Abstract
This paper studies a forwarder’s mode choice and contract choice in a shipping supply chain. The forwarder canvasses shippers’ orders and provides one-stop service to shippers. The forwarder needs to purchase ocean service from a carrier by a forward contract or spot market. Furthermore, the forwarder decides to offer inland service by insourcing mode or outsourcing mode. The market size, spot price and outsourcing cost is ex-uncertain. Moreover, the market size is correlates with the spot price and outsourcing cost. We find that the uncertainty of the market size, spot price and outsourcing cost have an important effect on the forwarder’s choice. Firstly, the forwarder still chooses the forward contract to purchase the ocean service even when the contract price is slightly larger than the expected ocean service spot price. Secondly, the forwarder and carrier choose the forward contract when the market size is relatively small. Thirdly, we show that the forwarder’s optimal mode choice. We find that the forwarder may choose insourcing mode although it faces high cost. Specially, the forwarder chooses the insourcing mode for the inland service even when the insourcing mode cost is slightly larger than the expected outsourcing cost. In summary, this paper analyzes the impact of the uncertainty on the mode choice and contract choice.
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Yan, L., Xing, W. (2023). Contract and Mode Choices Under Demand and Price Volatility in a Shipping Supply Chain. In: Li, X., Xu, X. (eds) Proceedings of the Tenth International Forum of Decision Sciences. ITLBD&DS 2022. Uncertainty and Operations Research. Springer, Singapore. https://doi.org/10.1007/978-981-19-9741-9_13
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DOI: https://doi.org/10.1007/978-981-19-9741-9_13
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