This thesis investigates into two issues on the tactical level in the ocean container shipping industry. The first one is the revenue management issue raised by the necessity to reposition empty containers and further complicated by decentralized orgranization structures that is commonly seen in practice. The second one is the carrier and the shipper’s choice of contracts in light of the situation when the shipper may be a truthful one who always conforms to the contract, or a profit-driven one who breaches contracts for benefits whenever possible, and when the carrier is uncertain about shipper types..

In the first study, we study new coordination mechanisms that incentivize trade lanes to make system-optimal planning decisions in a decentralized manner. Ideally, shipping lines...[ Read more ]

This thesis investigates into two issues on the tactical level in the ocean container shipping industry. The first one is the revenue management issue raised by the necessity to reposition empty containers and further complicated by decentralized orgranization structures that is commonly seen in practice. The second one is the carrier and the shipper’s choice of contracts in light of the situation when the shipper may be a truthful one who always conforms to the contract, or a profit-driven one who breaches contracts for benefits whenever possible, and when the carrier is uncertain about shipper types..

In the first study, we study new coordination mechanisms that incentivize trade lanes to make system-optimal planning decisions in a decentralized manner. Ideally, shipping lines wish to design mechanisms with three properties: (i) efficiency, i.e., induces the system-wide optimal business planning; (ii) stability, i.e., incentivizes trade lanes to cooperate as a grand coalition instead of in smaller groups, (iii) equity, i.e., remunerates trade lanes by their individual contributions to system profit; and (iv) welfare, i.e., minimizes resistance against change from current practice. Using the notion of internal pricing and a cooperative game theoretic framework, we devise optimization-based methodologies to design mechanisms that achieves efficiency and stability, while maintaining a controlled balance between equity and welfare.

In the second study, we invent a novel contract form, the floating price contract and evaluates its effectiveness for the carrier and the shipper together with two widely employed contracts, capacity commitment contract and non-capacity-commitment contract. We analytically delve into their performances of three contracts under an tight-capacity market where macroeconomy is relatively strong and the industry does not exhibit severe over-capacity problem, and numerically examine the case when the market is over-capacity: sluggish macroeconomy and prominent over-capacity. We find that without the need of screening, the non-capacity-commitment contract serves both parties’ best interests under a tight-capacity market, while the novel floating price contract is the most effective in a over-capacity market.