Abstract:Cargo loss and damage in the logistics operation were introduced under the assumption of random demand and supply chain information being fully shared. An independent decision model and a centralized decision model were established with a supply chain of the supplier, the third party logistics service provider and the distributor. A revenue sharing contract was designed. Simulation and analysis results show the third party logistics service provider undertaking all the cargo loss and damage will result in the providers’ insufficient incentives. The Pareto optimization can be realized by selecting proper benefit allotting coefficients, and the third party logistics service provider is therefore encouraged to make efforts to reduce cargo loss and damage. Finally, the paper presents a proposal about the optimal order quantity, prices of the third party logistics service provider and supplier, range of benefit allotting coefficients.