Service purchasing and market-entry problems in a shipping supply chain

Junjin Wang, Jiaguo Liu and Xin Zhang

Transportation Research Part E: Logistics and Transportation Review, 2020, vol. 136, issue C

Abstract: In the shipping industry, forwarders can purchase a “one-stop” service from an ocean shipping (OS) company or a dual “ocean + inland” service from an OS company and an individual inland shipping (IS) company. Additionally, the OS company can strategically decide whether or not to enter the downstream market for cargo-canvassing, which will form a co-opetition relationship with incumbent forwarders. We investigate a strategy matrix based on the following two questions: “What kind of shipping service should be purchased by the forwarder?” “Is it beneficial for OS company to enter the market?” We find that when the forwarder’s cargo-canvassing effort level is low, a dual-service purchasing strategy will benefit both the stakeholders, while market-entry is a self-interested behavior and hurts the forwarder. Enhancing the cargo-canvassing effort level may help the forwarder to overcome this dilemma. However, with an increasing level of effort, there is a mutual inhibition of dual-service purchasing and market-entry, which hurts both the stakeholders’ profits simultaneously. Interestingly, we show that a win-win situation exists when the forwarder adopts a dual-service purchasing strategy without market-entry. Furthermore, we verify that this win-win situation is Pareto-optimized.

Keywords: Service purchasing; Market-entry; Co-opetition; Cargo canvassing; Shipping supply chain (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (18)

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DOI: 10.1016/j.tre.2020.101895

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