Contracting in a shipping market with empty container repositioning

In this paper, we study a maritime transportation market with one ocean carrier providing maritime transportation services between two container ports. There are two freight forwarders in the two ports. Due to the imbalance of the realized demands between the two ports, the ocean carrier needs to reposition empty containers from the surplus port to the shortage port and incur repositioning cost. We propose a Stackelberg game model to characterize the contract design of the carrier and the price decisions of the freight forwarders. The model is analyzed under both the symmetric and asymmetric demand information cases. Keywords: empty container repositioning, pricing, asymmetric information.