Game Model of Long-term Freight Rate Contract between Container Liner Companies and Customers
The fluctuation of container ocean freight rates is considered crucial to the income of liner shipping companies.Facing increasingly fierce market competition and the changing customer demands,liner shipping companies(carriers)must develop reasonable pricing strategies to attract and retain customers(shippers),ensuring successful cooperation of their container transportation business.This study focuses on the pricing issues of long-term freight rate contracts between the carrier and shipper,aiming to construct an effective game model by deeply analyzing the bargain strategy of both parties under different market conditions.The goal is to find a balance point that maximizes the income of carriers while satisfying the shippers’needs for their cost control.This paper enriches the application of operations research and management science in theory and provides valua-ble pricing strategies for carriers in practice,which will have significant theoretical and practical implications.A game model is built based on the Rubinstein’s alternating offer framework,which simulates the bargain strategy between carriers and shippers in the long-term freight rate contracts.The model specifically considers the bidding policies under the presence of irrational offers and explores the impact of irrational offers on the attitude of both parties in the game under different market situations.Through this model,we are able to gain a deeper understanding of the changes in the shipper’s attitude in freight rate bargains and its impact on the carrier’s bidding strategies under excess or insufficient capacity market conditions.The results show that in an excess capacity shipping market,shippers usually occupy a dominant position in bargain.In such circumstances,there is an uncertainty in the carrier’s first-stage bidding strategy,while the shipper’s rational bargain directly affects the final outcome of the deal.When the shipper adopts an irrational bargaining strategy,if the carrier fails to recognize this,the offers may decline and the bargain ends,or else the first-stage fails and comes to the second stage.In an insufficient capacity shipping market,the shipper is in a passive position and will accept the offer as long as the carrier’s bid is below their acceptable price.The empirical analysis further validates the effectiveness of game theory and reveals the final game structure of both parties and factors such as expectation for the future market,discount factors,and bidding strategy.Through the solution of the model,we have obtained the optimal bidding strategies under different shipping market scenarios,providing practical guidance for carriers and shippers in actual bargains.The empirical analy-sis indicates that by adopting the strategies proposed in this study,carriers can effectively increase contract signing rate,enhance long-term cooperative relationships with shippers,and thereby gain a stable market share in the fiercely competitive market.Future studies may further focus on more market factors,such as the operational efficiency of liner compa-nies,the bargaining power of shippers,and potential market entrants.In addition,studies can also be extended to other types of transportation such as multimodal transport,and exploring more pricing game methods such as dynamic pricing.These studies will help carriers and shippers better respond to market changes,thereby achie-ving more scientifically sound and reasonable long-term transportation contracts.
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