Enabling One-Way Leases of Temperature Controlled Containers: A Heuristic Model

University essay from KTH/Industriell ekonomi och organisation (Inst.); KTH/Industriell ekonomi och organisation (Inst.)

Abstract: There is an asymmetry in demand for transportation means of goods and commodities globally. One industry in which this trend is especially prominent is the pharmaceutical industry, where the European Union is by far the largest net exporter of pharmaceutical products globally, followed by Switzerland. The largest global net importer of pharmaceutical products is America, and given that many pharmaceutical products need to be transported in a cold chain, a niche within the transportation industry has grown – one that focuses primarily on transportation of high-value temperature-sensitive goods. Transportation companies working with circulating assets around the world need to determine how much capacity can be allocated to the sale of one-way trips (which may displace assets within the fleet to places in which they cannot be sold again due to the lack of business) whilst still allowing the sale of round-trip leases to continue. We conducted a case study within Company A that is a cold chain provider for air freight to provide context on how a heuristic model for capacity control should be developed, and incorporated this with learnings from theory within the fields of revenue management and fleet management together with literature in similar business settings. This resulted in a four-step model with unique planning horizons for each level, ranging from strategic perspectives for fleet balancing down to operational aspects of daily allocation and release of containers. We conclude which factors are essential for the context of the case study and showcase how a model can be constructed taking these findings into account. The thesis deals with the issue of capacity control for one-way leases. Other models have used pricing strategies to accomplish similar tasks and this is not included in the proposed model which is a limitation of this study, this is discussed and elaborated on. Furthermore, possible implications for the customer behaviour with the suggested model is discussed.

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