Strategic alliances in container liner shipping (original) (raw)
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Strategic Alliances in Liner Shipping Industry: the case of P3 disapproval
This paper provides an extended analysis and discussion of strategic alliances in the liner shipping industry by focusing on the case of P3 alliance and the formation of 2M and O3 alliance as replacement of the first. The study draws the attention to the powerful lobbying that has strengthened the past ideology for ''necessary'' collaboration between LSCs, combined with the inelastic demand of transport services. The excess capacity drove liner ship owners to decrease freight rates in order to gain customers that created a reaction ending in the unattractive rates being offered in the past. As a result, few companies survived from the competition and formed special contracts to control the trade, known as cartelisation.
Mergers and Alliances in the Liner Shipping Industry: An Historical Perspective
Journal of Transportation Management, 1998
INTRODUCTION In the present decade, mergers and strategic alliances have become the model for liner shipping companies in coping with the globalization of the world economy. The present day competition and rise in the cost of capital has resulted in a steady fall in profits. Liner shipping companies "are characterized by operating scheduled services between predetermined ranges of ports on a continuous basis." (U.N.) Most liner shipping service today is focused on containerized freight traffic. Competition in the liner shipping industry has been in existence since the days when sailing ships were introduced. The intense competition at the turn of the last century can be compared to the present day competition in the liner shipping industry. The commonality between the two periods represents an attempt to increase price stability and profitability This paper will chronicle the merger history of the liner shipping industry and conclude with the current rationale for the most...
An Analysis of Shipping Agreements: The Cooperative Container Network
Networks and Spatial Economics, 2014
The recent economic downturn has intensified the need for cooperation among carriers in the container shipping industry. Indeed, carriers join inter-firm networks for several reasons such as achieving economies of scale, scope, and the search for new markets. In this paper we apply network analysis and construct the Cooperative Container Network in order to study how shipping companies integrate and coordinate their activities and to investigate the topology and hierarchical structure of inter-carrier relationships. Our data set is comprised of 65 carriers that provide 603 container services. The results indicate that the Cooperative Container Network (CCN) belongs to the family of small world networks. This finding suggests that the most cooperative companies are small-to-medium-size carriers that engage in commercial agreements in order to reduce costs and, when in partnership with larger carriers, these cooperative companies are able to compete, especially against the largest carriers. However shipping companies with high capacity engage in cooperation with other carriers by merely looking for local partners in order to increase their local and specialized market penetration.
Cooperation in container shipping: A small world network of agreements.
The recent economic downturn has increased the need for cooperation among carriers in the container shipping industry. We introduce in this work a network analysis to investigate the topology and hierarchical structure of inter-carrier relationships. Our dataset is comprised of 65 carriers that provide 604 container services. Main findings indicate that the Cooperative Container Network (CCN) belongs to the family of small world networks. We demonstrate that when we increase the value of the connectivity among carriers, the handled capacity increases linearly, whereas the clustering coefficient decreases linearly. We then show how the economic success of a container carrier is often based on cooperation but also on its strategic dominant positioning within the container market.
Liner shipping alliances and their impact on shipping connectivity in Southeast Asia
Maritime Business Review
Purpose The liner shipping industry underwent a major round of change between 2014 and 2017 where the concentration ratio of the top ten carriers rose from 64 per cent in 2013 to 82 per cent by 2017. This paper aims to analyze the impact of these developments on the state of shipping connectivity for major container transshipment hubs in Southeast Asia, namely, Port Klang, Singapore and Tanjung Pelepas. Design/methodology/approach The developments in shipping services deployed before and after the latest round of reshuffling in the liner shipping industry were analyzed. Findings Significant service rationalization took place in the period that saw 38 per cent reduction in the number of shipping services called at the ports. Participation in alliance arrangement was revealed to be important for shipping lines to compete successfully on the Asia–Europe trade route in the new shipping landscape. Terminal operators should expect further rationalization of services should overcapacity pe...
Journal of Transport Geography, 2017
This paper examines in which ways the changing organizational routines of shipping (i.e., alliance formation and vertical integration in container terminal operations) are affecting the selection of ports of call in intercontinental liner service networks. It first provides a conceptual analysis of the interplay between changes (a) in the organizational routines of shipping lines as part of alliances, (b) the organizational routines at the level of terminal operations (i.e. direct carrier equity involvement in terminal operations) and (c) in port calling patterns. The empirical part examines the relationship between port choice of alliance members and the direct involvement of shipping lines in container terminals in NorthWest European ports. It does so using binary and non-binary data on the evolution of calling patterns on the North Europe-Far East trade from 2006 to 2017. In addition, the changes in both alliance formation during that period and in the container terminal involvement of carriers in North West European ports are addressed. By examining the relationship between port calling patterns of alliances and the terminal interests of alliance members, the paper addresses an under-researched theme in the extant literature on port choice/selection by carriers. The paper is also of value to port managers and shipping professionals in view of port strategy and planning decisions, as well as shipping strategy formulation.
New Maritime Alliances and Competition in a New Economic Environment
PROMET - Traffic&Transportation, 2016
The recent creation of transport and information networks opens up two new and outstanding options: the interconnection of the economic areas and a new mediation between offer and demand in shipping. In this document the different ways of organization adopted by shipping companies were reviewed; their agreements, alliances, mergers and acquisitions, so as to determine the different levels of hierarchy among them. Secondly, a new port classification was proposed in accordance with the structure and development of shipping companies, together with the degree of port specialization within the framework of the recent spatial integration.
International Journal of Shipping and Transport Logistics, 2014
In container shipping industry inter-firm agreements are becoming progressively popular as shipowners share their slot capacity with commercial partners in order to have fully loaded container ships and reduce financial risk. This manuscript focuses on the cooperative agreements among shipping firms, i.e., vessel sharing and slot charter agreements within consortia and strategic alliances. Through a quantitative approach based on network and OLS regression analysis, we scrutinise the propensity to cooperate, the geographic extent and 'leveraging effect' generated by this commercial practise on the container-shipping industry. Results show that carriers, usually regarded as independent, are instead fairly cooperative, especially when involved in trade lanes originating from the Far East. Finally, we show that carriers increase their commercial objectives by leveraging the operated fleet capacity. We conclude with some implications for managers and practitioners as well as a discussion on limitations and future extensions of this study.
Alliance of Marine Container Carriers - Back to the Cartels
Logistics and Transport, 2015
This paper indicates the repetition of the formation of alliances of shipping companies exhibiting characteristics of cartelization, i.e. the division of markets, well-known from the late nineteenth and early twentieth centuries. The article analyzes the cause of the emergence of cartels in the nineteenth century, and points out the repetition of the same causes to the formation of alliances regarding sea container carriers as a result of the economic crisis of 2007.