Study Data from Hong Kong Polytechnic University Update Understanding of Operations Science (Insurance Incentive To Shippers By a Container Port: Issues of Risk Management In Supply Chain Finance): Science – Operations Science

2022 JAN 31 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators discuss new findings in Science - Operations Science. According to news reporting from Hong Kong, People’s Republic of China, by NewsRx journalists, research stated, “Letter of credit (LC) plays an important role in supporting financial activities and facilitating transactions in supply chain finance. An LC provides an option for advance payment by shippers (buyers) to exporters (suppliers).”

Financial support for this research came from Policy Research Institute of Global Supply Chain, The Hang Seng University of Hong Kong.

The news correspondents obtained a quote from the research from Hong Kong Polytechnic University, “The payment is made by financial companies. For risk management, financial companies usually require shippers to insure their goods. The selection of shipping port designations and transshipment ports is a commonly listed LC clause. Thus, a container port could consider providing shipping insurance subsidies along with the quality port service to attract shippers. Recently, facility sharing (FS) has been adopted by the Hong Kong Port (HKP) to reduce operating costs at terminals. We study the shipping insurance subsidies provided to shipper by the HKP utilising the benefits of FS. Our research is based on real-life data. We propose an insurance incentive strategy (IIS) as a profit maximisation problem and examine the relationship between the optimal capacity for transshipment, insurance rate, FS cost savings, and benefits of the IIS. Our results demonstrate that the IIS could lead to a win-win situation for shippers and container ports. We observed that the IIS could reduce the risk in supply chain finance and strengthen the partnership between port operators, liners, shippers, financial companies, and insurance companies. The total shipping insurance cost can be reduced with improved credibility and economies of scale.”

According to the news reporters, the research concluded: “We also discuss different scenarios that are particularly desirable for the adoption of IIS.”

This research has been peer-reviewed.

For more information on this research see: Insurance Incentive To Shippers By a Container Port: Issues of Risk Management In Supply Chain Finance. Annals of Operations Research, 2022. Annals of Operations Research can be contacted at: Springer, Van Godewijckstraat 30, 3311 Gz Dordrecht, Netherlands. (Springer - www.springer.com; Annals of Operations Research - http://www.springerlink.com/content/0254-5330/)

Our news journalists report that additional information may be obtained by contacting Sai-Ho Chung, Hong Kong Polytechnic University, Dept. of Industrial and Systems Engineering, Hong Kong, People’s Republic of China. Additional authors for this research include Hoi-Lam Ma, Lawrence C. Leung and Collin Wai-Hung Wong.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1007/s10479-021-04261-3. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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