Implications of economies of scale and scope for round-trip shipping canvassing with empty container repositioning

Abstract

Empty containers need to be repositioned from a surplus area to a shortage area, and the resulting economies of scope mean that the canvassing (i.e., the sale of transportation service) of two routes back and forth is no longer isolated. To study the liner company’s canvassing strategy for round-trip routes, this paper considers a benchmark situation where one forwarder is responsible for two directions and three canvassing sequences with one direction one freight forwarder responsibility. The results indicate that the liner company should focus canvassing on fewer forwarders, and the forwarder should expand service scope. Under one direction one freight forwarder responsibility, it is not necessarily optimal for the liner company that the direction with low potential market demand canvasses first. Examining the preferences of the liner company and two forwarders in terms of canvassing strategy, we find that a triple-win situation can not be formed, but only a win-win situation can be formed between the two of the three participants. Although the canvassing strategy where the direction with high potential market demand canvasses first has the worst effect on balancing cargo flow, it is possible to increase the market share while improving the profit of the liner company.