Forwarder's Shipping Capacity Option Procurement Policies With Option Trading And Empty Equipment Repositioning

In shipping markets, forwarders usually buy the shipping capacities from the shipping company in the form of contract beforehand and sell these capacities to the final customers. Because there are some problems such as asymmetric information, market demand uncertainty, capacities'perishables and empty container repositioning, optimization of freight forwarding option contract ordering policy has a strong theoretical value. In this paper, the theory and methods of simulation are used to analyze forwarders'option contract ordering policy under consideration of empty container repositioning. It works to provide forwarders some valuable academic supports on option contract ordering policy and empty container repositioning.Shipping companies and forwarders sell and buy shipping capacities in the form of option contracts. In reality, shipping companies provide s series of contracts and forwarders only choose some of them. We provide that there some conditions that option contracts should have if they were taken by forwarders. So this makes a foundation for studying forwarders'option contracts buying policy.Then we analyze the forwarders'ordering policies when there don't exist option trading between them, focusing on the impact of forwarder's ordering policy and how to reduce the amount of empty containers. We find that forwarder's revenue is directly related to the option amount and there is a set amount of ordering capacity to maximize the forwarders'revenue. Interestingly, the paper found that increased empty container cost can increase certain ports'revenue. At the same time, we found that forwarders can reduce the amount of empty containers by adjusting the price. Through adding empty container repositioning to purchasing policy, forwarders can reduce the amount of empty containers and increase revenue. This is the reason that forwarders consider empty container repositioning when making decisions.At last we analyze the forwarders'ordering policies when there doesn't exist option trading between them. There is also a set amount of ordering capacity to maximize the forwarders'revenue in the presence of option trading. Forwarders can handle excess or insufficient capacities through option trading in order to reduce suck costs and increase revenue. Because of option trading, forwarders have the ability to sell excess capacities, so they usually order more capacities before hand to tackle the future uncertainty. At last, risk aversion role of option trading is greater in markets with higher uncertainty; this is reflected mainly on the increase of income.