OceanTrans: Shipping in the Red Sea
OceanTrans Cargo Carrier is a container shipping company that provides services across the Middle East, the Red Sea and the Arabian/Persian Gulf. The CEO has to decide how to handle the increasingly tense competition his business is facing. When his competitor entered the market, it started slashing prices from the beginning in order to grab market share. The OceanTrans CEO felt compelled to react, dropping rates. Margins went down but the company was still in the black. However, thinking long-term, the CEO could not shake off the feeling that slashing prices would trigger a downward spiral in the industry, perhaps one that could not be reversed easily. OceanTrans was due to announce its freight rate for the following week. A few hours earlier, its competitor had lowered its own rate even further.