Information leakage in a cross-border logistics supply chain considering demand uncertainty and signal inference

Abstract

In cross-border logistics, mainline carriers (MCs) confronting demand uncertainty have to share their information with the overseas regional carrier (RC) via information system or electronic data interchange. However, does the RC or the incumbent MC have incentives to disclose the demand information to a new MC? The new MC competes with the incumbent MC but has no demand information, while the incumbent MC has accumulated big data and known demand uncertainty well. In this paper, we study the supply chain parties’ preferences over information leakage in a system consisting of an incumbent MC, a new MC and an overseas RC. Interestingly, we show that, when there is no information leakage, the new MC’s signal inference dramatically restricts the RC’s pricing flexibility. This induces the RC to disclose the incumbent MC’s information. We also show that, information leakage alters the MCs’ competition and their profits by balancing the RC’s service price and the MCs’ order sizes.