The Ocean Shipping Reform Act: the trans-Atlantic cares

For many years, economists have pressed for the deregulation of the shipping industry, with studies purporting to show constant returns to scale in motor transport, and staggering losses inflicted on the economy by regulation. Deregulation is now the order of the day in the US, but during the deregulation process, the Federal Maritime Commission (FMC) struggled with strong pressure to remove anti-trust immunity historically enjoyed by ocean shipping conferences.

However, instead of entirely removing this anti-trust immunity, the US Congress passed the Ocean Shipping Reform Act (OSRA) in 1998. OSRA, which came into effect on 1 May 1999, represents a logical continuation of the trend toward deregulation established by the Shipping Act of 1984. Although the Act (OSRA) maintains anti-trust immunity, its creation also established confidential service contracts between shippers and individual lines.

Because the actual effect of this Act has yet to be researched and reported in the transportation literatures, this paper assesses the impact of OSRA on the market structure of the container shipping industry. Three major east- and westbound arterial routes, as determined by Drewry Shipping Consultants and Containerisation International, are examined in this study to ascertain whether the markets are competitive or not 1, 2. The trade imbalance existing in all three trade routes (trans-Atlantic, trans-Pacific, and from Asia to northern Europe) provides a basis from which to investigate the pricing structure in the container shipping market. The changing tariff structure of the trans-Atlantic lane in 1999 provides the foremost evidence of the impact of the Act to evaluate the new law's impact on the maritime industry. By examining the traffic volume and freight rates of inbound and outbound trades, this paper found that before the second quarter of 1999, the trans-Atlantic lane's market structure was non-competitive, but it became competitive after the third quarter of 1999. This paper concludes that OSRA did have substantial influence on the market structure of the trans-Atlantic lane since the Act came into effect on 1 May 1999. The Act laid a solid legal framework upon the industry that forced the carriers in the trans-Atlantic trade route to operate competitively.     

Some notes on structure and stability in liner shipping

Almost six years have elapsed since the passage of the Ocean Shipping Reform Act (OSRA), legislation that has led to significant changes in the structure of the US liner shipping industry. The European Union (EU) is poised to follow suit with the impending elimination of rule 4056/86, the block exemption from EU competition rules for liner shipping companies operating on European trades routes. The EU reform, however, is likely to go further than OSRA by prohibiting both conferences and discussion agreements on European trade routes. The outcome of such a policy is uncertain and the current review of it is several years old already. This paper is intended to provide some insight into the potential impact of regulatory reform in Europe, using the US experience as a benchmark. Specifically, the impact of OSRA with respect to industry structure, including its profitability, efficiency and what may be in store for the future is examined.     

Some notes on structure and stability in liner shipping

Almost six years have elapsed since the passage of the Ocean Shipping Reform Act (OSRA), legislation that has led to significant changes in the structure of the US liner shipping industry. The European Union (EU) is poised to follow suit with the impending elimination of rule 4056/86, the block exemption from EU competition rules for liner shipping companies operating on European trades routes. The EU reform, however, is likely to go further than OSRA by prohibiting both conferences and discussion agreements on European trade routes. The outcome of such a policy is uncertain and the current review of it is several years old already. This paper is intended to provide some insight into the potential impact of regulatory reform in Europe, using the US experience as a benchmark. Specifically, the impact of OSRA with respect to industry structure, including its profitability, efficiency and what may be in store for the future is examined.     

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.     

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.     

Green shipping practices and firm performance

Global economic development is facilitated by the commercial shipping industry. Shipping operations contribute to the growth of international trade activities, which heavily count on ships to carry cargoes from places of production to places of consumption. Despite its importance, there have been growing concerns about the environmental impacts caused by shipping activities in international trade. To balance environmental protection and productivity, many shipping firms have begun to adopt green shipping practices (GSPs) to improve their operations in a more environmentally friendly manner. GSP consists of six dimensions, namely, company policy and procedure (CPP), shipping documentation (SD), shipping equipment (SE), shipper cooperation (SC), shipping materials (SM), and shipping design and compliance (SDC). GSP is becoming an important aspect of shipping operations. It is timely for the shipping industry to evaluate firm capability in carrying out greening operations, that is, firms’ “greening” capability. Firm capability comprises two key elements: one is embedded in firms’ business routines or activities, and the other concerns firms’ ability in transforming inputs into outputs. GSPs can be considered as inputs while firm performance measures as outputs. This study uses an input/output approach to examine the greening capability (GC) of shipping firms. The results indicate that shipping firms are relatively weak in the practices of SC and SE, while the capability scores of SM, CPP, SDC, and SD are all close to 1, with an average score of 0.927, 0.920, 0.924, and 0.978, respectively. Academic and managerial significance of the findings are highlighted.     

A qualitative analysis of reintroducing cabotage onto New Zealand's coasts

This paper provides a qualitative analysis of the proposal to ‘reintroduce cabotage’ onto New Zealand's coasts. New Zealand's coastal shipping trade was opened up to international competition in 1995. The analysis is principally based on a stakeholder analysis of the 83 submissions received by the Shipping Industry Review team, as part of the Government's study to identify ways to increase participation in New Zealand's shipping industry. The stakeholders included New Zealand and international shipping companies, unions, industry associations, freight service providers, manufacturers and producers. The main conclusion drawn from the stakeholder analysis was that to reintroduce cabotage onto New Zealand's coasts would appear to have an overall net negative impact on the New Zealand economy at this stage. However, the Shipping Industry Review team ‘was divided on the implementation of cabotage’, and a force-field analysis was undertaken subsequently based on the author's stakeholder impact analysis and the Review team's list of pros and cons of reintroducing cabotage. This force-field analysis also supported the author's earlier conclusion. However, the almost ‘complete absence of statistics’ relating to the commercial activities of the shipping industry in New Zealand places severe limits on the analysis.     

Investment strategies in market uncertainty

The nature of the global economy is one of dynamic change. Shipping is a service industry with its demand related to changes in international trade levels and patterns. As a consequence shipping is subject to sometimes unpredictable swings in demand so that the operator is required to make strategic planning decisions while navigating through boom or bust environments. While boom economies generate rising freight rates which are welcomed and encourage investment, ship operators may also have to face falling freight demand and declining freight rates that may have significant impact on profitability, often falling to uneconomic levels for extended periods. In such a period of uncertainty and declining profitability management will make operational decisions to reduce costs. However, shipping lines operate in a market environment so any decisions made to rationalize the trade may have significant long-term competitive implications. For example, traditional micro economic theory might suggest that the prudent strategy to adopt would be to close down the operation and reopen when the market conditions improve. In a world of certainty or when costs of taking this action are zero, this would be a valid strategy. However, because of fear of competitors taking up a line's market share if the shipping company exits, even temporarily, this strategy cannot be valued simply in terms of shut-down and start-up costs. A further consideration is the fact that standard capital budgeting techniques, such as Net Present Value (NPV), cannot incorporate the flexibility to respond to new information and strategic responses explicitly into their investment analysis. This paper will demonstrate the use of Real Option Analysis (ROA) to provide guidelines for decisions about closing operations in adverse market conditions.     

Investment strategies in market uncertainty

The nature of the global economy is one of dynamic change. Shipping is a service industry with its demand related to changes in international trade levels and patterns. As a consequence shipping is subject to sometimes unpredictable swings in demand so that the operator is required to make strategic planning decisions while navigating through boom or bust environments. While boom economies generate rising freight rates which are welcomed and encourage investment, ship operators may also have to face falling freight demand and declining freight rates that may have significant impact on profitability, often falling to uneconomic levels for extended periods. In such a period of uncertainty and declining profitability management will make operational decisions to reduce costs. However, shipping lines operate in a market environment so any decisions made to rationalize the trade may have significant long-term competitive implications. For example, traditional micro economic theory might suggest that the prudent strategy to adopt would be to close down the operation and reopen when the market conditions improve. In a world of certainty or when costs of taking this action are zero, this would be a valid strategy. However, because of fear of competitors taking up a line's market share if the shipping company exits, even temporarily, this strategy cannot be valued simply in terms of shut-down and start-up costs. A further consideration is the fact that standard capital budgeting techniques, such as Net Present Value (NPV), cannot incorporate the flexibility to respond to new information and strategic responses explicitly into their investment analysis. This paper will demonstrate the use of Real Option Analysis (ROA) to provide guidelines for decisions about closing operations in adverse market conditions.     

Enhancing the competitiveness of Korea’s container shipping industry through structural improvements

ABSTRACT

After the collapse of Hanjin Shipping in 2016, Korea faced the task of reconstructing its container shipping industry by enhancing the competitiveness of its shipping companies in a rapidly evolving market environment. Responding to this need for policy design, this study first attempts to understand the industry based on the shipping ecosystem, which comprises the following four areas: shipping finance, collection of cargo, acquisition of ships, and partnership among carriers. Second, it lists the structural problems, along with the remedial policy alternatives, that were identified after conducting in-depth interviews with industry experts, which included mid-level managers. Third, it conducts an importance-performance analysis to classify problems according to their importance and performance, followed by an analytic hierarchy process analysis to define the priorities of policy alternatives. Finally, drawing on the empirical results, the paper concludes with suggestions on an integrated policy package for the container shipping industry.     

Dynamics of liner shipping service scheduling and their impact on container port competition

Container ports provide the primary interface where physical exchange between buyers and sellers of containerised shipping capacity can be consolidated and realised. Consequently, ports that are able to complement and add value to the objectives of shipping lines and shippers will become focal points for containerised cargo flows. To evaluate container port competition, the authors propose a practical and direct approach based on revealed preferences of shipping lines with respect to container shipping service dynamics. The container shipping networks are generated as carriers formulate their service schedules to capitalise on opportunities that are presented by evolving container trade patterns along trade routes and relative changes in the competitive profile of the ports of call. Empirical results showed that this approach offers a deeper understanding on the workings and evolution of competitive dynamics between ports, which may not be obvious from observations of port performance at the aggregated level. Benefits of the approach also include raising awareness that policy makers should be aware of the need to understand the nature, extensity and intensity of competitive relationships between ports as they craft and implement policies to correct for the actual or perceived market failures in the industry.     

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,     

Lessons from bankruptcy of Hanjin Shipping Company in chartering

This paper aims to analyze the charter contract management of major container shipping companies in response to fluctuations in shipping market conditions in terms of contract duration using data of containerships between 2010 and 2016. Duration analysis was conducted to examine the relationship between charter duration and shipping market conditions. Moreover, this paper explores the causes of Hanjin Shipping Company’s bankruptcy, drawing managerial implications. Test results from Cox PH (Proportional Hazard) model show that most container shipping companies in Europe having net earnings purchased large vessels instead of chartering vessels, while some ocean carriers featuring poor financial performance, in particular the Hanjin Shipping Company, chartered bigger ships with higher charter rates and longer duration. Contract charter rates and duration of Hanjin Shipping Company featured greater risk compared to competitors.     

Seasonality patterns in the container shipping freight rate market

Shipping indexes have attracted many researchers because they reflect the overall trend of corresponding seaborne markets and can provide implications for the future. Apart from the Baltic Dry Bulk Index (BDI) and correlated indices, the China Containerized Freight Index (CCFI) has been gaining more attention. As a country with large-scale manufacturing, China is an important exporting country and the CCFI was chosen to reflect the container shipping market because the data are more convincing and representative. There have been no systematic attempts to understand the seasonality patterns of container freights. Seasonality patterns reveal the regular fluctuation patterns within a 1-year period. They exist in time series, which are observed more than once a year, like the CCFI. To investigate the nature of seasonality (stochastic and/or deterministic) in container freight rates across different line services, we analyze the CCFI. This paper uses the HEGY method and Monte Carlo method comprehensively to figure out the small sample problem. In addition, seasonal dummy variables are used to test deterministic seasonality. Except for the Japan service series, which contains a half-year unit root, the other container freight rates seem to only involve a non-seasonal unit root at the zero frequency. Deterministic seasonality exists in all the line service series. Furthermore, the seasonality depends on the balance between supply and demand. Under this premise, the seasonal law of freight rates is much obvious.     

A qualitative analysis of reintroducing cabotage onto New Zealand's coasts

This paper provides a qualitative analysis of the proposal to 'reintroduce cabotage' onto New Zealand's coasts. New Zealand's coastal shipping trade was opened up to international competition in 1995. The analysis is principally based on a stakeholder analysis of the 83 submissions received by the Shipping Industry Review team, as part of the Government's study to identify ways to increase participation in New Zealand's shipping industry. The stakeholders included New Zealand and international shipping companies, unions, industry associations, freight service providers, manufacturers and producers. The main conclusion drawn from the stakeholder analysis was that to reintroduce cabotage onto New Zealand's coasts would appear to have an overall net negative impact on the New Zealand economy at this stage. However, the Shipping Industry Review team 'was divided on the implementation of cabotage', and a force-field analysis was undertaken subsequently based on the author's stakeholder impact analysis and the Review team's list of pros and cons of reintroducing cabotage. This force-field analysis also supported the author's earlier conclusion. However, the almost 'complete absence of statistics' relating to the commercial activities of the shipping industry in New Zealand places severe limits on the analysis.     

Evaluation of political risk in a shipping project

Shipping projects, as land-based ones, are evaluated by using different measures of merit based on discounted cash flows. The bulk carrying industry, where costs are known better than revenues, adopted the required freight rate (RFR) and its derivative the economic cost of transport (ECT) as its major measures of merit. Shipping is a business exposed to many unforeseen risks. Although many of these risks are beyond the control of the shipowners/operators, they should all be carefully weighed during the process of project selection designed for investment decisions. One such risk is the expropriation of shore-based facilities built by the shipping operator at one or more termini of the maritime distribution channel. The operator has to assess the value and probability of risk and translate them into a premium which he will levy on each unit of goods transported. Adding this premium to the required freight rate together with the inventory holding costs and marine insurance charges will produce the real economic cost of transport.     

现代航运服务体系建设——上海国际航运中心流动的智慧

进入21世纪,具有明显周期性特征的航运业快速持续发展了6年时间,成为航运业有史以来最长的一次繁荣期。但随着世界经济进入不景气的下降周期,国际贸易活动开始进入萎缩期,国际航运运价指数一路暴跌,与国际贸易流量相伴而生的国际航运业开始进入冬季。在这样的背景下,《国务院关于推进上海加快发展现代服务业和先进制造业建设国际金融中心和国际航运中心的意见》的提出,无疑对上海国际航运中心建设提出了更高的要求和目标,必将给上海国际航运中心建设置入"加速助力器",同时也为中国经济发展带来新的机遇。2009年上海港完成集装箱吞吐量2500.1万TEU,其中洋山深水港完成785万TEU,全港集装箱吞吐量已连续3年位居世界第二位,货物吞吐量完成5.92亿t,同比增长1.8%。全港货物吞吐量和集装箱吞吐量继续位居世界第一和第二位。但航运融资、航运保险等业务在全球份额不足1%,相比伦敦各项业务基本20%以上的份额,差距巨大。单纯吞吐量的增长已经不能胜任港口在上海现代服务业发展中的带动作用,上海应该在"硬实力"成果突出的基础上,重点推进"软实力"发展。加大航运服务体系的建设,将是今后上海国际航运中心建设的重中之重。     

Quality shipping — incentives,disincentives

Shipping is the indispensable means of distributing goods between places of production and areas of consumption on our globe and is often claimed to be the most environmentally friendly mode of transport. However, there is a distinguished backwardness of shipping technology in environmental terms due to the hard competition within the globalised shipping business.     

中远集运船舶全球动态监控系统的技术特点

为实现全球航行船舶的有效监控,公司自主开发的“中远集运船舶全球动态监控系统”解决了岸端主控的难题,实现了对船舶航行状态进行准确、实时跟踪,并将船舶动态、静态、人员、工况、载货、自动识别系统（AIS）、保安报警系统（SSAS）与气象等多态异构数据整合在同一信息平台,是具有实际应用价值的全球船舶动态监控系统。该系统获2008年度“中国航海学会科学技术一等奖”。