Market organization: the conference system

Abstract

Liner shipping stands out, together with the international airline industry, in the world economy in being almost completely cartelized in the first place as far as pricing is concerned. Unlike the airline industry, the organization of the freight rate making in the liner shipping industry is highly decentralized. Practically every longer trade route of the world is covered by a separate coalition of liner-service operators — the liner conference — which fixes the freight rates on the route concerned. This does not necessarily imply that price competition is wholly ruled out on all liner-trade routes. Outside competition from independent liners and tramps, and to a lesser extent from industrial (bulk) carriers and air freight, occurs at varying intensity. On some routes competition can be fierce occasionally. On other routes the conference members operate in ‘splendid isolation’.