Modeling Shipment Spot Pricing in the Australian Container Shipping Industry: Case of ASIA-OCEANIA trade lane

The shipping industry is fairly volatile pertaining to shipment pricing. To handle this volatility, two types of pricing strategies are employed in the shipping sector, contract market pricing and spot pricing. The contract market offers a fixed shipment price for a known cargo task over a set period, with secured booking space in periods of high demand. The spot market has a fluctuating shipment price, where one can benefit from lower prices than contract rate shipment prices in the low season, but face escalating shipment prices and less certainty of being able to secure a booking on a particular vessel in peak season, as space is reserved for contracted customers. However, both the pricing strategies followed have no relationship between current shipment demand and available shipping capacity and shipment prices are quoted based on predefined price lists (hard copy). This paper addresses the research gap of optimal spot shipment price calculation based on current shipment demand and available shipping capacity. To do so, we have developed a model that utilizes historical data to calculate spot pricing for container shipments. The proposed model is capable of calculating shipment spot prices based on shipment demand and capacity. Data from various sources was gathered to generate a shipping dataset for three years (i.e. from 2016 until 2018). Regression and correlation analysis are used to quantify research outcomes. Results have shown that the proposed model significantly increases the correlation between shipment price and shipment demand from 0.33 to 0.88 and available capacity from [Formula: see text] to 0.35 respectively.