Korean liner shipping in the era of global alliances

Abstract

In the course of the last two decades Korean shipping has emerged as a major player in the liner market. In 1970 there was not a single container ship in the Korean¯eet; yet, within the next two decades, shipping companies from Korea have become included among the top 10 liner operators in the world, in the context of a spectacular ascent of Asian companies in international container shipping. During the same period the organization of liner shipping itself underwent major changes. In the 1970s and 1980s, pools and powerful consortia prevailed, maximizing frequency and optimizing¯eet deployment under pressure from the high investment entailed by containerization. The era of consortia, however, came to a close in the early 1990s; intermodalism and the expansion of the major liner companies into forward and backward segments of the transport chain rendered them in¯exible for pursuing individual strategies of product diversi® cation with a view to larger market shares. Global alliances were ® nally born as a result of a major reshuƒ ing of co-operation agreements and of the globalization of the production process on the demand side. The aim of this paper is to follow and assess the options available to an aggressive low-cost national eet in its journey to competitive maturity through a period of changing organization of liner shipping, focusing on the course of the leading Korean container company, and one of the largest in the world today, Hanjin. It highlights at the same time both the deep structural changes which liner shipping has undergone in the last two decades and the e ects of current changes, such as the recent wave of mergers in this sector.

Liner alliances in the globalization era: a strategic tool for Asian container carriers

“…Alliances and, in general, collaboration in operations have arisen in both these transport industries from co-operation made imperative by the other quintessential element of scheduled transport: frequency of services [16]. The combination of required frequency and of heavy expenditure for asset replacement, due to the advent of container ships, was indeed the main reason for the emergence of the mode of cooperation which made its mark on post-containerization liner shipping: liner shipping consortia [17]. General cargo ships had to be abandoned quickly in favour of a new type of vessel capable of reduced port-time, increased productivity and superior quality of service.…”

“…Evergreen has always followed an independent strategy, participating onlyÐ and rather exceptionally [31]Ð in looser forms of cooperation such as joint-services, and the string of agreements it currently has are with much smaller-scale carriers and not with any major line [32]. On the other hand, the Japanese lines, together with the leading carriers of Singapore and Hong Kong, were among the main members of the consortia system operating within the context of the Far Eastern Freight Conference [17]. As all major Asian carriers, apart from the leadingÐ both in size and globality of operations [33]Ð Evergeen, have been the constituent members of the alliance system in the mid-1990s, this high degree of commonality of attitude towards this form of co-operation points to more universal advantages of the alliance system, compared to other co-operation forms.…”

“…See [17]for accomplished mergers and acquisitions involving Asian companies. Although looking as the next in the line of buyers of Western companies with a long tradition, Cosco abandoned, in April 1998, its bid for the two Italian companies Lloyd Triestino and Italia Navigazione, both under privatization.…”

Transhipment Port Selection and Decision-making Behaviour: Analysing the Taiwanese Case

“…This already ambitious target for today's liner carriers is also combined with the requirements of shippers for the provision of more than just the shipping link of the transport and distribution chain. In this context, global carriers are not only required to provide the organisation of intermodal transport, but also the provision of total logistics often including added value services as discussed in Thanopoulou et al (1999) and in . Amidst these pressures, port selection becomes a key element not only for achieving a cost advantage, but also for achieving product differentiation to the extent that differences in the quality of service are recorded as significant.…”

To partner or to acquire? A longitudinal study of alliances in the shipping industry

“…The focus of industry studies has been on the high-profile merger and acquisition transactions [7] and little is known about the overall trends or patterns of such transactions. Prior research on alliances [9][10][11] has been in the form of case studies on companies (some major ones, or those from a particular region) providing in-depth information about them. Large sample, comprehensive studies of all firms in the industry have generally not been undertaken.…”