Shipping Alliance Research Articles

Evaluation of International Shipping Alliance: A Case Study of Transport Capacity and Cost Efficiency Influence the Quality of Cooperation Inter-Country Using Discriminant Analysis

Evaluation of International Shipping Alliance: A Case Study of Transport Capacity and Cost Efficiency Influence the Quality of Cooperation Inter-Country Using Discriminant Analysis

Exploring the factors affecting the performance of shipping companies based on a panel data model: A perspective of antitrust exemption and shipping alliances

Globally, some large shipping companies have started large-scale joint ventures to seek future development and cooperation while seizing the opportunities of the times. Meanwhile, shipping alliances have become the main theme of the shipping market. To the best of our knowledge, it is the first that we use panel data models to analyze and explore the impact of the shipping alliance membership and antitrust exemption policies for the shipping industry on the performance of shipping companies. The results show that the shipping alliance membership and antitrust exemption policies have a significant positive effect on the performance improvement of shipping companies in European countries and USA, while there are no significant impacts in other countries. The antitrust exemption policies in the shipping industry have an undeniable effect on promoting the enhancement of the national shipping industry. This study offers relevant suggestions on the advancement of the China's antitrust exemption system.

Integration effect of shipping network based on shipping alliances

ABSTRACT Shipping alliances and shipping lines are one major research field concerning marine management. This paper examines the role played by shipping lines in shaping the global container shipping network, and focuses on the significant impact of shipping alliances on the global shipping market. The scientific evaluation of the effects of shipping alliances construction and reorganization on network integration remains inadequate. To bridge this gap, our study uses AIS big data to construct a comprehensive model of the container shipping network from the perspective of multilayer, focusing on two levels: shipping alliances and shipping lines. Our findings show that while shipping lines have been competing for shipping markets fiercely, the construction of shipping alliances eases the competition among them and promotes their cooperation. The three alliances have formed a new oligopoly pattern, combining to build a complete and mature network with increased efficiency, density, and stability. Shipping alliances promote spatial complementarity, expand network coverage, and develop branches. We also identify distinct spatial patterns for each alliance, with differentiated complementary structures. This study sheds light on the spatial effect of shipping network integration, offering a new perspective and method for understanding the organization of the global shipping network.

Do shipping alliances affect freight rates? Evidence from global satellite ship data

Shipping alliances (SAs) can facilitate their members’ coordination on price and capacity decisions. Although this helps reduce the oversupply of capacity and cutthroat competition during market downturns, the possible freight rate increase due to potential collusion among member shipping lines is another concern. This study aims to empirically investigate the impacts of SAs on container freight rates on nine major shipping corridors for the period from 2015 to 2020. To measure market concentration, data from a satellite-based Automatic Information System (AIS) is used to identify liner shipping companies' services in each market. We propose to use the alliance-level Herfindahl-Hirschman Index (HHI) and Concentration Ratio Index (CR) to measure market concentration. Then we used the simulated market concentration measures as the instrumental variable to address the endogeneity issue between freight rates and alliances’ market share. The main finding is that both alliance-level HHI and CR are negatively associated with freight rates, implying that SAs may help reduce prices. This finding provides new insights for antitrust authorities when investigating alliance applications in the liner shipping sector.

Multi-scenario analyses for antitrust immunity policies on shipping alliances: A dynamic tripartite evolutionary game perspective

Shipping alliances are regarded as a special group in antitrust immunity policies worldwide because of their abilities to coordinate shipping resources. In particular, the international shipping involves different countries and stakeholders, making it difficult to form a unified antitrust immunity and maritime policy. This study builds a tripartite dynamic evolutionary game model composed of stakeholders including the shipping alliances, ports, and governments. It analyses the complex impacts of government policy, cooperation between the port and shipping alliance, accountability mechanism, and sudden changes in the external environment on the different stakeholders’ decisions. The stability points, evolution process, and evolution speed of the tripartite game, along with the movement of the convergence point in the unstable state, are investigated. Furthermore, the mutual influence of the three parties, especially that of government policy on the evolution process regarding the pricing strategy and antitrust immunity, is discussed. The results show that the reduction in the freight rate difference makes it easier for the alliance to choose a low-freight strategy under the antitrust immunity policy. The government could cooperate with the port and indirectly restrict the alliance through the port extra charge, while an increase in the alliance supply would weaken the port’s bargaining power. This research also investigates the timing of government regulation by considering the sudden fluctuations of the market and the international political risk when the three parties exert a push–pull pressure on one another’s decisions and provides comprehensive decision support for the three parties from the perspective of dynamic evolution.

Shipping alliances under an unexpected shock: Effects on market volatility and social welfare

This paper analyzes the impact of container shipping alliances on the market stability of prices and volumes in the event of an unexpected shock. Given two complementary or substitutable ports in which oligopolistic liners are operating, an alliance between complementary liners, referred to as “global alliance”, enhances their strategic complementarity, which makes shocks more easily propagating among ports and increases volatility of the price and volumes of shipping services. Furthermore, due to incomplete adjustment of production facilities of shippers facing unexpected shocks, the shipping demand in the short term is less elastic than that in the long term. It is shown that the increased market volatility of global alliance causes a greater decline in shippers' benefit under a shock through i) shippers' inefficient investment and ii) an excessive price increase in transportation services, while the liners’ profit may even increase owing to the second effect.

Analysis of the Key Factors Influencing Automation Transformation in Container Terminals Based on the Dempster–Shafer Evidence Interval Method

The steady growth of container volume and aggressive shipping alliances have intensified competition among terminals. With the rapid development and application of modern information and communication technology, automation is a great way to promote terminals’ sustainable development. The objectives of this study are to analyze the key factors influencing automation transformation and provide theoretical guidelines for implementing automation transformation. Based on the literature review, the main factors influencing the automation transformation of container terminals are characterized and analyzed. They are divided into four categories: technical feasibility, external promotion, self-constraints, and goals/demand. Thereafter, a novel multi-source data fusion method, the Dempster–Shafer evidence interval method (DSIM) based on Dempster–Shafer evidence theory and interval value, is proposed to fuse conflicting and uncertain opinions among experts. This method is effective for expert opinion elicitation. Using DSIM, the key factors’ relative importance and their relationship are examined based on the opinions of experts in China. The results show that technical feasibility is the most important factor category in the foundation of automation transformation. Finally, a generalized planning framework for constructing automation transformation schemes is established, providing references and suggestions for terminals’ decision-makers.

Risk mitigation in service industries: A research agenda on container shipping

Shipping lines face various marketing risks, with outcomes that need to be mitigated. A current, serious, example of this has been the COVID19 pandemic and the severe supply chain disruptions that followed it. During such times, unmitigated marketing risks can lead to corporate failure, significant losses, or irreparable adverse impact on a carrier's brand name, due to sailing schedule unreliability. We cast a look at the marketing risks of shipping lines deriving, for instance, from adverse market developments, competitor moves, operational mistakes, unreliability (schedule integrity; supply of containers to customers, etc.), and we propose avenues of risk mitigation. Our methodology includes a combination of literature review and Spherical Fuzzy Theory. Among other conclusions, our results show that it is the ‘unexpected’ and ‘unanticipated’ -e.g., a natural disaster; a war; a tsunami; or COVID19-that poses the greatest risk to carriers: Intense competition amongst them, geared to short-term profit maximization, and coupled with the fine-tuning of capacity management within alliances, does not allow them the luxury of affording built-in buffers or slacks that could ‘absorb’ the unexpected. Not unexpectedly therefore, COVID19 has been the greatest risk factor of all times, mitigated –quite profitably one should add—by the joint capacity management of global shipping alliances.

The impact of revenue-sharing contracts on parallel shipping alliances

In this paper, we explore the effect of revenue-sharing contracts between ports and shipping lines to counter the negative effects of parallel shipping alliances. We consider a vertical structure approach formed by port-shipping line chains, where ports are considered the upstream market, while shipping lines are the downstream market. Then, we propose the vertical integration of both chains as a solution to the loss of welfare because of the shipping alliance. We find that when ports may influence the downstream markets, welfare increases, and it is a proper ports response that port horizontal cooperation.

Analysis of fleet deployment in the international container shipping market using simultaneous equations modelling

ABSTRACT The shipping industry is a capital-intensive industry in which ship investment and demolition are directly related to the company’s profitability, transportation capacity, and fleet structure. Thus, companies need to consider investment and demolition activities carefully before making decisions about fleet deployment. This study focuses on decisions related to investment in new and second-hand vessels as well as vessel demolition in different sub-markets of the container shipping market at the same time. By considering market factors, operating conditions, and shipping alliances, we developed a systematic model for the container market. This model innovatively employs a simultaneous equations model (SEM) to analyze fleet deployment decisions and uses the three-stage least squares method to avoid endogenous effects. The results indicate that shipping alliances, fleet deployment, and bunker price all have significant effects on the investment and demolition decisions of shipping companies. We further discuss the strategic decisions of shipping companies related to joining shipping alliances and highlight the considerations of larger companies when expanding (primarily squeezing out competition and responding to the market). The results provide valuable information for shipping companies to determine the best ship deployment strategies and avoid overcapacity.

An investigation into the forces shaping the evolution of global shipping alliances

ABSTRACT Global shipping alliances have become an important institution in international seaborne trade. Their raison d’être is higher efficiency and lower costs, to the benefit of the consumer. However, experiences from GSA operations during the COVID-19 supply chain crisis show that GSAs may have considerable market power, not quite aligned with the spirit of the lawmaker who has exempted them from antitrust laws. This raises many questions this paper attempts to answer: What drives the formation, stability and dissolution of GSAs? And have external and internal factors, such as government policies, ship sizes and freight rates, had always the same effect on GSAs over time? We decompose industry concentration (HHI) into seven components. This is done based on the Variational Mode Decomposition model. The components are subsequently reconstructed through gray correlation. Next, a Generalized Additive Model is specified, to analyze the relationships between influencing factors and the evolution of GSAs. We look both at the development (trend) of industry concentration, as well as its fluctuations (cyclicality) over time. We show that effects vary over time, with the same factors having different impacts on GSAs at different times. The paper can assist policymakers in their efforts to regulate and supervise container shipping.

The Impact of Revenue-Sharing Contracts on Parallel Shipping Alliances

The Impact of Revenue-Sharing Contracts on Parallel Shipping Alliances

Liner alliance shipping network design model with shippers' choice inertia and empty container relocation

<abstract><p>Liner companies have responded to escalating trade conflicts and the impact of the COVID-19 pandemic by forming alliances and implementing streamlined approaches to manage empty containers, which has strengthened the resilience of their supply chains. Meanwhile, shippers have grown more sensitive during these turbulent times. Motivated by the market situation, we investigate a liner alliance shipping network design problem considering the choice inertia of shippers and empty container relocation. To address this problem, we propose a bilevel programming model. The upper model aims to maximize the alliance's profit by optimizing the alliance's shipping network and fleet design scheme. The lower model focuses on optimizing the slot allocation scheme and the empty container relocation scheme. To ensure the sustainable operation of the alliance, we develop an inverse optimization model to allocate profits among alliance members. Furthermore, we design a differential evolution metaheuristic algorithm to solve the model. To validate the effectiveness of the proposed model and algorithm, numerical experiments are conducted using actual shipping data from the Asia-Western Europe shipping route. The results confirm the validity of the proposed model and algorithm, which can serve as a crucial decision-making reference for the daily operations of a liner shipping alliance.</p></abstract>

Capacity sharing within a shipping alliance: firm optimization and welfare analysis

ABSTRACT The global shipping industry still frequently faces the problems of low profitability and excessive capacity despite the claimed benefits of capacity sharing between alliance members. This paper investigates capacity sharing within shipping alliance members and its impacts on social welfare under stochastic demand. The dynamic game models constructed in this study examine four scenarios based on whether the alliance members share their surplus capacities and whether their pricing is flexible (their prices are determined before or after the demand realization). The results suggest that flexible pricing always harms the social welfare while capacity sharing improves the social welfare. Without capacity sharing, the government’s subsidy or tax is needed when the carriers’ service substitute degree is low or high, respectively. If the carriers agree with capacity sharing, the tax is needed under flexible pricing while neither subsidy nor tax is needed under the inflexible pricing. This paper provides explanations on the low profits of the shipping lines with their pricing and alliance strategies. Moreover, the policy implications identified in this study can provide support for governments to make their regulation on carriers.

Slot allocation and exchange for container shipping alliance under profit-sharing agreement and uncertain demand

Shipping alliance has become a prevalent cooperation form among major container shipping companies in recent decades. By forming an alliance, shipping companies can exchange their container slots to better satisfy the shipping demand and improve capacity utilization. This paper considers the slot allocation and exchange for a shipping alliance with consideration of profit-sharing agreement and uncertain demand. The profit-sharing agreement indicates the profit segmentation that should be kept by each alliance member among the total alliance profit. To tackle this problem, a two-stage stochastic programming model is subsequently developed to maximize the total profit of the alliance and minimize the deviation of the profit percentage of each member from the prescribed value indicated in the profit-sharing agreement. In the first stage, the number of slots allocated and exchanged within the alliance is determined. In the second stage, after the uncertain shipping demand is realized, each alliance member separately determines their container shipping plan to obtain profit. A tailored pattern-search-based solution algorithm is developed to solve the model. A series of numerical experiments demonstrate the applicability of the programming model and deliver several interesting managerial insights.

Collaborative management evaluation of container shipping alliance in maritime logistics industry: CKYHE case analysis

With the shipping industry development, shipping alliances have become a new mode of competition and played a crucial role in the maritime logistics. The competitiveness of a container shipping alliance lies in its collaborative management operation level of the system. This article establishes an indicator system to evaluate a container shipping alliance's collaborative operation level and applies the fuzzy quality function deployment (QFD) method to build the collaborative management framework of the container shipping alliance. Drawing on the CKYHE case, it calculates the importance degrees of system elements in the alliance, and evaluates CKYHE's collaborative management level and its members' management and operation levels. The evaluation results prove the inevitability of the CKYHE alliance's disintegration and restructuring. Finally, this study provides a reliable systematic indicator system and effective collaborative management methods for alliance performance evaluation, which has positive significance for container shipping alliances to improve collaborative management.

Robust optimization of liner shipping alliance fleet scheduling with consideration of sulfur emission restrictions and slot exchange

Robust optimization of liner shipping alliance fleet scheduling with consideration of sulfur emission restrictions and slot exchange

COVID-19 as a catalyst of a new container port hierarchy in Mediterranean Sea and Northern Range

COVID-19 has dramatically impacted the organization of value chains and the pattern of international trade. The manufacturing sector has had to act resiliently, and the maritime sector was no exception. Container shipping lines have adapted their routes, services and fleet deployment with direct effects on many port activities. Our analysis focuses exclusively on container vessels by considering number of calls and calculating total containership capacity deployed within 45 Western Mediterranean and Northern European ports throughout 2018, 2019 and 2020. 2018 is considered as a ‘business as usual’ year, without exceptional events. 2019 is the start of the outbreak and 2020 is the year most impacted by the economic consequences of the pandemic. As we cover at least one port in each country, we considered ports that handled more than one million TEUs per year and if the country did not have such a port, we considered the largest one. The aim of our analysis is dual. First, we attempt to point out the importance of certain ports as major hubs and the downgrading of others to regional hubs, gateways or feeder ports in the Western Mediterranean and Northern Europe. Second, our objective was to assess the way shipping alliances have impacted the ranking of these ports during COVID-19. As a result, this exceptional crisis has not been a catalyst of a new port hierarchy while it has revealed contrasting situations with ‘poor’ and ‘good’ crisis resilience for ports meaning that some were downgraded, and others maintained their ranking. Moreover, COVID-19 has exacerbated the maritime alliances’ shortcomings, their capacity to unilaterally impose their decisions through their Cooperative Working Agreements, regardless of the consequences both for transport users and ports. One of the key lessons of the COVID-19 crisis is that the time for change for maritime alliances has come.

Q-method and its application in clustering Hong Kong shippers' selection criteria of ocean carriers

Despite recent geopolitical tensions across nations, the liner shipping industry still plays a pivotal role in supporting international trade by ensuring low-cost transportation services. However, given the increased intensity of mergers and acquisitions, the formation of new shipping alliances and general perception of the commoditisation of ocean carriers pose numerous risks in how shipping line operations interact with shippers' needs. Previous research has identified several factors regarding ocean carrier selection criteria from the shippers' perspective, mainly focusing on regional markets. Nonetheless, knowledge of how shippers address these factors is limited. In this study, through a mix of qualitative and quantitative analyses, Q-methodology is applied to investigate shippers' choice behaviour regarding ocean carriers in Hong Kong. The results of our analysis show the emergence of three unique clusters of shippers with different needs when considering the ocean carrier selection process. The three clusters are ‘reliability and flexibility of service achiever’, ‘long-term shipper-carrier relationship builder’, and ‘customer service and cost-saving seeker’. These findings may assist in enabling shipping lines to enhance their competitiveness by analysing and selecting the most suitable strategy for serving customers and identifying operational and marketing areas that need to be restructured or strengthened.

Bilateral slot exchange and co-allocation for liner alliance carriers of containerized maritime logistics

With the maritime logistics technology evolving toward standardization and modernization, container liner shipping has become the most valued mode of transportation in the shipping industry. Liner carriers share resources in the alliance-based mode to achieve synergy. Specifically, slot exchange is a key and effective alliance-based means to enhance competitiveness and operational effectiveness. To this end, this article looks at how to optimize slot capacity allocation within a container liner alliance under the slot exchange mode in the containerized maritime logistics industry. First, we explained the slot exchange concept and its impact on the shipping business. Second, we identified the key factors that may affect slot allocation decisions. Then we established an optimal multi-objective slot exchange allocation model for liner alliances and solved the problem with the NSGA-II algorithm. Finally, taking the cooperation of two carriers on two trans-Pacific routes as an example, we used the model to establish the optimal slot exchange strategy for each carrier on the shipping alliance's routes to verify the practical application value of this model. The results showed that the model proposed in this article can help develop an optimal slot allocation plan, providing a scientific and effective tool for container liner alliances to formulate slot exchange and allocation strategies.