Ocean Freight Analysis
Objective
The purpose of this report is to analyze the price and revenue management in containerized ocean freight industry. First of all, we will introduce the background and development of ocean freight industry; explore the characteristics of ocean freight price and demand. Then we will analyze relationship between demand and price. Two famous shipping companies, COSCO and MSC will be introduced as examples to implement price optimization with price differentiation and competition considered in ocean shipping industry. Finally, we will discuss revenue management in ocean freight, the strategy of enlarging their margin during such a recession period. Based on current economy circumstance, we will analyze the trend of ocean freight industry, and give our recommendation. To track pricing trend on whole container ocean shipping industry, data of China‐Europe lines during last three years are collected.
Demand and Revenue Management
1
Introduction
Since the 1960s, most manufactured goods moved by ocean freight are transported by container vessels. Goods are loaded into standard shipping containers at the point of departure – mostly at the factories – then transferred by road to the docks. With globalization, international trade is less limited by distance, and container ocean freight has always been the most important way of transportation. During the past 20 years, as export demand growing rapidly, demand for container ocean freight in China is also increasing. The leap of demand even drives the business increase of relevant trade areas. Nowadays, 50% increase of container ocean freight business of Antwerp is attributed to Chinese market, and 1/3 goods operated on Hamburg are imported from or exported to China. Up to the end of last year, Europe has become China’s largest trade partner. Also China is the second largest trade partner, following the United States, of the Europe.
Demand and
The purpose of this report is to analyze the price and revenue management in containerized ocean freight industry. First of all, we will introduce the background and development of ocean freight industry; explore the characteristics of ocean freight price and demand. Then we will analyze relationship between demand and price. Two famous shipping companies, COSCO and MSC will be introduced as examples to implement price optimization with price differentiation and competition considered in ocean shipping industry. Finally, we will discuss revenue management in ocean freight, the strategy of enlarging their margin during such a recession period. Based on current economy circumstance, we will analyze the trend of ocean freight industry, and give our recommendation. To track pricing trend on whole container ocean shipping industry, data of China‐Europe lines during last three years are collected.
Demand and Revenue Management
1
Introduction
Since the 1960s, most manufactured goods moved by ocean freight are transported by container vessels. Goods are loaded into standard shipping containers at the point of departure – mostly at the factories – then transferred by road to the docks. With globalization, international trade is less limited by distance, and container ocean freight has always been the most important way of transportation. During the past 20 years, as export demand growing rapidly, demand for container ocean freight in China is also increasing. The leap of demand even drives the business increase of relevant trade areas. Nowadays, 50% increase of container ocean freight business of Antwerp is attributed to Chinese market, and 1/3 goods operated on Hamburg are imported from or exported to China. Up to the end of last year, Europe has become China’s largest trade partner. Also China is the second largest trade partner, following the United States, of the Europe.
Demand and
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