round trip meaning in shipping

Round trip or Round voyage

by Ship Inspection 14k Views

Round trip or Round voyage . A charter for a “round voyage” may be a mixture of a. time charter and a voyage charter (similar to a trip charter).

The Charterer may charter the ship from one delivery or loading place to a discharging port and back to the original place of delivery to the Charterer. The freight rate would take into account the fact that the ship may have to be positioned at the original port in ballast. The two legs of the complete voyage may be known as the “outward” leg and the “homeward” leg, although in modern times the ship may never really visit its “home port” or port of registry. A report of a round voyage reads as follows:

“Nova Spirit (69,000 tonnes dw, 14k on 28t, Liberia, built 2012) delivery Japan, Aug 10-20, trip via Australia, redelivery Japan, $8,500 per day. (Shinwa)”

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Definition of round trip

Examples of round trip in a sentence.

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'round trip.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

1837, in the meaning defined above

Dictionary Entries Near round trip

round-trip ticket

Cite this Entry

“Round trip.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/round%20trip. Accessed 9 Jun. 2024.

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Freight definitions & terms

Freight glossary: understanding freight definitions and shipping industry terms.

The freight industry has a vocabular all its own—one that even seasoned professionals need to brush up on from time to time. We used our extensive logistics knowledge and experience to create a straightforward guide to freight shipping and logistics terminology.

Whether you’re new to the freight industry or want a refresher on common freight terms, our shipping dictionary is your go-to resource. It covers the terms you need to know to understand the freight shipping process from start to finish.

Accessorials

Accessorials commonly include the need for special equipment and services like liftgates, non-commercial destinations, and inside pickup and/or delivery.

A shipping agent is the person who does business on behalf of another person or company with full or limited decision-making authority. An agent may supervise customs procedures, documentation, or shippers insurance. This person may also receive a portion of the monetary gain from the transaction as payment.

Amazon (FBA) warehouse shipping

Fulfillment by Amazon (FBA) warehouse shipping is a service that helps Amazon sellers outsource shipping to Amazon. Shipping to Amazon warehouse has some nuances shippers need to be aware of for the smooth transfer of heir products. Amazon warehouses only accept shipments from select LTL carriers, so it's important to check the box "Delivery to an Amazon Warehouse" when quoting your shipment.

Attempted pickup

An attempted pickup happens when a carrier is dispatched to a location to pick up freight, but freight is not ready upon arrival. Typically, LTL carriers charge a fee for this attempt. Learn what to expect at an LTL pickup  to help prevent additional carrier charges.

Axle load refers to the weight each axle on a truck puts on the nation's highways.

A back haul is the return trip of a truck transporting cargo or freight. It may be a return to the origin of the freight hauled for which the carrier is willing to offer a discount to secure freight for the trip.

Beneficial Owner

Beneficial owner is a legal term where specific property rights belong to a person, even though the legal title of the property belongs to another person. This term is often used in rail or ocean freight and refers to the actual owner of the freight being shipped, despite the title of the freight being in another party’s name.

Bill of Lading (BOL)

Billing adjustment.

Billing adjustments are costs incurred after a shipment has delivered. These additional costs may be added by the carrier for discrepancies between the freight characteristics quoted and the actual delivered shipment details. These may include but are not limited to: weight, class, dimensions, or fees for additional services performed such as a liftgate.

Blocking and bracing

Blocking and bracing  refers to wood or other supports used to keep pallet shipments in place on trailers or in containers throughout the shipping process. This technique is widely used by expert shippers to secure freight.

Blind Shipment

Freight is labeled a blind shipment when the shipper and receiver are not aware of one another.  In such cases, the bill of lading lists the party that paid for the shipment as the shipper or receiver of the freight shipment.

Bogie is a rail shipping term that refers to a frame with wheels on which a container is mounted for over-the-road transport.

Brokerage License

A brokerage license is a legally required document that a broker obtains in order to have the ability to make land, sea, and air freight shipping arrangements. Brokerage licenses are different for both transportation and customs. To make sea shipping arrangements, an NVOCC (Non-Vessel Operating Common Carrier) license is required. To make air shipping arrangements, an IAC (Indirect Air Carrier) license is required and obtained through the International Air Transport Association.

Bulk Freight

Bulk freight is freight that is typically not contained within packages or containers. Often times, bulk freight comes in the form of liquid or a granular form such as sand or crude oil.

Cartage is a trucking term that refers to shipping freight within the same city or close proximity.

Carrier lanes

Carrier lanes are also referred to as freight lanes, shipping lanes, or trucking lanes. In any case, the lanes refer to the routes a carrier routinely serves.

Carrier liability

Carrier liability refers to the financial liability a carrier is responsible for in the event of loss or damage to a shipment. This amount varies based on carrier and is usually limited to a per pound basis. Learn more about carrier liability and our shippers interest insurance .

Chassis is rail shipping term that refers to a frame with wheels and locking devices to secure a container during intermodal transport .

Classification

A freight classification  is a standardized assignment to a shipment for the purpose of applying transportation charges. Freight classifications are determined based on a range of factors including: weight, density, stowability, and liability.

Common Carrier

An LTL common carrier  consolidates and deconsolidates freight for multiple companies or brands while offering a set route and rate. They are often motor carriers, trucking companies, or freight service providers that operate on a similar schedule with a strict set of guidelines.

Concealed Damage

Concealed damage is damage to the item(s) not visible until the package is opened.

The consignee is the person or company who receives the shipment.

The consignor is the individual (typically the seller) who sends goods to the consignee and is the legal owner until the consignee pays them in full.

Consolidation

A consolidated shipment  is when two or more shipments are combined to save money on freight shipping costs. This shipping method is commonly used in less than truckload (LTL) shipping with multiple stops before reaching the final destination.

Containers are used for intermodal shipping  and come in standard sizes to ensure they fit on standard trucks, rail cars and container ships. A shipping container looks like a truck trailer with no wheels and container shipping is now among the most  common freight shipping methods  in the United States and abroad.

Crating is a packaging strategy ideal for shipping fragile or delicate freight where items are packed in wood crates and surrounded by protective material.

Cross docking

Cross-docking occurs when freight is moved directly from an incoming truck onto an outbound truck. Cross-docking eliminates the need for warehousing and storage in the supply chain.

Cross-town shipping is a term used when a container or trailer is delivered by railroad as part of the shipping route.

Cubic Capacity

The total freight load capacity of any truck, train or ship is measured in cubic feet. Cubic capacity is the total load in cubic feet—which cannot be exceeded and could result in a violation if surpassed.

Customs Broker

A customs broker is a person or company licensed by the U.S. Treasury Department to act on behalf of freight importers and exporters with respect to U.S. Customs transactions. A customs broker must be used for all shipments going to and from Canada .

Delivery appointment fee

A delivery appointment fee is applied when a carrier is required to make an appointment for delivery.

Deliver order

A deliver order is a document which authorizes the release of freight to another party. Most often this paperwork is required by large warehouses in order to release freight to a carrier. The owner of the goods will provide the paperwork to the carrier making pickup, and in turn the pickup driver presents the paperwork to the pickup location as proof they have been contracted to transport the goods. Also referred to as Release Paperwork or simply DO Paperwork.

Density calculator

Our freight density calculator and online quoting tool instantly calculate freight class based on your shipment’s density.

Detention is an additional fee charged by a carrier when loading or unloading extends past the time allotted. In LTL shipping, 15 minutes of un/loading time are provided free at each location. In full truckload that time is extended to 2 hours.

Drayage services

Drayage services refers to the transport of freight over a short distance to the next destination in the intermodal shipping  process.

A drop deck is a type of flatbed shipping  equipment used for transporting taller cargo.

Dry vans are fully enclosed truckload trailers. Dry vans are the most common equipment used for truckload shipments.

An embargo is any event that prevents freight from being accepted or handled. Most often, an embargo is due to international conflict or sanctions imposed on a particular country or group of people. However, embargo events may also include floods, tornadoes or congested highways.

An exception is noted on the bill of lading before it is signed to designate there was a problem with the shipment, such as a shortage or damage at the time of delivery.

Expedited freight

Expedited shipping services are often chosen when there is a need for urgent delivery or time-sensitive shipments. 

Flatbed shipping

Flatbed shipping uses an open trailer for large or heavy freight that cannot be safely loaded into an enclosed box truck. Flatbeds is ideal for any item that must be side-loaded on a trailer.

Free on board (FOB)

Free on board (FOB) is a logistics term used as a designation to assign ownership of goods throughout the shipping process.

Freight is defined as the goods transported by truck, train, ship, or plane.

Freight broker

A freight broker is a third-party company that works for the shipper to find carriers who can transport their goods and cargo from one place to another. As a broker, Freightquote by C.H. Robinson works directly with carriers to negotiate rates for shippers.

Freight carrier

A freight carrier transports goods from one location to another.

Freight class

Freight class is a standardized number between 50 and 500 assigned by the National Motor Freight Classification system  to classify commodities for shipping purposes. Density, stowability, handling, and liability are factored into the standardized freight classes, designed to give consumers and carriers a uniform pricing structure when shipping freight.

Freight class calculator

Our freight class calculator and online quoting tool instantly calculate freight class based on your shipment’s density.

Freight cost/rate

Freight rate or freight cost are terms used to describe the fee(s) charged by the freight carrier to move a shipment from origin to destination location.

Freight insurance

Freight insurance (or shippers insurance ) is an optional insurance policy that covers the shipped items and cost of the freight shipping.

Freight liability

Freight liability is the responsibility for shipment losses, damages, and delays.

Freight shipping

Freight shipping is the process of transporting commodities, goods, and cargo by land, air, or sea. Common types of over the road freight shipping include truckload, less than truckload (LTL), and intermodal.

Freight shipping quote

A freight shipping quote is the quoted fee for a carrier to move a shipment.

Freight terminal

A freight terminal is commonly used in LTL freight shipping. Trailers arrive at a terminal and shipments are sorted and consolidated for additional transportation.

Ground freight

Ground freight is a shipment transported by truck.

Gross Vehicle Weight Rating

The gross vehicle weight rating refers to the vehicle’s maximum operating weight, as specified by the manufacturer. The weight includes the driver, fuel, engine, body, chassis, and cargo, but excludes the weight of a trailer.

Hazmat (or hazardous) materials  are defined by the U.S. Department of Transportation with a hazardous classification if a material, in particular amount and form, poses an unreasonable risk to health, safety, or property.

Inbound Freight

Inbound freight is an integral part of supply chain management. Inbound freight shipments typically come from vendors.

Inside pickup and delivery

Inside pickup and delivery refers to a freight shipment that is located or delivered inside a business, garage, or other building where the driver is required to assist in loading the freight with the help of someone at the location. Freight must be easily accessible and located near an exit.

Interline Carrier

The term interline carrier is used when the initial carrier of a freight shipment transfers the freight to another carrier to get it to its final destination. Also sometimes referred to as Agent Carrier or Partner Carrier.

Intermodal Transportation

Intermodal transportation typically refers to truck-rail-truck shipments but may also include truck to air shipping or truck to ship in the event freight is being shipped overseas.

Last mile delivery

Last mile delivery refers to the transportation of your shipment from the fulfillment center to its final destination: the customer.

A lift gate is a hydraulic lift on a special truck that raises freight from the ground to the trailer. Request a lift gate when a loading dock is not available at the pickup and/or delivery location.

Limited Access

Limited access is a fee applied by the carrier when the pickup or delivery location is restricted by either time during the day, roads, documentation to get in, or other things that make it a more restricted delivery than a driver arriving during standard business hours.

Less than truckload (LTL)

Less than truckload (LTL) shipments are designed for larger than parcel but not large enough to require the space of a full truckload trailer. LTL is typically used for shipments between 150 and 15,000 pounds. The shipper only pays for the portion of the standard truck trailer their freight occupies.

Motor Carrier

The term motor carrier  is used to define a person providing motor vehicle transportation for compensation.

Nested freight

Nested freight  occurs when materials are stacked one item inside of another. This reduces the amount of space taken up by the combined freight, making LTL shipping more efficient as a result.

Not Otherwise Indicated (NOI)

A general class rate or NOI is assigned to any freight that has no rate listed in the NMFC . The NMFC numbers dictate the freight rating that is assigned to freight. A freight rating is based on density, freight stowability, ease of handling, and liability.

Oversize freight

Oversized freight refers to items requiring extra space due to size, shape, or weight that may be subject to higher shipping rates.

Pallet labels

Pallet labels are used to ensure a shipment reaches its destination. Simply print the labels provided to you after booking with Freightquote and attach to each pallet in your shipment.

Pallet shipping

Pallet shipping uses wood or plastic platforms to stack and transport goods for stability and ease of handling.

Package shipping

Package shipping , also known as parcel shipping, refers to small, lightweight, and individual shipments limited to 150 pounds.

Proof of delivery

Proof of delivery provides signed evidence that the goods have been delivered to the recipient at the final destination. In full truckload shipping, this signature typically appears on the BOL. In LTL shipping, this signature typically appears on a pre-printed delivery receipt provided by the carrier.

Reconsignment

Reconsignment is a charge assessed by carriers when the delivery address is changed after pickup has been completed.

Residential location

Residential locations often require the use of a lift gate. Carriers may apply a fee when a pickup or delivery location is in a residential location.

Said to Contain (STC)

Said to Contain (STC) is a notation on the bill of lading  indicating the number of individual pieces contained within a single handling unit. For example, product listed on a BOL may read, “1 pallet STC 25 boxes,” meaning the pallet being shipped contains 25 individual boxes.

Shipper Load and Count (SLC)

Shipper load and count (SLC) is a notation on the bill of lading  indicating the shipper loaded and verified the piece count of the load, but the carrier’s driver did not observe or verify this count.

A shipper is the person or company who ships goods, or needs goods transported.

Shipping labels

Shipping labels are the labels containing destination and return shipping information, used to ensure each parcel reaches its intended location. Simply print the labels provided to you after booking with Freightquote and attach to each package in your shipment.

Shipping rate

Shipping rates are the fees charged by the freight carrier to move a shipment from origin to destination location.

Small business shipping

Make small business shipping easier by using Freightquote by C.H. Robinson to compare quotes for truckload, LTL, and parcel shipments in minutes. Book the carrier of choice, and track freight easily throughout the shipping process.

Small parcel shipping

Small parcel shipments are lightweight, individual shipments limited to 150 pounds. Also referred to as package shipping.

Sort and Segregate (Sort and Seg)

Sort and segregate (sort and seg) is a service performed at delivery where the carrier’s driver, receiving location, or a third-party lumper must sort and count each package or box as it is unloaded from the truck.

A tariff establishes the cost and contract of a freight shipment for the shipper and the carrier.

Temperature controlled shipping

Temperature controlled shipping refers to the truckload shipment that requires a stable temperature range. This service is commonly used for  shipping food or other perishable goods .

Third-party logistics (3PL)

Third-party logistics (3PL) providers are organizations who can take over or assist with various logistics concerns. Typically these involve the use of TMS technologies  to help increase visibility of your supply chain, allowing you to make informed decisions for your business.

Through Rate

A through rate applies to the distance between the point of origin and the point of delivery destination.

Time-Critical

Time-critical freight shipment delivery is set to the earliest possible delivery time to accommodate particular shipping requirements.

Time-Definite

Time-definite deliveries guarantee that the delivery will occur on a specific day or time of day.

Tradeshow shipping

Tradeshow shipping refers to the shipment of goods to and from trade shows and conventions that often require extra planning.

Transit Time

Transit time is the total amount of time from freight being picked up at origin to freight being delivered at its destination location.

Truckload (TL)

Truck order not used (tonu).

Truck order not used (TONU) is a term used when a carrier is dispatched to a location to pick up freight, but the load is either cancelled or not available for pickup upon arrival. Typically, full truckload carriers charge a fee  for this load cancellation or delay.

Volume Rate

Volume rate is a less than truckload (LTL) shipping term for rates that are made subject to a minimum weight of 7,000 pounds or more, or cubic volume exceeding 750 cubic feet.

Warehousing

Warehousing refers to the storage of goods in a facility for a specified period of time. Freight shippers usually store their goods at warehouses until they’re ready to ship.

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Time Charter Equivalent (TCE): Definition and How It's Calculated

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

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What Is Time Charter Equivalent (TCE)?

Time charter equivalent (TCE) is a shipping industry measure used to calculate the average daily revenue performance of a vessel. Time charter equivalent is calculated by taking voyage revenues, subtracting voyage expense, including canal, bunker and port costs, and then dividing the total by the round-trip voyage duration in days. It gives shipping companies a tool to measure period-to-period changes.

Key Takeaways

• Time charter equivalent (TCE) is a method for determining the net profit or loss of operating a vessel per day.
• Voyage expenses are mainly fuel and the costs related to maintaining the crew onboard in terms of salary but also food and quarter.
• Looking at TCE provides shipping companies a way to track period-by-period changes.

Understanding Time Charter Equivalent

The time charter equivalent is calculated as:

(Voyage Revenues - Voyage Expenses) Round Trip Duration in Days

It can also be calculated on a per-day basis based on period, spot and weighted average .

TCE revenue is used as a measure of performance to track performance from one period to another but it is a non-GAAP measure. Companies may still choose to report it in their financial statements as a footnote.

The TCE is used by cargo brokers in the shipping industry to present chartering opportunities to shipowners. Chartering opportunities differ widely in potential revenues and costs. The TCE is a way to describe these opportunities in a standardized way — essentially dollars per day — making comparisons easier for shipowners.

Why Per-Day Costs Matter

The single largest variable costs of a voyage are fuel and the cost related to crew upkeep, and this varies in direct relationship to the speed at which the voyage is performed. The speed of the laden part of the voyage is agreed with the charterer when the voyage charter is negotiated. The ship owner or, if there is one, the time charterer chooses the speed of the vessel for the ballast voyage (when the ship is empty of cargo) sailing the ship to a position where it can load a cargo for the voyage charter. In both cases the slower the ship, the lower the fuel cost as consumption will be lower and the faster the ship, then the higher the fuel consumption and therefore the cost.

The slower a ship sails, the longer the voyage (more days) but the less fuel it consumes. So the calculation of the TCE will be affected in two ways (as the Freight lump sum remains the same). The net freight will go up because of the savings made on the fuel but at the same time, it will be divided by more days taking the TCE down. Therefore a ship should only go slower if the cost of fuel, saved by slower sailing, offsets the reduction of the TCE caused by the increase in the number of days the voyage lasted. Finally, if the fuel cost saving justifies slower sailing then the owner will look to the lost opportunity of the days that could have been spent on the next voyage compared with the improvement in TCE from slower steaming on the current voyage. This is a very important point but the decision must be taken at the start of a voyage.

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Implications of economies of scale and scope for round-trip shipping canvassing with empty container repositioning

• S.I.: Data-Driven OR in Transportation and Logistics
• Published: 22 July 2020
• Volume 309 , pages 485–515, ( 2022 )

Cite this article

• Zhuzhu Song 1 ,
• Wansheng Tang   ORCID: orcid.org/0000-0002-2321-666X 1 &
• Ruiqing Zhao 1  

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2 Citations

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Empty containers need to be repositioned from a surplus area to a shortage area, and the resulting economies of scope mean that the canvassing (i.e., the sale of transportation service) of two routes back and forth is no longer isolated. To study the liner company’s canvassing strategy for round-trip routes, this paper considers a benchmark situation where one forwarder is responsible for two directions and three canvassing sequences with one direction one freight forwarder responsibility. The results indicate that the liner company should focus canvassing on fewer forwarders, and the forwarder should expand service scope. Under one direction one freight forwarder responsibility, it is not necessarily optimal for the liner company that the direction with low potential market demand canvasses first. Examining the preferences of the liner company and two forwarders in terms of canvassing strategy, we find that a triple-win situation can not be formed, but only a win-win situation can be formed between the two of the three participants. Although the canvassing strategy where the direction with high potential market demand canvasses first has the worst effect on balancing cargo flow, it is possible to increase the market share while improving the profit of the liner company.

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Acknowledgements

This work was supported by the National Natural Science Foundation of China under Grant No. 71771164.

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Zhuzhu Song, Wansheng Tang & Ruiqing Zhao

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Proof of Lemma 1

According to the profit function, to solve the forwarder’s optimization problem, we first define the following two problems:

And then proving the above two problems is equivalent to the original problem which is denoted by \(P_{\mathrm{OS}}^{}\) . Let \(q_\mathrm{i}^{\mathrm{OS}}\) , \({\bar{q}}_{i}^{}\) , \({\underline{q}}_{i}^{}\) , \(i\in \{A,\,B\}\) denote the optimal solutions to the original problem \(P_{\mathrm{OS}}^{}\) and two new problems \({\bar{P}}_{\mathrm{OS}}^{}\) and \({\underline{P}}_{\mathrm{OS}}^{}\) , respectively. The forwarder’s corresponding optimal profits of these three problems are \(\pi _\mathrm{OS}^*\) , \({\bar{\pi }}_{\mathrm{OS}}^*\) , \({\underline{\pi }}_{\mathrm{OS}}^*\) . Then we must have \(\pi _{\mathrm{OS}}^*=\max ({\bar{\pi }}_\mathrm{OS}^*,\,{\underline{\pi }}_{\mathrm{OS}}^*)\) . The proof as follows: Since \({\bar{q}}_{i}^{}\) is feasible to \(P_{\mathrm{OS}}^{}\) , we have \(\pi _\mathrm{OS}^*\geqslant {\bar{q}}_{A}^{}(a-{\bar{q}}_{A}^{})+{\bar{q}}_{B}^{}(\delta a-{\bar{q}}_{B}^{})-2\min ({\bar{q}}_{A}^{},\,{\bar{q}}_{B}^{})(w-\tau \min ({\bar{q}}_{A}^{},\,{\bar{q}}_{B}^{}))-(w+\tau (({\bar{q}}_{B}^{}-{\bar{q}}_{A}^{})^++({\bar{q}}_{A}^{}-{\bar{q}}_{B}^{})^+))(({\bar{q}}_{B}^{}-{\bar{q}}_{A}^{})^++({\bar{q}}_{A}^{}-{\bar{q}}_{B}^{})^+)={\bar{q}}_{A}^{}(a-{\bar{q}}_{A}^{})+{\bar{q}}_{B}^{}(\delta a-{\bar{q}}_{B}^{})-2{\bar{q}}_{B}^{}(w-\tau {\bar{q}}_{B}^{})-(w+\tau ({\bar{q}}_{A}^{}-{\bar{q}}_{B}^{}))({\bar{q}}_{A}^{}-{\bar{q}}_{B}^{})={\bar{\pi }}_\mathrm{OS}^*\) . Similarly, we have \(\pi _\mathrm{OS}^*\geqslant {\underline{\pi }}_{\mathrm{OS}}^*\) , then \(\pi _\mathrm{OS}^*\geqslant \max ({\bar{\pi }}_{\mathrm{OS}}^*,\,{\underline{\pi }}_\mathrm{OS}^*)\) . Besides, if \(q_{\mathrm{A}}^{\mathrm{OS}}-q_{\mathrm{B}}^\mathrm{OS}\leqslant 0\) , then \(q_{\mathrm{i}}^{\mathrm{OS}}\) is feasible to \({\underline{P}}_{\mathrm{OS}}^{}\) , so we have \({\underline{\pi }}_\mathrm{OS}^*\geqslant q_{\mathrm{A}}^{\mathrm{OS}}(a-q_{\mathrm{A}}^{\mathrm{OS}})+q_\mathrm{B}^{\mathrm{OS}}(\delta a-q_{\mathrm{B}}^{\mathrm{OS}})-2q_{\mathrm{A}}^{\mathrm{OS}}(w-\tau q_{\mathrm{A}}^{\mathrm{OS}})-(w+\tau (q_{\mathrm{B}}^{\mathrm{OS}}-q_{\mathrm{A}}^\mathrm{OS}))(q_{\mathrm{B}}^{\mathrm{OS}}-q_{\mathrm{A}}^{\mathrm{OS}})=\pi _{\mathrm{OS}}^*\) . Therefore, \(\pi _{\mathrm{OS}}^*\leqslant \max ({\bar{\pi }}_\mathrm{OS}^*,\,{\underline{\pi }}_{\mathrm{OS}}^*)\) .

Thus, we first solve the above two new problems. To solve the problem \({\bar{P}}_{\mathrm{OS}}^{}\) , the Hessian matrix of \({\bar{\pi }}_\mathrm{OS}^{}\) is:

It is easy to see that the Hessian matrix is negative definite. Hence, \({\bar{\pi }}_{\mathrm{OS}}^{}\) is concave function. Obviously, the feasible region is a convex set. Therefore, \({\bar{P}}_{\mathrm{OS}}^{}\) is a convex programming problem. Therefore, we can use Karush–Kuhn–Tucker conditions to solve this optimization problem. The Lagrangian is \(L=q_{A}^{}(a-q_{A}^{})+q_{B}^{}(\delta a-q_{B}^{})-2q_{B}^{}(w-\tau q_{B}^{})-(w+\tau (q_{A}^{}-q_{B}^{}))(q_{A}^{}-q_{B}^{})+\mu _{1}(q_{A}^{}-q_{B}^{})\) . Taking the Karush–Kuhn–Tucker conditions, we have

Then, we can get the optimal pricing for \({\bar{P}}_{\mathrm{OS}}^{}\) under different cases as follows:

when \(w\leqslant \frac{(2\tau +\delta -1)a}{2\tau }\) , \({\bar{q}}_{A}^{}={\bar{q}}_{B}^{}=\frac{a\delta +a-2w}{4(1-\tau )}\) ,

when \(w>\frac{(2\tau +\delta -1)a}{2\tau }\) , \({\bar{q}}_{A}^{}=\frac{a\delta \tau -a\tau +a-w}{2(1-2\tau ^2)},\,{\bar{q}}_{B}^{}=\frac{a\delta \tau +a\delta +a\tau -2\tau w-w}{2(1-2\tau ^2)}\) .

\({\underline{P}}_{\mathrm{OS}}^{}\) is quite similar to \({\bar{P}}_\mathrm{OS}^{}\) and the optimal solutions can be obtained in the same way. Then we only need to compare the profits in these two problems and find the optimal solution to the original problem \(P_{\mathrm{OS}}^{}\) . The comparison process is straightforward and thus is omitted.

Then we can calculate the forwarder’s corresponding ordered quantity which are summarized in Lemma  1 . \(\square \)

Proof of Proposition 1

Substitute the forwarder’s ordered quantity of Lemma  1 into the liner company’s profit and the corresponding quantity conditions are converted to the base wholesale price. That is, the liner company’s optimization problem is transformed into the following two sub-problems:

After the solution process similar to Lemma  1 , the liner company’s optimal base wholesale price can be obtained and the forwarder’s optimal ordered quantities can get by back substitution which are summarized in Proposition  1 .

Proof of Lemma 2

Based on Eqs. ( 4 ) and ( 5 ), the profit functions of the two forwarders are discontinuous as follows:

Following from the first-order condition, we obtain the maximum of \(\pi _{\mathrm{A}}^{\mathrm{TS}}\) and \(\pi _{\mathrm{B}}^{\mathrm{TS}}\) with which the reaction functions are composed.

We formulate the reaction functions as:

The intersection of \(q_{\mathrm{A}}^{\mathrm{re}}\) and \(q_{\mathrm{B}}^{\mathrm{re}}\) is the equilibrium point \(q_\mathrm{A}^*=\frac{(1+\delta \tau -\tau )a-w}{2(1-\tau ^2)}\) and \(q_\mathrm{B}^*=\frac{\delta a-w}{2(1-\tau )}\) with the condition \(w\geqslant \frac{(\delta +\tau -1)a}{\tau }\) . \(\square \)

Proof of Proposition 2

Substitute the forwarder’s ordered quantity of Lemma  2 into the liner company’s profit and the liner company’s optimization problem is transformed as follows:

The following solution process is similar to Lemma  1 and use the Karush–Kuhn–Tucker conditions. Then, the liner company’s optimal base wholesale price can be obtained and the forwarders’ optimal ordered quantities can get by back substitution which are summarized in Proposition  2 . \(\square \)

Proof of Corollary 1

Under the case OS, the order quantity is the same in each direction when \(\delta >\delta _{1}\) and the condition under the case TS is \(\delta >\delta _{3}\) . It is easy to prove \(\delta _{1}<\delta _{3}\) . \(\square \)

Proof of Lemma 3

Although there is a Stackelberg game between the two forwarders, the forwarder A ’s decision completely don’t need to consider the forwarders B ’s decision because there’s no \(q_{B}^{}\) in Eq. ( 7 ). Hence, we can solve the decision of forwarder A according to the actual game sequence. Since \(\frac{\mathrm{d}^2\pi _{\mathrm{A}}^\mathrm{TA}}{\mathrm{d q}_{A}^2}=-2(1-\tau )<0\) , according to the first-order condition, we can obtain \(q_{A}^*\) by solving the equation \(\frac{\mathrm{d}\pi _{\mathrm{A}}^{\mathrm{TA}}}{\mathrm{d q}_{A}^{}}=2\tau q_{A}^{}+a-w-2q_{A}^{}=0\) . Substitute \(q_{A}^*\) into the forwarder B ’s profit and the solution process of forwarder B ’s optimization problem is similar to Lemma  1 and use the Karush–Kuhn–Tucker conditions. \(\square \)

Proof of Proposition 3

In this case, the two forwarders’ quantity decisions is not affected by other parameters and thus the optimization problem of the liner company is unconstrained. Since \(\frac{\mathrm{d}^2\varPi _{\mathrm{A}}^{\mathrm{TA}}}{\mathrm{d w}^2}=\frac{-(2-\tau )}{(1-\tau )^2}<0\) , according to the first-order condition, we can obtain \(w^{\mathrm{TA}}\) by solving the equation \(\frac{\mathrm{d}\varPi _{\mathrm{A}}^{\mathrm{TA}}}{\mathrm{d w}}=\frac{(2w-2c)\tau +(1+\delta )a+2c-4w)}{2(1-\tau )^2}=0\) and the forwarders’ optimal ordered quantities can get by back substitution. \(\square \)

Proof of Lemma 4

The solution process of forwarders’ optimization problem is similar to Lemma  3 . \(\square \)

Proof of Proposition 4

The solution process of the liner company’s optimization problem is similar to proposition 1 and then the forwarders’ optimal ordered quantities can get by back substitution. \(\square \)

Proof of Proposition 5

The liner company’s profit under each strategy are as follows:

To examine the liner company’s preference for canvassing strategy, we need to determine the size relationship of the threshold value under each strategy. When \(e>\frac{a-c}{2}\) , there is \(\delta _{1}<\delta _{2}<\delta _{3}=\delta _{4}<\delta _{5}\) ; when \(e\leqslant \frac{a-c}{2}\) , there is \(\delta _{1}<\delta _{2}<\delta _{4}=\delta _{5}<\delta _{3}\) .

For part 1), if \(\delta \in (\delta _{2},\,\delta _{3}]\) with \(e>\frac{a-c}{2}\) , \(\varPi _{\mathrm{OS}}^*-\varPi _{\mathrm{TS}}^*=\frac{1}{8(\tau -2)(\tau ^3-4\tau -4)}((3\tau ^2-10)a^2\tau \delta ^2+(4a\tau ^2(c-a+3e)-2a\tau ^3(a+2c)+4\tau (5a^2-2ae)-32ae)\delta +(4a(2c+e)-3a^2-2c^2-4ce+2e^2)\tau ^3+4\tau ^2(2a^2-3a(e+c)+c^2-e^2)+2\tau (4c(c+2e)-a^2-4a(2c+e))+32ae)\) , which can be easily proved to be greater than 0 in this interval. Other cases are available accordingly.

For part 2), through the comparison of \(\varPi _{\mathrm{TS}}^*\) , \(\varPi _{\mathrm{TA}}^*\) and \(\varPi _{\mathrm{TB}}^*\) can be obtained. \(\square \)

Proof of Proposition 6

The order quantities for each strategy in both directions are as follows:

Then, this proposition can be easily obtained by making a difference. \(\square \)

Proof of Proposition 7

The total order quantity for both directions is \(q_{\mathrm{A}}^{}+q_{\mathrm{B}}^{}\) . This proposition can be obtained by a simple differential comparison. Thereinto, when \(\delta \in (0,\,\delta _{1}]\) , it is easy to prove that \((q_{\mathrm{A}}^{\mathrm{OS}}+q_{\mathrm{B}}^{\mathrm{OS}})>(q_{\mathrm{A}}^{\mathrm{TS}}+q_{\mathrm{B}}^{\mathrm{TS}})=(q_{\mathrm{A}}^{\mathrm{TB}}+q_{\mathrm{B}}^\mathrm{TB})\) . And \((q_{\mathrm{A}}^{\mathrm{OS}}+q_{\mathrm{B}}^{\mathrm{OS}})-(q_{\mathrm{A}}^{\mathrm{TA}}+q_{\mathrm{B}}^{\mathrm{TA}})=\frac{a\tau ^2\delta +(a-c-e)\tau ^3-(a-e)\tau ^2+2e\tau }{(\tau -2)(2\tau ^3-3\tau -2)}\) , which is less than 0 when \(\delta \leqslant \delta _{7}\) and \(\delta _{7}<\delta _{1}\) . \(\square \)

Proof of Proposition 8

Under the case OS, empty containers repositioning occurs when \(\delta \leqslant \delta _{1}\) and the empty container quantity which needs to be repositioned from port B to port A is \(Q_{\mathrm{B A}}^{\mathrm{O S}}=\frac{(a-c+e)\tau ^2+(a\delta -c)\tau -a(1-\delta )}{2\tau ^3-3\tau -2}\) ; Under the case TS, empty containers repositioning occurs when \(\delta \leqslant \delta _{3}\) and the empty container quantity which needs to be repositioned from port B to port A is \(Q_{\mathrm{B\!A}}^{\mathrm{T\!S}}=\frac{(a-c+e)\tau ^2+((3\delta -1)a-2c)\tau -4a(1-\delta )}{2(\tau ^3-4\tau -4)}\) ; Under the case TA, empty containers repositioning always occurs and the empty container quantity which needs to be repositioned from port B to port A is \(Q_{\mathrm{B\!A}}^{\mathrm{T\!A}}=\frac{a(1-\delta )}{2(1-\tau )}\) ; Under the case TB, empty containers repositioning occurs when \(\delta \leqslant \delta _{4}\) and the empty container quantity which needs to be repositioned from port B to port A is \(Q_{\mathrm{B\!A}}^{\mathrm{T\!B}}=\frac{(a-c+e)\tau ^2+((3\delta -1)a-2c)\tau -4a(1-\delta )}{2(\tau ^3-4\tau -4)}\) . This proposition can be obtained by a simple differential comparison. \(\square \)

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Song, Z., Tang, W. & Zhao, R. Implications of economies of scale and scope for round-trip shipping canvassing with empty container repositioning. Ann Oper Res 309 , 485–515 (2022). https://doi.org/10.1007/s10479-020-03735-0

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round trip noun , adjective , & adverb

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What does the word round trip mean?

There are seven meanings listed in OED's entry for the word round trip . See ‘Meaning & use’ for definitions, usage, and quotation evidence.

This word is used in North American English.

round trip has developed meanings and uses in subjects including

How common is the word round trip ?

How is the word round trip pronounced, british english, u.s. english, where does the word round trip come from.

Earliest known use

The earliest known use of the word round trip is in the late 1700s.

OED's earliest evidence for round trip is from 1792, in Adams's Weekly Courant .

round trip is formed within English, by compounding.

Etymons: round adj. , trip n. 1

Nearby entries

• round tilth, n. 1723–
• round timber, n. 1656–
• round tire, n. 1560–1657
• round-toed, adj. 1665–
• round tool, n. 1688–
• round top, n. & adj. 1661–
• round towel, n. 1724–
• round tower, n. 1790–
• round-towner, n. 1775–
• round trade, n. c1810–
• round trip, n., adj., & adv. 1792–
• round-trip, v. 1899–
• round-tripper, n. 1881–
• round-tripping, n. 1907–
• round-trussed, adj. 1600–1829
• round turn, n. 1611–
• round turnip, n. 1599–
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• roundure, n. 1600–
• roundward, adv. & adj. 1842–
• roundway, adj. 1833–

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The accounting slang term "round tripping" refers to a series of transactions between companies that bolster the revenue of the companies involved but that, in the end, don't provide real economic benefit to either company. While not necessarily illegal, round tripping is at best disingenuous. It's important for a scrupulous businessperson to be able to recognize when a transaction may amount to round tripping – and, just as important, to know when a transaction that may look like round tripping is in fact legitimate.

Name Origins of "Round Tripping"

The name for the practice comes from "round trip" – a journey that takes you from one place to another and then back to your starting point. In essence, that's what's happening with financial round tripping: The companies involved start out in a certain financial position, and then they engage in a series of transactions. When all those transactions are settled, they're in the same financial position they were in when they started. They've made a "round trip." Such deals are also known as "lazy Susans."

Round Tripping: Meaning

A common round-tripping maneuver involves reciprocal sales of identical assets. Imagine you own an office supply store, and the owner of a stationery store comes to you with a proposal. He'll buy a pallet (40 cases) of copy paper from you at your retail price of $30 a case, for a total of $1,200. Meanwhile, you'll buy a pallet of the identical paper from him at the same price, $1,200. He's proposing a round-tripping deal. Other, more flagrant examples might include mutual payments for nonexistent "services," or one company "investing" in another, with the second company turning around and using the money to buy goods or services from the first.

Purpose of Round Tripping

According to Accounting Tools , the point of round tripping is to inflate revenue – to make a company look like it's doing more business than it really is. Although the bottom line for any company is profit, observers often judge a company's growth and size by its sales revenue. Round-trip deals generally don't inflate profit; after all, the $1,200 in revenue you would earn from selling paper to the stationery store would be offset by the $1,200 expense of buying an equal amount of paper. But each company gets that additional $1,200 in revenue, so it appears a little bigger and more active than it would without the round trip.

Legitimate Round Tripping Transactions

Say your office supply store has a delivery van whose tires are shot. You go to the tire shop next door and buy a new set of radials for $600. Three weeks later, the owner of the tire shop comes in and buys paper, printer ink, pens and other stuff worth $600 for his business. This would not be a round-trip situation. Each of you had a legitimate business purpose for these transactions; the fact that you both wound up with $600 in revenue and $600 in expenses, for a net profit of zero, is immaterial. Round tripping is about setting up reciprocal deals with no legitimate business purpose.

Legality of Round Tripping

The fact that legitimate deals can look like lazy Susans makes it hard to simply outlaw the practice. That said, WallStreet Mojo indicates that if a company is using self-canceling transactions to make its numbers look better to investors or lenders (which is the purpose of round tripping), it can be prosecuted for fraud. For instance, the Securities and Exchange Commission might charge several software companies relating to a round tripping fraud scheme for a series of transactions that an agency says provides no economic benefit and are intended only to boost the company's reported revenue.

• Accounting Tools: Round Tripping Definition
• WallStreet Mojo: Round Tripping

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What are Round-Trip Transactions?

Complete Explanation of Round Tripping including Purpose, Example, & Risks

Home › Finance › Corporate Finance › What are Round-Trip Transactions?

In the complex world of financial markets and corporate accounting, the term “round-trip transactions” often surfaces amidst discussions of financial ethics, regulatory compliance, and corporate governance.

These transactions, while not inherently illicit, tread a fine line between strategic financial management and the murky waters of manipulative practices.

This comprehensive guide aims to unravel the intricacies of round-trip transactions, shedding light on their purposes, risks, and the legal and ethical considerations they entail.

• Round-Trip Transactions Meaning

Key Takeaways

The purpose of round-trip transactions, how is round tripping used, round tripping example, the risks and implications of round-trip transactions, legal and regulatory framework, ethical considerations of round trip transactions, detecting and preventing round-trip transactions, what exactly defines a round-trip transaction in financial terms, why might a company engage in round-trip transactions, what are the potential risks of engaging in round-trip transactions, how can round-trip transactions be identified or prevented.

Round-trip transactions refer to a series of transactions in which a company sells an asset to another party with the agreement that the asset will be bought back at a later date, usually at a similar or predetermined price.

This cycle creates the appearance of genuine business activity without any substantive change in the company’s financial position or the asset’s ownership. While round-trip transactions span various industries, they are notably prevalent in the energy sector and financial markets, where companies might engage in these deals to inflate revenue figures or to create a facade of heightened market activity.

The distinction between legitimate and manipulative uses of round-trip transactions hinges on intent and disclosure. Legitimate uses are typically transparent and aim to achieve lawful financial or operational objectives, such as hedging against price fluctuations. Conversely, manipulative practices are designed to deceive stakeholders or regulatory bodies about a company’s true financial health or market activity.

Manipulative Impact on Financial Statements : Round-tripping is primarily used to artificially inflate a company’s revenue and trading volume, misleading stakeholders about the company’s true financial performance and market activity.

Legal and Ethical Risks : Engaging in round-trip transactions carries significant legal and ethical risks, including regulatory penalties and reputational damage, as these practices can be considered deceptive and manipulative.

Importance of Transparency and Regulation : The detection and prevention of round-trip transactions highlight the importance of transparent accounting practices and stringent regulatory oversight to ensure the integrity of financial markets and protect investor interests.

Round tripping is often used to artificially inflate a company’s revenue and trading volume, creating the appearance of a higher level of business activity than actually exists.

This practice can be employed to meet financial targets, influence stock prices, or enhance the attractiveness of the company to investors by manipulating financial statements. By artificially inflating revenue, a company can appear more financially robust and liquid than it truly is, potentially influencing stock prices and investor perception.

The allure of round-trip transactions lies in their ability to temporarily enhance a company’s financial standing without necessitating actual business growth or operational improvements. This can make a company more attractive to investors, lenders, and analysts in the short term, albeit at significant risk.

Companies might engage in round-trip transactions in several different ways. Here are the most common round-trip transactions:

Inflating Revenue : A company may engage in round-tripping by selling an asset to another entity and buying it back at a similar price. These transactions can be recorded as legitimate sales and purchases, artificially inflating the company’s revenue and sales volume without any real change in its economic situation, misleading stakeholders about the company’s financial performance.

Boosting Asset Turnover : By repeatedly selling and repurchasing assets in round-trip transactions, a company can give the impression of higher asset turnover than is actually the case. This can make the company appear more efficient in its use of assets, potentially misleading investors about its operational effectiveness.

Manipulating Market Activity: In the case of publicly traded companies, round-trip transactions can be used to create an illusion of heightened trading activity for the company’s shares. This can influence stock prices by suggesting a higher demand for the shares than actually exists, potentially attracting more investors based on misleading information.

An example of round-tripping involves a company, Company A, selling an asset to Company B for $1 million. Shortly thereafter, Company B sells the same asset back to Company A for approximately the same price, say $1.01 million.

This sequence of transactions makes it appear as though Company A has engaged in $1 million worth of sales, thereby inflating its revenue figures, even though there has been no real change in the economic position of either company.

This practice can be used to manipulate financial statements and give an inflated impression of the company’s financial health and trading volume, potentially misleading investors and regulators.

The primary risk associated with round-trip transactions is the potential for legal repercussions and loss of investor trust. Regulatory bodies in many jurisdictions scrutinize such practices closely, and companies found guilty of using round-trip transactions to manipulate financial outcomes can face hefty fines, legal sanctions, and reputational damage.

Notable incidents, such as the Enron scandal, highlight the catastrophic impact that deceptive financial practices can have on stock prices, market stability, and investor confidence.

Moreover, round-trip transactions can distort market perceptions, leading to inefficient capital allocation and undermining the integrity of financial markets. The artificial inflation of activity or liquidity can mislead stakeholders about market demand, price stability, and the true value of assets involved.

The legal status of round-trip transactions varies by jurisdiction, but there is a growing trend towards stricter regulation and oversight. Financial regulatory bodies worldwide have implemented guidelines and reporting requirements to curb the abuse of such transactions.

The role of auditors and financial regulators is pivotal in detecting manipulative practices, necessitating rigorous examination of financial records, transaction trails, and disclosure statements.

Beyond legal implications, round-trip transactions pose significant ethical dilemmas. The fine line between creative accounting and outright fraud is often blurred, challenging companies to maintain integrity and transparency in their financial reporting.

Ethical business practices and robust corporate governance structures are crucial in mitigating the temptation to engage in deceptive financial maneuvers.

Companies must foster a culture of honesty and accountability, ensuring that all stakeholders can rely on the veracity of financial statements and market activities.

For investors and regulators, identifying potential round-trip transactions involves scrutinizing sudden spikes in revenue or trading volume without corresponding changes in market conditions or company operations. Vigilance and due diligence are essential in assessing the authenticity of reported financial health and operational activity.

Companies, on their part, can prevent misuse by adopting transparent accounting practices, regularly auditing financial records, and ensuring that all transactions are conducted at arm’s length and properly disclosed. As the financial landscape evolves, so too must the strategies for maintaining fairness and integrity in corporate reporting and market transactions.

Round-trip transactions, while a legitimate tool in certain contexts, present a complex challenge in the realm of financial ethics and regulation. As companies navigate the pressures of financial performance and market competitiveness, the temptation to engage in such practices underscores the importance of robust regulatory frameworks, corporate governance, and ethical leadership.

The future of round-trip transactions will undoubtedly be shaped by ongoing efforts to balance financial innovation with transparency and integrity, ensuring the stability and trustworthiness of markets and corporate institutions. In this ever-changing environment, the collective responsibility of companies, regulators, and investors to foster transparency and integrity has never been more critical.

Frequently Asked Questions

A round-trip transaction refers to a set of transactions where an asset is sold and subsequently repurchased by the original seller, often at a similar price, to artificially inflate volume or revenue without any real change in asset ownership.

Companies may use round-trip transactions to meet financial targets or create the illusion of increased business activity, thereby enhancing their financial statements or market valuation temporarily.

Round-trip transactions can lead to legal penalties, reputational damage, and a loss of investor trust if used to manipulate financial statements or deceive stakeholders.

Identifying round-trip transactions involves scrutinizing financial records for transactions that inflate company activity without real economic substance, while prevention requires transparent accounting practices and rigorous financial oversight.

Accounting & CPA Exam Expert

Shaun Conrad is a Certified Public Accountant and CPA exam expert with a passion for teaching. After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career.

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Meaning of round trip – Learner’s Dictionary

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(Definition of round trip from the Cambridge Learner's Dictionary © Cambridge University Press)

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