Market structure and horizontal growth strategies – A case study of the container shipping industry

This article aims to review the structural transformation in the container shipping industry from 1995 to 2020 and identify the growth strategies of global carriers to enhance their market presence. Along with large investments in mega vessels, the growing deployment of charter capacity in all ship sectors has been a prominent trend in fleet expansion. The waves of mergers/acquisitions and bankruptcies have narrowed the group of global carriers. In addition to internal and external growth, they have been increasingly involved in strategic alliances to expand service coverage and compete well with powerful rivals. A few mega carriers have progressively captured the industry. In 2020, the Top 12 controlled 88 % of the global supply, and nearly 56 % was in the hands of the Top 4. Besides the substantial expansion of the four biggest carriers, we can identify the de-concentration within this gigantic group through the less inequality between their market shares.

The Vulnerability and Resilience of the Global Container Shipping Industry

Intermodal shipping containers, standardized and capable of being carried on trucks, trains, barges, or ships, have transformed the global economy since they were introduced in 1959. By allowing previously separated segments of regional and global transport systems to interact, they have vastly expanded global trade and facilitated supply chains that stretch around the world. But vulnerabilities in the system became apparent during the COVID-19 pandemic. Problems at key bottlenecks in the system, compounded by an unexpected six-day shutdown of the vital Suez Canal, precipitated global disruptions leading to shortages of goods and soaring prices around the world. As the global shipping industry recovers, it will have an opportunity to transition toward a system that is more resilient.

Monopoly in the container shipping market: an econometric approach

PurposeSince the 2010s, market conditions for container shipping companies have been deteriorating owing to decreasing container cargo trade and increasing supply capacity. This study aims to contribute to the empirical literature on the container shipping industry market structure. Specifically, this study aims to investigate the extent of market competition.Design/methodology/approachThis study analyzes the market structure and evaluates the market power of shipping companies through a non-structural test.FindingsThe H-statistic for the entire period of 2004–2018 was 0.37, which is significantly different from zero. This indicates the absence of monopoly pricing throughout the entire period. For the time-phased estimates, the H-statistic between 2004 and 2008 is 0.15, which is not significantly different from zero. On the other hand, the H-statistic from 2009 to 2018 was 0.40, which differs significantly from zero.Originality/valueAs the Far East Freight Conference had released tariffs and charge rates by item for container shipping routes, monopolistic pricing is said to have appeared until the European Union abolished the European Economic Community (No. 4056/86) in 2008, before the economic crisis. However, this study indicates that pricing in the container shipping industry has been distinctly non-monopolistic; further, competition seems to have intensified since 2008. Industry competitiveness is of interest not only to academics but also to practitioners, including policymakers, especially when considering competition policies.

AN APPLICATION OF FUZZY ANALYTIC HIERARCHY PROCESS TO OVERCAPACITY ABSORBING METHODS IN CONTAINER SHIPPING

The market in container shipping has been characterised as highly cyclical. In a depressed stage of the cycle, with a sharp decrease in demand, the gap between supply and demand widens significantly leading to a deepening overcapacity in the sector. In order to reduce overcapacity in the container shipping sector specific actions have been undertaken by such shipping operators. This paper describes a study which modelled certain selection criteria applied to overcapacity absorbing methods for containership companies. The relative ranking of each criterion was determined through a fuzzy- AHP method. In order to conduct the method, five main and twenty seven sub-criteria were determined. The results of this approach showed that during the times of a collapsed market the most preferred type of overcapacity absorbing method is to lay-up vessels, followed by adopting slow-steaming and thirdly, scrapping. Newbuilding contract cancellation/postponement and service suspension were found to have the least effect.

EVALUATING KEY RISK FACTORS AFFECTING CARGO DAMAGES ON EXPORT OPERATIONS FOR CONTAINER CARRIERS IN TAIWAN

The main purpose of this article is to apply the Analytic Hierarchy Process (AHP) method to analyse key risk factors affecting cargo damages on export operations for container shipping carriers in Taiwan. Based on the literature and experts’ opinions, a hierarchical structure with three risk aspects and eleven risk factors was constructed. We then applied the AHP procedure and AHP experts’ questionnaires to evaluate the key risk factors. The empirical results showed that: (1) ‘Shipping proxy phase’ is the most important aspect affecting cargo damages on export operations for container shipping carriers in Taiwan. (2) In order of relative importance, the top four key risk factors are “shipper’s concealed items have not been reported,” “inappropriate cargo packaging,” “insecure fixation between the container and ship deck,” and “error in printed documents.” Furthermore, some recommendations concerning effective risk management strategies and advices are provided for container shipping carriers.

The 2020s political economy of machine translation

This article specifies and explores the hypothesis that the diversity of human languages, right now a barrier to “interoperability” in communication and trade, will become significantly less of a barrier as machine translation technologies are deployed over the next several years. We argue that machine translation will become the 2020's analogy for ideas, to what container shipping did for goods trade in the second half of the twentieth century. But as with container shipping or railroads in the nineteenth century, this new boundary-cost and transaction-cost reducing technology does not reduce all boundary and transaction costs equally, and so creates new challenges for the distribution of ideas and thus for innovation and economic growth. How we develop, license, commercialize, and deploy machine translation will be a critical determinant of its impact on trade, political coalitions, diversity of thought and culture, and the distribution of wealth.