Optimal Pricing and Long-term Contracts for Alternative Fuel Bunkering Center Development

Limited alternative-fuel supply and bunkering infrastructure continue to slow the maritime green transition. In some hub-port settings, large shipping companies are establishing bunkering centers and securing long-term contracts with energy suppliers to ensure stable fuel access and supply fuel to third-party vessels through downstream bunkering services. This creates a distinctive contracting problem: the shipping company jointly determines procurement and downstream resale pricing while balancing internal fuel use and third-party bunkering, whereas the supplier sets wholesale prices under incomplete information. We study this interaction through a Stackelberg game in which the supplier sets wholesale prices and the shipping company chooses procurement and resale decisions. A central feature of the model is an endogenous self-consumption ratio that captures how procured fuel is split between internal use and external bunkering. The results show that the equilibrium selfconsumption ratio, rather than procurement alone, governs effective downstream fuel availability by determining how tightly the bunkering center is locked into internal fleet use. Extending the model to a two-period setting, we compare uniform and dynamic wholesale-pricing regimes and show that inventory has no strategic value under uniform pricing, but becomes valuable under dynamic pricing because it affects future procurement dependenceand residual fuel availability. We further show that contractual and operational extensions do not necessarily improve third-party access: quantity-based discounts can be offset by supplier price adjustments, while congestion frictions can prevent residual fuel availability from being translated into realized downstream bunkering activity.