Title: Service differentiation in liner shipping: advance booking and express services

Authors: Michele Acciaro

Addresses: Center for Maritime Economics and Logistics (MEL), Erasmus University Rotterdam, Room H10-14, Burg. Oudlaan 50, 3062TG Rotterdam, The Netherlands; Det Norske Veritas (DNV), Research and Innovation, Veritasveien 1, 1363 Hovik, Norway

Abstract: Containerisation has transformed ocean shipping in a relatively standardised process. Possibilities to differentiate services exist nonetheless as a result of route densities, cargo and customer types, and shipment time sensitivity among other factors. Although yield management and product differentiation models have been extensively discussed in the airline sector, the topic has been the subject of relatively little investigation in liner shipping economics. This paper proposes a liner service differentiation model based on advance booking and explains in what cases two different classes of booking may be profitable. The paper structure is as follows: Section 1 introduces the topic; a review of the literature on pricing in liner shipping is presented in Section 2; this is followed by the explanation of how carriers may effectively price discriminate; Section 4 presents a simple model that accounts for advance booking and two classes of services; and Section 5 concludes.

Keywords: pricing; liner shipping; yield management; service differentiation; advance booking; express service; service contracts; price discrimination; route densities; cargo types; customer types; shipment time sensitivity; product differentiation; shipping economics.

DOI: 10.1504/IJSTL.2011.041133

International Journal of Shipping and Transport Logistics, 2011 Vol.3 No.4, pp.365 - 383

Published online: 10 Jul 2011 *

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