Shipping Alliance Research Articles

Capacity utilization and its determinants for a container shipping line: theory and evidence

Under-utilization of fleet capacity appears to be a long-lasting issue in the container shipping industry. Also, there are some difficulties unsolved while measuring the ratio of Capacity Utilization (CU) of a container shipping line. From the perspective of an engineering approach, the slots capacity installed is the most popular way to represent the capacity output. Since the slots capacity installed lacks theoretical support, this study adopts an economics model to find the capacity output of a shipping line. Further, the derived CU ratio identifies the realized utilization of fleet capacity for a shipping line. Focused on the three largest container shipping lines in Taiwan, this article shows that their fleet capacity are totally under-utilized and the movement patterns of CU ratios are approximately identical. In addition, the variations of CU ratios also suggest that the enactment of Ocean Shipping Reform Act has contributed a positive effect on the capacity utilization of a container shipping line. Finally, by running a regression model to investigate the determinants of CU ratios, the result indicates that demand condition and global shipping alliance are two critical factors to improve the utilization of fleet capacity for a container shipping line.

Additional Costing Equations for Jointly-Operated Container Shipping Services to measure the Effects of Variations in Fuel and Vessel Hire Costs

This paper proposes new equations to calculate shipping costs and slot distribution when working in a shipping alliance environment. The fixed costs and capacity are shared by a predetermined ration of contributed containerships for the jointly-operated service route. The exchange rate of slot-exchange pattern depends on the relative ration of both round-voyage sailing days. Each contributing shipping company needs to estimate and account for the voyage fixed costs of each component serviced route in the agreement. This paper also simulates the effects that bunker cost and vessel hire changes have on shipping costs. The examination indicated the fixed costs are US$424 per TEU in 2010, with 63.1% attributable to bunker costs and 24.04% to containership costs. The validation shows the peak of charter hire in 2006, the fixed costs were estimated US$637 per TEU, with 63.92% attributable to containership costs and 27.53% attributable to bunker costs. (for ship of a capacity of 1,100 TEUs and 28 round trip days). The results proof the proposed equations can represent cost and are helpful for container carriers to maintain market competition.

Verifying liner Shipping Alliance’s stability by applying core theory

The core is a vital concept in cooperative game theory and has been widely used in analyzing alliance’s stability. It is especially interesting to apply core theory in liner shipping market due to the latter’s exceptional characteristic of non-homogeneous cost curves as well as divisible and fluctuant demand. Having observed some new phenomena and trends in the industry, this paper studies the economic performance and stability of liner shipping alliance by applying core theory where business cooperation is partly realized by delivering joint-service with mega container ships. To demonstrate the core situation in liner shipping alliance, a cost function is first identified on the basis of two assumptions regarding cooperation: 1) sharing or pooling vessels and 2) deploying mega container ships if needed. Taking cost functions as basis, two conditions of approaching core may be groomed, i.e., collective rationality and individual rationality. The first condition is discussed from the perspective of market, while the second condition is studied within the alliance. Stability of liner shipping alliance is then observed based on these two conditions. An illustrative case study is conducted in order to show some implications and explicitly clarify the theory.

A Study on Port Alliance between Incheon Port and Major Ports in Northern China

Recently, amount of cargoes from main ports in Northeast Asia have rapidly increased and as well surplus port development in same region corresponded with the boom in external trade that resulted from successful export-oriented economics strategy by China, Japan and South Korea. To cope with this business circumstances, a certain form of port alliance is desperately needed to provide a suitable service to customer and establish their countervailing power against the shipping alliance. Nevertheless, Incheon seaport has not made a definite port alliance system with main ports in Northern China yet. Thus, the purpose of this study is to identify the key success factors to form a port alliance through examining previous studies. We have benchmarked previous studies which are related to main ports in global region and the questionnaire on customers of ports. By studying this, we are able to suggest a few strategies for forming successful port alliance to enhance Incheon port's capabilities in the long term plan. As a policy proposal, this study suggests Incheon port and main ports in Northern China should construct a logistics infrastructure through mutual investment and provide an incentive system when the ocean carrier makes port call to both ports.

Iterated Cooperation and Possible Deviations between Liner Shipping Carriers Based on Noncooperative Game Theory

The top liner shipping carriers have already established alliances in the shipping industry and are investigating new business connections with customers, suppliers, competitors, consultants, and other companies. Several studies have attempted to explain this phenomenon using a variety of conceptual and theoretical frameworks. This paper focuses on liner shipping strategic alliances and their establishment and transformation within the framework of noncooperative game theory, which is considered an effective tool to analyze motivations, competitive structures, strategies, and potential payoffs in a number of industries, including the turbulent liner shipping industry. Not only can a liner shipping company be seen as a player in a shipping alliance, but a liner shipping strategic alliance itself can be viewed as a player when it competes with other alliances. In this paper, more attention is paid to the former situation by assuming that those liner companies are unable to make enforceable contracts through outside parties. This paper aims to (a) indicate the motivations for short-term cooperation among several liner carriers, (b) analyze the pros and cons of being a member of a liner shipping strategic alliance, (c) explain a player's deviation or departure behavior when it faces turbulence and unpredictable shipping circumstances, and (d) recommend ways to enhance long-term alliance stability by increasing benefits while decreasing drawbacks. Of those four main points, the differences between short-term cooperation and long-term alliance are the number of subgames and the potential future payoff. Specific models based on the assumption of noncooperative behavior are set up as iterated games to give those differences clear explanations. The outcome of this paper will be helpful for liner shipping carriers attempting to succeed in the shipping industry with greater efficiency, better customer service, and lower cost.

海運アライアンス競争力からみた変遷要因の分析

海運アライアンス競争力からみた変遷要因の分析

Using fuzzy MCDM to select partners of strategic alliances for liner shipping

As world economic activities intensify and trade barriers fall, the formation of viable strategic alliances in the liner shipping industry gains importance and accelerates of necessity. However, the selection of a suitable partner for strategic alliance is not an easy decision, involving a host of complex considerations. Decision-making information is hard to come by and often vague, particularly regarding privately held companies. Fuzzy set theory was designed to sort through the uncertainties of vague linguistic terms and help generate a single possible outcome. This research paper proposes the utilization of the fundamental principles encompassed in the fuzzy set theory to analyze and consider a multiplicity of complex criteria and determines the most suitable partner in strategic shipping alliances. The fundamental emphasis of the current fuzzy multiple criteria decision-making (FMCDM) methodology is the determination, definition, testing and comparison of complex multi-level criteria used in the partnership selection process. The tools and formulas employed are: (1) triangular fuzzy numbers and linguistic values characterized by triangular fuzzy numbers which are used to evaluate the preference rating system; (2) the method of graded mean integration, and the entropy weighting method which are jointly used to adjust integration weights of all sub-criteria above those of the alternatives; (3) the concepts of ideal and anti-ideal solutions which are employed to calculate the relative closeness of the various alternatives versus ideal solutions to rank their priorities, and finally, to determine the best alternative. We design a hypothetical problem in selecting partners of strategic alliances for liner shipping to demonstrate the computational process of this FMCDM algorithm. The main contribution of this paper is that the definition, conversion, and treatment of vague and complex multi-level criteria as set memberships under the fuzzy set theory are employed to develop a practical model for business purpose.

정기선해운의 성공적인 제휴관리에 관한 실증연구

전략적 제휴는 기업의 경쟁우위를 확보하기 위한 중요한 경영전략으로 이용되며 많은 기업들이 경쟁기업과 다양한 형태의 제휴를 맺고 있다. 본 연구에서는 정기선해운에서 제휴유형간의 만족도에 차이가 있는지, 제휴유형별 성공요인의 중요도에 차이가 있는지, 제휴 유형간 성공요인의 중요도에 차이가 있는지 등에 대하여 실증분석을 하였다. 연구의 곁과 정기선사들은 제휴의 성과에 대하여 대체로 만족하고 있으며 제휴의 성공여부는 다양한 요인에 의하여 결정되며, 제휴의 유형에 따라 성공요인의 중요도에 차이가 있는 것으로 나타났다. The question of how to make strategic alliances work successfully is becoming increasingly important as more and more firms regard cooperative relationships as a means of improving their competitive position. The objectives of this research are to determine whether certain liner shipping alliance forms are more successful than others, whether the relative importance of reasons for successful liner shipping alliance varies with the different reasons, and whether the relative importance of reasons for alliance success varies with the form liner shipping alliances. The research findings have shown that the majority of liner shipping alliance forms, utilised by respondents in this survey, experienced a relatively high level of success. However, success was shown to be dependent upon a variety of factors and the reasons for successful alliance varied with the form of alliances.

A conceptual application of cooperative game theory to liner shipping strategic alliances

Since its advent, the liner shipping industry has been characterized by fierce competition and cooperation amongst the member carriers. In recent years, almost all the liners have sought extensive cooperation with others, as reflected mainly by the formation of strategic shipping alliances. Despite this, there are still some liners who prefer the ‘go-it-alone’ policy and have achieved relative success. It seems that cooperation is not always necessary for a liner company's success. It follows that a study that aims to find the rationale behind liner cooperation (or non-cooperation) is of great significance. Over many years of development, game theory has proved to be a useful tool in the study of economics. It is analytically applicable in this market. With these arguments in mind, this paper aims to apply cooperative game theory to analyse co-operation among members of liner shipping strategic alliances. This will involve: (i) presenting a detailed and systematic analysis of liner shipping strategic alliances: (ii) a concise overview of the development of game theory with specific focus on cooperative game theory, and (iii) deducing a conceptual framework through the application of cooperative game theory to liner shipping strategic alliances. The accomplishment of the aforementioned objectives will enhance understanding of inter-organizational relationships and decision-making behaviour in the liner shipping sector.

Maritime Transport The Importance of the "Core" in Explaining Shipping Alliances

Maritime Transport The Importance of the "Core" in Explaining Shipping Alliances

Ocean Shipping Alliances: The Wave of the Future?

Over the last decade, carriers have entered into operational relationships known as alliances to increase their product offerings and to reduce their costs. Carriers have been able to do so because alliances enable partners to rely on and to combine other carriers' operations in addition to their own. Although alliances have drastically improved operational efficiency, larger carriers will not take the logical next step and merge for a variety of reasons. Ironically, regulation through the Federal Maritime Commission is not one of the factors dissuading carriers from consolidating. This paper explains, from the carriers' point of view, the advantages and disadvantages of entering into alliances and explores the history of the US regulatory regime of cooperative agreements, including alliances. Thereafter, this paper analyses the factors that potentially will influence the future of alliances and predicts the effect of each of these factors. Overall, this paper concludes that carriers would prefer to enjoy the benefits of alliances without having to ally or to merge with another carrier; therefore, the real long-term goal of large carriers is the improvement of their services without the aid of another large carrier, regardless of whether the improvement is through an alliance or a merger.

Global change, local pain: intermodal seaport terminals and their service areas

The creation of global shipping alliances and the trend to post-Panamax container ships have put pressure on seaports to respond in such a way as to guarantee the continued success of intermodal terminals. This paper points out the globalisation that is taking place in container shipping and how ports are responding. Emphasis is put on terminal improvements in the form of post-Panamax cranes and on the nature of competition in the service areas of ports. Halifax and Vancouver are used as examples of ports trying to adapt in the new age of containerisation.

Impact of Global Shipping Alliances on Pacific Rim Seaports

(1998). Impact of Global Shipping Alliances on Pacific Rim Seaports. Maritime Studies: Vol. 1998, No. 98, pp. 1-29.