An company must decide how to sell its capacity. It could sell a portion of its long-term contracts. A long-term contract specifies that the buyer (the company’s customer) will purchase a certain amount of cargo space at a certain price. The long-term contract rate is currently $1,875 per standard unit of space. If long-term contracts are not signed, then the company can sell its space on the spot market. The spot market price is volatile, but the expected future spot price is around $2,100.
