Contracting in ocean transportation with empty container repositioning under asymmetric information

In the paper, we examine a contracting problem under asymmetric information in a two-port system involving two freight forwarders and one carrier providing ocean container transportation services between the two ports. We develop a two-stage game model to capture the unique characteristics of the ocean freight transportation with empty container repositioning. We first analyze the forwarders’ optimal strategies, and then characterize the optimal contract for the carrier under symmetric and asymmetric information. Through computational studies, we investigate the impacts of empty container repositioning cost and information asymmetry on the system performances. The numerical experiments reveal that (1) if the market demand is likely to be high, the ocean carrier is more eager to procure private information so as to prevent profit loss from information asymmetry; (2) the degree of information asymmetry has different impacts on the empty container repositioning cost in different transportation directions.