Abstract
Liner shipping companies (LSCs) apply distinct operational strategies in order to improve efficiency. The relationship between various operational strategies and profitability, however, has not been systematically and empirically examined. This study innovatively extracts and quantifies eight commonly used operational strategy measures from Automatic Identification System (AIS) data, and investigates the relationship between LSCs’ operational strategies and profitability. This relationship is further examined in light of market focus or non-focus approaches. Machine learning-based clustering methods use four of these operational strategy measures (market scope, market scope diversity, average voyage distance, and ship size diversity) in order to categorize LSCs as focused or non-focused. The results of this study show that focused LSCs tend to achieve higher level of profitability than do non-focused LSCs. Non-focused companies, on the other hand, can limit the interplay between operational strategies and profitability. More specifically, we find that two operational strategies (capacity allocation and service frequency) have a non-linear relationship to profitability, while speed choice and idle capacity ratio are linearly related to profitability.
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