Carrier encroachment vs forwarder agency: co-operations in the freight market

In the freight forwarding market, carriers may provide transportation through traditional forwarders or by establishing an online booking platform to encroach the original freight market. Meanwhile, forwarders may cooperate with carriers through exclusive agency or mixed agency. This study applies a game-theoretical model to understand the interactions between carrier encroachment and forwarder agency strategy. We observe that only if the carrier with less potential market encroaches could it exist a situation that the forwarder originally linking to the carrier with larger potential market becomes the only choosing mixed agency. Beyond that, the probabilities of two forwarders considering mixed agency simultaneously are relatively small only if the agency fee is low or the substitution degree is high is satisfied. However, the factors influencing whether each carrier encroaches are significantly different. For the carrier with smaller potential market, the agency fee is the most important determinant, whereas the other pays more attention to the substitution degree.