Carrier profitability influenced by large containerships

Abstract

The container shipping market has recently faced persistently low freight rates due to the mismatch between the sluggish demand for container shipping services and overcapacity of containerships, especially due to the ever-increasing use of large containerships. To address this challenge in a systematic manner, this paper uses a case study of the East Asia-Europe route to explain the attractiveness and popularity of large containerships to carriers. However, negative impacts of using large containerships are explained by revisiting interactions among carriers as well as interactions among key players in the container supply chain. Results of this paper provide policy implications to help market participants to gain a better understanding of the recent unprofitable situation in the container shipping industry.