Agency encroachment and information sharing: cooperation and competition in freight forwarding market

Abstract

ABSTRACT The information exchange between the forwarder and vessel operating common carrier (VOCC) directly leads to a shortage or surplus of capacity and influences operational efficiency. Meanwhile, the development of information technology has inspired VOCCs to establish online booking platforms, which has changed the traditional booking behavior of shippers. Thus, this paper investigates the equilibriums of platform encroachment and information sharing with two symmetric VOCCs and a forwarder. Using a game-theoretic model, it can be characterized as Stackelberg-Nash game with Bertrand competition to determine whether to encroach existing freight forwarding market and share information or not. We observe whether freight forwarder shared information is affected by the encroachment strategy of VOCCs and the market demand state. Further, the encroachment strategy can prompt freight forwarder to share information with VOCCs if the magnitude of high demand is lower. In addition, for VOCCs, the best chance of establishing online platforms is when the magnitude of high demand is relatively low, not when the demand state has increased.