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.     

Ocean shipping deregulation restructures the liner shipping industry

Significant pro-competitive changes were made to the Shipping Act by the Ocean Shipping Reform Act (OSRA). The most notable of these was the shift away from public tariffs and publicly available contract rates to confidential rates using individually negotiated service contracts. The number of individual member service contracts has risen dramatically since OSRA went into effect in 1999. These statistics support the argument that OSRA was able to bring more competition to the industry. However, the theory and empirical evidence of the Act’s success in improving the performance of the liner industry serving the Transatlantic and Transpacific trade routes, which are two major trunk roads subject to the jurisdiction of the US, are not so compelling. This article employs the theory of joint product to assess the impact of OSRA on the shipping market structure and competition of two major east–west arteries after 1999. This article considers head haul and backhaul container shipments as joint products. Two simple statistical equations are derived to reinterpret Smith’s condition of joint product. The empirical results confirm that the market structure of Transatlantic and Transpacific trade lanes are competitive.     

Strategic groups in Taiwanese liner shipping

Liner shipping is normally viewed as being oligopolistic in nature with firms competing on the basis of service offered. Since shipping services are easily copied by competitors, if shipping firms want to gain a competitive advantage, it is essential to identify the competitors' strategies. This paper uses the analytical concepts of strategic groups theory to explore the strategic differences in the Taiwanese (the Republic of China, ROC) shipping industry. Cluster analysis is used to classify shipping companies, shipping agencies and ocean freight forwarders into four strategic groups on the basis of the key strategic factors obtained from the factor analysis. The results of multivariate analysis of variance (MANOVA), analysis of variance (ANOVA) and the Scheffe test showed that strategies among the strategic groups are significantly different.     

Strategic alliances in container liner shipping

The economic crisis in the years between 2008 and 2010 has demonstrated the necessity for substantial adjustments on behalf of container lines. Capacities were shifted quickly to emerging and less affected markets allowing a faster recovery of globally organized companies. This paper illustrates the dynamics in the container shipping market. Alongside the main characteristics of the Top 20 ocean shipping companies, liner services are described. These services are classified by geographic coverage and vessel deployment. In addition, this paper provides a better understanding of the collaboration among service providers. Starting from a general framework of co-operative liner services, in-depth analyses of the global alliances in liner shipping are obtained. These formations - Grand Alliance, New World Alliance and CKYH Alliance - are compared with alternative forms of collaboration in the liner shipping industry. The analysis of alliance announcements which are related to operational and strategic changes indicates that the “global alliances” cannot be regarded as closed corporate-like entities. In effect, service agreements are not only negotiated with the focal members of the specific alliance. Instead, every service is arranged individually and under specific conditions. By understanding the dynamics within alliances, we are able to develop an assessment relating to the stability of collaborations. Ultimately, these insights direct us to several paths for future research.     

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.     

Analyzing ship investment behaviour in liner shipping

This study analyzes capacity expansion and ship choice decisions. Theoretically, we derive the probability of capacity expansion as a function of market and company attributes and characterize the impacts of these factors on expansion decisions. Empirically, we analyze ship investment and ship choice behaviour using binary choice and nested logit models based on ship investment data from major liner shipping companies over the period 1999 to 2009. Most expansion decisions are found to be market-driven, and large companies expand to maintain their market shares. In terms of ship selection, statistical results support the assumption that shipping companies decide on a new order or second-hand purchase before considering the ship size. Also, new orders are preferable to second-hand purchases. For new orders, the preference increases with ship size, and decreases with shipbuilding length and demand growth rate. For all ship types, the preference increases with a high and stable time-charter rate. For second-hand ships, handysize is the most preferable size. The substitution of new orders and second-hand purchases is possible, but not symmetrical.     

Empty container repositioning in liner shipping1

The efficient and effective management of empty containers is an important problem in the shipping industry. Not only does it have an economic effect, but it also has an environmental and sustainability impact, since the reduction of empty container movements will reduce fuel consumption and reduce congestion and emissions. The purposes of this paper are: to identify critical factors that affect empty container movements; to quantify the scale of empty container repositioning in major shipping routes; and to evaluate and contrast different strategies that shipping lines, and container operators, could adopt to reduce their empty container repositioning costs. The critical factors that affect empty container repositioning are identified through a review of the literature and observations of industrial practice. Taking three major routes (Trans-Pacific, Trans-Atlantic, Europe–Asia) as examples, with the assumption that trade demands could be balanced among the whole network regardless the identities of individual shipping lines, the most optimistic estimation of empty container movements can be calculated. This quantifies the scale of the empty repositioning problem. Depending on whether shipping lines are coordinating the container flows over different routes and whether they are willing to share container fleets, four strategies for empty container repositioning are presented. Mathematical programming is then applied to evaluate and contrast the performance of these strategies in three major routes.     

The coopetition game in international liner shipping

In maritime freight transportation, carriers build collaborative relationships with other carriers while competing with each other to optimize their own profits. In such a scenario, a game of coopetition is formed. We formulate a nonlinear mixed-integer problem to determine the optimal levels of coopetition for a single company and embed the resulting problem into a general game theoretic framework. A diagonalization algorithm that incorporates an ascent direction search technique is developed to effectively evaluate the game. The numerical results show that carriers choose similar coopetition levels to maximize their profits, and the coopetition game can reach equilibrium under general conditions.     

Designing optimal routes in a liner shipping problem

A real liner shipping problem of deciding optimal weekly routes for a given fleet of ships is considered and a solution method for solving the problem is proposed. First, all feasible routes for each ship are generated together with the cost and the duration for each route. The routes are given as input to an integer programming (IP) problem. By solving the IP problem, routes for each ship are selected such that total transportation costs are minimized and the demand at each port is satisfied. The total duration for the routes that are selected for a given ship must not exceed one week.

The real liner shipping problem is solved together with four randomly generated test problems. The computational results show that proposed solution method is suitable for designing optimal routes in several liner shipping problems.     

班轮运输业反垄断豁免前瞻

列举了班轮运输业的四大垄断形式,简要介绍了主要航运国家的反垄断豁免规制,分析了反垄断豁免的利弊,预测了反垄断豁免的演变趋势,提出了对我国发展班轮运输业的建议.     

Designing optimal routes in a liner shipping problem

A real liner shipping problem of deciding optimal weekly routes for a given fleet of ships is considered and a solution method for solving the problem is proposed. First, all feasible routes for each ship are generated together with the cost and the duration for each route. The routes are given as input to an integer programming (IP) problem. By solving the IP problem, routes for each ship are selected such that total transportation costs are minimized and the demand at each port is satisfied. The total duration for the routes that are selected for a given ship must not exceed one week.

The real liner shipping problem is solved together with four randomly generated test problems. The computational results show that proposed solution method is suitable for designing optimal routes in several liner shipping problems.     

The evolution of Canadian liner shipping policy

This paper traces the evolution of Canadian liner shipping policy from its beginnings, at the time of the initial formation of shipping conferences, in the late nineteenth century, to its current form, as provided by the 1987 Shipping Conference Exemption Act. It is shown that evolution has been associated with a shift in policy orientation from an initial British-based position to a contemporary form that is distincly American in nature. The reasons for this shift are analysed and the similarities and differences between curent Canadian and U.S.A. legislation are identified. The paper shows that the adoption by Canada of an American-style policy became inevitable once the container revolution had physically integrated the transport systems of both nations.     

Korean liner shipping in the era of global alliances

In the course of the last two decades Korean shipping has emerged as a major player in the liner market. In 1970 there was not a single container ship in the Korean fleet; yet, within the next two decades, shipping companies from Korea have become included among the top 10 liner operators in the world, in the context of a spectacular ascent of Asian companies in international container shipping. During the same period the organization of liner shipping itself underwent major changes. In the 1970s and 1980s, pools and powerful consortia prevailed, maximizing frequency and optimizing fleet deployment under pressure from the high investment entailed by containerization. The era of consortia, however, came to a close in the early 1990s; intermodalism and the expansion of the major liner companies into forward and backward segments of the transport chain rendered them inflexible for pursuing individual strategies of product diversification with a view to larger market shares. Global alliances were finally born as a result of a major reshuffling of co-operation agreements and of the globalization of the production process on the demand side. The aim of this paper is to follow and assess the options available to an aggressive low-cost national fleet in its journey to competitive maturity through a period of changing organization of liner shipping, focusing on the course of the leading Korean container company, and one of the largest in the world today, Hanjin. It highlights at the same time both the deep structural changes which liner shipping has undergone in the last two decades and the effects of current changes, such as the recent wave of mergers in this sector.     

Weekly container delivery patterns in liner shipping planning models

This paper addresses a fundamental question related to nearly all container liner shipping planning models: whether the implicit assumption of identical container delivery pattern every week is valid in a situation of identical shipping services and identical cargo demand every week. We prove that when the number of containers transported from one port to the next is formulated as a continuous variable, the resulting mathematical model with an identical container delivery pattern is equivalent to the model with general container delivery patterns which can be different in different weeks. When the number of containers transported is formulated as an integer variable, the model with an identical container delivery pattern is not equivalent to the model with general container delivery patterns. However, the difference between the optimal objective values of the two models is negligible for practical applications. In sum, little, if not nothing, is lost by assuming an identical container delivery pattern in liner shipping planning models.     

关于加强台湾海峡两岸集装箱班轮运输管理的公告

为加强台湾海峡两岸间集装箱班轮运输管理,规范两岸间集装箱班轮运输市场秩序,根据《中华人民共和国国际海运条例》(以下称《国际海运条例》)、《台湾海峡两岸间航运管理办法》(交通部1996年第6号令)等有关规定,现将两岸间集装箱班轮运输管理有关事项公告如下: 一、两岸间接     

A critical evaluation of strategic alliances in liner shipping

During the last few years, the liner industry has endured a period of radical change, largely due to the formation of the so-called global strategic alliances amongst leading container carriers. However, not even after a full year of operations, a series of cross-alliance mergers and acquisitions has forced three out of the four newly formed alliances to restructure and/or modify their partner base. While this recent development does not put an end to such kind of agreements, as the merged companies are still committed in a second generation of strategic alliances, it highlights the fact that, despite the intentions of their respective partners, such alliances are actually characterized by a high level of instability. This paper, after considering the key profiles of strategic alliances in liner shipping, argues that their current structure may prove inherently inadequate to deliver an acceptable level of stability. The main factors driving such instability can be found in the increased organizational complexity of the alliance as well as in the establishment of a certain degree of intra-alliance competition, whose effects are likely to undermine the level of mutual trust between partner companies. Causes and effects of such factors are investigated and some measures aimed at controlling alliance instability are also suggested.