Impact of port integration on port service quality in the context of shipping alliance

Abstract

This paper explores the impact of port integration on the port service quality under a chain structure where the interactions among ports, shippers and shipping lines are considered. A game theoretic framework is proposed to investigate the decisions of ports (the determination of quality-of-service level), shippers (the choice of departure ports) and shipping lines (whether forming an alliance and the corresponding operating arrangement) jointly. Based on the game theoretic framework, the mathematical models are established and the corresponding solution algorithm is designed. The methodology is applied in two representative port clusters with port integration in China. The case-study results demonstrate two important findings. Firstly, both positive and negative impact of port integration on the level of quality-of-service for shippers and for shipping lines is likely to appear. The effect on the port service quality would vary with the difference in the integration scenarios. Secondly, the port integration would stimulate shipping lines to offer more frequent portcalls, indicating that the hinterland shippers would enjoy more opportunities to be served by shipping lines. However, when excessive port integration takes place, the shipping lines would tend to change the strategy of forming an alliance to the strategy of competing.