A Pricing Strategy Of The International Container Liner Company

The shipping market is continuously open currently, more and more shipping companies join into the competition, some structural changes have taken place in the whole liner market, with constantly towards disintegration of the liner conference, the original structure of shipping market which monopolized by the liner conference is broken, therefore, it is significant for liner company’s survival and development to research the way making reasonable freight strategies under the new competitive environment and increasingly complex economic background. The main research content of this article is analyzing the optimal pricing strategy for the companies based on the actual situation of the South American routing which consider cost, demanding and so on various aspects of factors in price setting.In the first part of this work, we firstly expound the factors which affect the price of shipping, and analyze how these factors affect the changes of shipping price simultaneously. With these theories, this paper puts forward a shipping pricing strategy based on market demand, which utilizes the variables of market supply and demand to establish the market equilibrium price function, and then establish the market demand function and the profits function of enterprise A. We take advantage of the real data from the companies in the market to analyze the model. In the second part, we consider another case, shipping companies often encounter other competitors when to make shipping price, in order to maintain their market share and profit, they also need to make a price adjustment appropriately. For the reason that, we also analyses the shipping companies’ price competition to strengthen the practical significance of this paper.After the discussion, we find that the leadership of enterprise has an effect on the pricing in a certain degree for shipping company. The price of the leader shipping companies is always higher than the market equilibrium price such as the company A in this work, but the price difference is always stay in a certain rage. We also can find that if the leader as company A wants to maximize its own profit, it should reduce the gap between their own price and the equilibrium price so that they can not only increase the profits but also improve the market shares. In addition, the price competition existing inevitably and the company should not follow the price blindly. It may increases the demand, but also reduces the profits significantly and affects the development of whole industry.This work analyzes the basic shipping pricing strategy to provide a reference for the shipping companies. There is no doubt, the pricing strategy of this work still need to be further improvement, for example, we can consider other variables such as the quality of service, seasonal variations into the demand function of the company.