Liner shipping development trends

The expansion of liner shipping paralleled developments in retailing and containerization introduced scale economics. The liner industry has moved into an era of prosperity, and containerships have been affecting demand for other ship types. Demand growth is generally taken for granted, but several factors have been putting pressure on smaller carriers, including upsizing and route network developments. Trends appear to favour independent operation over vessel sharing and increasing profitability suggests that carriers will seek to own more of their own assets. Competition from logistics providers will increasingly dictate how the industry develops.     

A conceptual application of cooperative game theory to liner shipping strategic alliances

Since its advent, the liner shipping industry has been characterized by fierce competition and cooperation amongst the member carriers. In recent years, almost all the liners have sought extensive cooperation with others, as reflected mainly by the formation of strategic shipping alliances. Despite this, there are still some liners who prefer the 'go-it-alone' policy and have achieved relative success. It seems that cooperation is not always necessary for a liner company's success. It follows that a study that aims to find the rationale behind liner cooperation (or non-cooperation) is of great significance. Over many years of development, game theory has proved to be a useful tool in the study of economics. It is analytically applicable in this market. With these arguments in mind, this paper aims to apply cooperative game theory to analyse co-operation among members of liner shipping strategic alliances. This will involve: (i) presenting a detailed and systematic analysis of liner shipping strategic alliances: (ii) a concise overview of the development of game theory with specific focus on cooperative game theory, and (iii) deducing a conceptual framework through the application of cooperative game theory to liner shipping strategic alliances. The accomplishment of the aforementioned objectives will enhance understanding of inter-organizational relationships and decision-making behaviour in the liner shipping sector.     

A conceptual application of cooperative game theory to liner shipping strategic alliances

Since its advent, the liner shipping industry has been characterized by fierce competition and cooperation amongst the member carriers. In recent years, almost all the liners have sought extensive cooperation with others, as reflected mainly by the formation of strategic shipping alliances. Despite this, there are still some liners who prefer the ‘go-it-alone’ policy and have achieved relative success. It seems that cooperation is not always necessary for a liner company's success. It follows that a study that aims to find the rationale behind liner cooperation (or non-cooperation) is of great significance. Over many years of development, game theory has proved to be a useful tool in the study of economics. It is analytically applicable in this market. With these arguments in mind, this paper aims to apply cooperative game theory to analyse co-operation among members of liner shipping strategic alliances. This will involve: (i) presenting a detailed and systematic analysis of liner shipping strategic alliances: (ii) a concise overview of the development of game theory with specific focus on cooperative game theory, and (iii) deducing a conceptual framework through the application of cooperative game theory to liner shipping strategic alliances. The accomplishment of the aforementioned objectives will enhance understanding of inter-organizational relationships and decision-making behaviour in the liner shipping sector.     

Daily Maersk’s impacts on shipper’s supply chain inventories and implications for the liner shipping industry

The liner shipping industry has long been characterized by a weekly sailing frequency and schedule unreliability. This research is motivated by the launch of the revolutionary “Daily Maersk” service in late 2011, which introduced daily departures and “absolute reliability” in the Asia–North Europe trade lane. This article analyzes Daily Maersk’s impacts on a shipper’s supply chain inventories and profound implications for the liner shipping industry as a game changer. The quantitative analyses show that the impact of more frequent sailings is most significant on a shipper’s cycle stock, while improving schedule reliability substantially reduces safety stock and pipeline stock. Daily Maersk is most valuable for products that have high value density, high inventory holding cost ratio, low demand variability, and high service level (SL) requirement. These findings imply that the trend of liner alliance/merger/acquisition is likely to continue or even accelerate as shipping lines consolidate fleet capacity to offer more frequent sailings. Rival carriers may step up their involvement in terminal operations to improve schedule reliability. They also need to rethink about their SL targets and clearly define their preferred customer segments.     

From piggyback to double-stack intermodalism

Intermodal transportation has been growing at a fast pace thanks to the development of double-stack trains, deregulation of US domestic transportation and intensified competition in the liner trade. Its growth has been supported by import traffic in the recent past but will have to rely much more on domestic cargo in the future. Effective marketing rather than hardware development will pose the primary challenge to intermodal transportation. To meet this challenge, rail, highway and ocean carriers will have to rethink their business philosophy and realign themselves for more efficient provision of intermodal services. The traditional division between international and domestic intermodal operation has become obsolete.     

Equality of bargaining power in contracts for international liner shipping

Mandatory rules exist in contracts for international liner shipping primarily because of imbalances and non-equity in the allocation of contract responsibilities. The superior bargaining position owned by the carriers depends largely upon liner market monopoly levels, the supply and demand balance between the shipper and carrier, and the cargo volume size of the shippers. With the development of shipping technologies, mode of transport, and shipping competition policy, the unequal comparison of bargaining forces between shippers and carriers changes. When the existing mandatory rule was deemed no longer necessary due to changing circumstances, legislation requirements to restore freedom to contract became apparent. When both sides have equal bargaining power, adoption of the principle of freedom of contract for their business relationships is suitable. The Rotterdam Rules concerning freedom of volume contract construction is based on equal bargaining powers between both sides and responds to the evolving situation of the industry. The Rules represent the development trend of today’s theory of contracts for international liner shipping and the demand for legal and institutional changes.     

Market structures and competitive strategies: the carrier-stevedore arm-wrestling in northern European ports

Over the last few years, liner and stevedoring markets have been facing new challenges. The progressive concentration on the demand side (carriers) and the emergence of global alliances in the mid-1990s have triggered a similar process of consolidation on the supply side (stevedores). In turn, more recently, the strategic choices of pure terminal operators have led to the progressive involvement of carriers in port operations, both from a financial and a managerial point of view. This paper aims at analysing the current contest in northern Europe between customers and suppliers of port services. Substantial concentration in the stevedoring market and the emergence of dedicated facilities in that area, make this arm-wrestling stronger and stronger.

At present, the liner market is following a number of strategic directions including the pursuit of economies of scale (larger vessels) and the supply of services using faster vessels (deployment of 'fewer' assets) in order to offer either new services or additional loops (scope). By exploring the strategic behaviours of the top carriers ('bigger' or 'more effective'), the paper attempts to outline the future evolution of the two industries in a 2015 vision, highlighting in particular scenarios for north European ports. Global alliances are weakening and a new era of M&As is probably approaching: how will the bargaining power change between port users and port customers? Which competitive paradigm will dominate?     

Liner alliances in the globalization era: a strategic tool for Asian container carriers

There has been an increased interest recently in alliances as successors of the large consortia that used to operate in the context of the conference system. Today, having become a common means and term of co-operation in a variety of other industries, alliances are posited as the response of the supply side of liner shipping to important changes on the demand side; alliances have, thus, become predominant in the most important routes for container cargoes. In recent years, however, the list of major container traffic generators and the list of major carriers of containerized cargoes have begun to contain more common entries, generally originating from the Asian region. Asia is, however, a large continent and the entrance of Asian carriers into liner shipping has not been simultaneous; the position, strategies and co-operation strategies of Asian companies have more differences than they share common features. Nevertheless, this paper suggests that alliances are a distinct form of co-operation in liner shipping and the empirical evidence based on a survey in the region supports this hypothesis. The similarity of attitudes of the major Asian container carriers vis a vis alliances is in this way revealing in terms of the range of motivations for participating in the alliance system in a globalized transport environment.     

Market structures and competitive strategies: the carrier–stevedore arm-wrestling in northern European ports

Over the last few years, liner and stevedoring markets have been facing new challenges. The progressive concentration on the demand side (carriers) and the emergence of global alliances in the mid-1990s have triggered a similar process of consolidation on the supply side (stevedores). In turn, more recently, the strategic choices of pure terminal operators have led to the progressive involvement of carriers in port operations, both from a financial and a managerial point of view. This paper aims at analysing the current contest in northern Europe between customers and suppliers of port services. Substantial concentration in the stevedoring market and the emergence of dedicated facilities in that area, make this arm-wrestling stronger and stronger.

At present, the liner market is following a number of strategic directions including the pursuit of economies of scale (larger vessels) and the supply of services using faster vessels (deployment of ‘fewer’ assets) in order to offer either new services or additional loops (scope). By exploring the strategic behaviours of the top carriers (‘bigger’ or ‘more effective’), the paper attempts to outline the future evolution of the two industries in a 2015 vision, highlighting in particular scenarios for north European ports. Global alliances are weakening and a new era of M&As is probably approaching: how will the bargaining power change between port users and port customers? Which competitive paradigm will dominate?     

Longhaul feeder services in an era of changing technology: an Asia-Pacific perspective

Traditional liner carriers, operating in the highly competitive commercial environment of the last few years, have attempted to lower the marginal cost of each box carried. Technological improvements in both construction and propulsion systems have led to a steady growth in carrying capacity. Ships of 600+ TEUs are now in service and, as a result of this trend, have displaced 'smaller' ships from the major east-west trades. The more competitive environment of these trades has in turn led to a redeployment of ships in the 2500+ TEU range to the north-south trades. The result has been a rapid increase in north-south capacity, including feeder services and falling freight rates. Despite the current excess supply in shipping and historically low freight rates, significant developments in technology have created opportunities for new fast containerships. The paper analyses the key economic factors in the differentiation of the new fast ship technology from the traditionally designed containerships and demonstrates the potential financial viability to owners of these new 'greyhounds'.     

Editorial: Young maritime researchers—a note of respect

Globalization, liberalization, competition and spatial interaction are significant factors affecting the transformation of manufacturing industries worldwide. In the transportation and logistics industry, however, cooperation is becoming even more critical than competition in determining firms' efficiency. Cooperation has always characterized the liner sector in which strategic alliances, mergers and acquisitions have generated twin effects: notable increases in ship size and falls in freight rates. Meanwhile, the stevedoring industry is undergoing privatization-driven consolidation and the emergence of global pure terminal operators. This article focuses on vertical integration between global carriers and terminal operators. We address the following key current issues: 1. dedicated terminals as a strategy for cutting costs and controlling integrated transport chains;

2. the struggle for supply chain control, involving global carriers versus global terminal operators, driven by financial power and technical and managerial capability.

We close analysing one of the core problems of the market, namely the evolving role of the dedicated terminals. For the pure stevedores they represent an opportunity to secure a cargo, while in the hands of the liners they enable cost stability and the possibility to put pressure on pure terminal operators.     

Maritime liner shipping and the stevedoring industry: market structure and competition strategies

Globalization, liberalization, competition and spatial interaction are significant factors affecting the transformation of manufacturing industries worldwide. In the transportation and logistics industry, however, cooperation is becoming even more critical than competition in determining firms' efficiency. Cooperation has always characterized the liner sector in which strategic alliances, mergers and acquisitions have generated twin effects: notable increases in ship size and falls in freight rates. Meanwhile, the stevedoring industry is undergoing privatization-driven consolidation and the emergence of global pure terminal operators. This article focuses on vertical integration between global carriers and terminal operators. We address the following key current issues:

• dedicated terminals as a strategy for cutting costs and controlling integrated transport chains;
• the struggle for supply chain control, involving global carriers versus global terminal operators, driven by financial power and technical and managerial capability.

We close analysing one of the core problems of the market, namely the evolving role of the dedicated terminals. For the pure stevedores they represent an opportunity to secure a cargo, while in the hands of the liners they enable cost stability and the possibility to put pressure on pure terminal operators.     

Shipping economics: where we are and looking ahead from an institutional economics perspective [1]

There have been significant changes in the nature of shipping services in recent years. These have been most notably in the liner segment, but other parts of the market have not remained static. Technology shifts have been responsible for some of the change, but there have also been developments in institutional structures and managerial approaches. The economic drivers behind the sector, however, remain relatively poorly understood, despite a copious literature on shipping. Managerial economics has tended to put emphasis on the emergence of more sophisticated logistics structures and the role of information to tighten the overall supply chain. Industrial economists have been concerned with technical change and in particular with its interaction with more liberal markets structures. Often tied with this has been interest in the underlying nature of shipping markets (e.g. competitive, monopolistic or contestable) and, depending on the outcome, whether there is price leadership, collusion, predatory behaviour or whatever. Much of this work has been aspatial, treating shipping as any other industry with distance between demand and supply ignored or incorporated in a very simplistic manner. Environmental economists have focused on matters of fuel efficiency and pollution. This paper takes a broad overview of shipping economics in the context of the larger institutional framework within which it operates. It seeks broader analysis within an institutional economics framework, but also highlights some of the problems of achieving this.     

Strategic fleet size planning for maritime refrigerated containers

In the present economic climate, it is often the case that profits can only be improved, or for that matter maintained, by improving efficiency and cutting costs. This is particularly notorious in the shipping business, where it has been seen that the competition is getting tougher among carriers, thus alliances and partnerships are resulting for cost effective services in recent years. In this scenario, effective planning methods are important not only for strategic but also operating tasks, covering their entire transportation systems. Container fleet size planning is an important part of the strategy of any shipping line. This paper addresses the problem of fleet size planning for refrigerated containers, to achieve cost-effective services in a competitive maritime shipping market. An analytical model is first discussed to determine the optimal size of an own dry container fleet. Then, this is extended for an own refrigerated container fleet, which is the case when an extremely unbalanced trade represents one of the major investment decisions to be taken by liner operators. Next, a simulation model is developed for fleet sizing in a more practical situation and, by using this, various scenarios are analysed to determine the most convenient composition of refrigerated fleet between own and leased containers for the transpacific cargo trade.     

Shipping economics: where we are and looking ahead from an institutional economics perspective [1]

There have been significant changes in the nature of shipping services in recent years. These have been most notably in the liner segment, but other parts of the market have not remained static. Technology shifts have been responsible for some of the change, but there have also been developments in institutional structures and managerial approaches. The economic drivers behind the sector, however, remain relatively poorly understood, despite a copious literature on shipping. Managerial economics has tended to put emphasis on the emergence of more sophisticated logistics structures and the role of information to tighten the overall supply chain. Industrial economists have been concerned with technical change and in particular with its interaction with more liberal markets structures. Often tied with this has been interest in the underlying nature of shipping markets (e.g. competitive, monopolistic or contestable) and, depending on the outcome, whether there is price leadership, collusion, predatory behaviour or whatever. Much of this work has been aspatial, treating shipping as any other industry with distance between demand and supply ignored or incorporated in a very simplistic manner. Environmental economists have focused on matters of fuel efficiency and pollution. This paper takes a broad overview of shipping economics in the context of the larger institutional framework within which it operates. It seeks broader analysis within an institutional economics framework, but also highlights some of the problems of achieving this.     

形势依然非常严峻 《2012年第二季度中国航运景气报告》发布

航运企业经营状况恶化趋势有所放缓,但是中国航运行业总体状况恶化趋势略微加剧。7月3日,上海国际航运研究中心发布"2012年第二季度中国航运景气报告"。报告显示,2012年第二季度,     

Port Specialization and Efficiency—The Case of Ghana

The US Shipping Act of 1984 permits ocean liner vessel operators and shippers to make use of service contracts to further their mutual interests. However, starting from the very day this novel provision was incorporated into the Act, it has remained as a bone of contention between shippers and carriers serving US trade routes. This article highlights the major issues that have sprouted subsequent to the introduction of service contracts in ocean liner shipping. The author concludes with some logical suggestions to fine-tune the Act, without interfering with its legislative framework.     

Service contracts: a case study of unfulfilled promises

The US Shipping Act of 1984 permits ocean liner vessel operators and shippers to make use of service contracts to further their mutual interests. However, starting from the very day this novel provision was incorporated into the Act, it has remained as a bone of contention between shippers and carriers serving US trade routes. This article highlights the major issues that have sprouted subsequent to the introduction of service contracts in ocean liner shipping. The author concludes with some logical suggestions to fine-tune the Act, without interfering with its legislative framework.     

The Nigerian shipping industry and indigenous shipping companies

The shipping industry in Nigeria since the early 1990s has been experiencing a continuous disastrous downturn. Nigerian shipping companies' participation in international shipping has continued to be very limited. Their presence and impact is hardly felt in the world's shipping industry. Both the national carriers (that is shipping companies with national carrier status) and other indigenous private shipping companies have vessel as well as management problems. These problems have led to the poor performance of the Nigerian shipping industry for over a decade now. The carriers in the industry are not attaining for the country the gains that are supposed to emanate from shipping. This paper points out the importance of shipping to a nation, identifies the problems the country's shipping companies are facing and proffers solutions that include merging of the companies to have strong financial standing and a competitive edge.     

An optimal containership slot allocation for liner shipping revenue management

In the competitive liner shipping market, carriers may utilize revenue management systems to increase profits by using slot allocation and pricing. In this paper, related research on revenue management for transportation industries is reviewed. A conceptual model for liner shipping revenue management (LSRM) is proposed and a slot allocation model is formulated through mathematical programming to maximize freight contribution. We illustrate this slot allocation model with a case study of a Taiwan liner shipping company and the results show the applicability and better performances than the previous allocation used in practice.