The economics of concentration in shipping: Consequences for the VLCC tanker sector

Merikas, Andreas; Merikas, Anna; Polemis, Dionysis; Triantafyllou, Anna

doi:10.1057/mel.2013.19

Cited by 9 publications

(5 citation statements)

References 15 publications

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“…Within the container management industry, there has traditionally been strong competition between operators, who, despite their large size, operate globally and yet at the same time face intense local competition for shorter journeys (W. T.O., 2013). The growth of freight flows on a route has historically led to a greater concentration of freight in the hands of large operators (Merikas, Merikas, Polemis, & Triantafyllou, 2013;Sys, 2009; U.N.C.T.A.D., 2010). Large trade flows could, however, simultaneously result in an increase in the degree of competition on that route (Kumar & Hoffmann, 2002) by attracting new competitors from different transport modalities (Laroche, Sys, Vanelslander, & van de Voorde, 2017).…”

Section: Modelling the Transport Cost Functionmentioning

confidence: 99%

A global model for the estimation of transport costs

Camisón-Haba

Clemente-Almendros

2019

Economic Research-Ekonomska Istraživanja

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This paper presents a model of transport cost determinants that corrects the specification problems observed in the transport cost equations in previous literature. The model includes freight transport supply and demand, as well as infrastructure quality and non-time-varying fixed effects related to the route, the exporting company, its strategy and the product. In addition, when defining the origin-destination routes, the model more appropriately accounts for economies of network and economies of scale. In order to build the database, 583 personal interviews were conducted over the course of 2011 with producing companies that ship goods and with the logistics operators. As a result, 305 routes between the Valencian Community and Europe were identified, from which 6390 observations were obtained. The results show that distance is a determining factor in the cost of transport, notwithstanding the infrastructure coverage and improvements in quality. At the same time, the analysis confirms that transport cost is more sensitive to the degree of competition on the route, the volume of freight on the route and the volume of goods shipped on the route by the exporting company, the configuration of the supply chain, the company strategy and the coverage and quality of transport infrastructure.

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Section: Modelling the Transport Cost Functionmentioning

confidence: 99%

A global model for the estimation of transport costs

Camisón-Haba

Clemente-Almendros

2019

Economic Research-Ekonomska Istraživanja

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“…Both tendencies (concentration and increasing capacity) play a significant role on liner shipping markets. In the real world, the number of strategic alliances has been decreasing and M&A movements between global ocean carriers have strongly consolidated the whole liner shipping industry over the past decades (Cariou 2002, Hirata 2017, Merikas et al 2014, Chen et al 2017, ITF 2018.…”

Section: Discussionmentioning

confidence: 99%

“…Consequently, a positive relationship should exist between individual profits by trade line and the firm's market share. Expectedly, such a relationship should be affected by the level of concentration as fewer competitors increases individual profit (Orzen 2008, Merikas et al 2014, as well as demand conditions (intercept and slope of the demand curve).…”

Section: Hypothesesmentioning

confidence: 99%

Capacity management by global shipping alliances: findings from a game experiment

Cariou

Guillotreau

2021

Marit Econ Logist

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The present article uses game experiments to understand the dynamics of oligopolistic competition in liner shipping markets. We show how a limited number of carriers, interacting over time, acting independently or grouped into global shipping alliances, are able to effectively and jointly reduce excess capacity. A serious game (called TRALIN) has been designed to this end, mimicking the global liner shipping market where four to five global shipping alliances compete on a set of 12 routes, connecting four ports of call for a few sequential voyages. Carriers are initially subject to low profits due to overcapacity and have to anticipate competitor capacity decisions and vessel deployment simultaneously. Results from 18 experimental games with 4644 decisions were collected and statistically analysed to confirm the main tenets of oligopoly theory and to highlight the existence of a learning effect from successive interactions (rounds in games). Our results suggest that a 'coordinated' reduction in capacity is more likely to occur when the number of competitors is limited, but even more when excessive capacity is high, urging the need for cooperation; a learning effect amongst market participants is detected over time. Serious games are flexible tools for improving our understanding of competition, the organization of liner shipping networks, and the role played by global shipping alliances. This tool may help practitioners to understand how over-capacity is evolving within the competitive process, and what factors may influence it. Although voluntarily made simplistic for the purpose of experiments, our design allows one to focus on the main tenets of oligopoly theory as applied to shipping markets.

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“…Because of shortcomings of separate measures, it is common to employ multiple indicators in market structure analysis. Merikas et al [11] investigated the change in the structure of the tanker shipping market and its impact on freight rates by applying the index and the index. They found that market concentration has increased since 1993.…”

Section: =1mentioning

confidence: 99%

“…First, the analysis can be performed for separate segments (e.g., the market for transshipment operators or the market for main-haulage operators). Some literature has analyzed specific segments of IFT markets; see for example [8], [9], [10], [11]. However, due to the multistage characteristic of IFT services, the segmental analysis gives an incomplete view of the IFT market.…”

Section: Introductionmentioning

confidence: 99%

Analyzing competition in intermodal freight transport networks: The market implication of business consolidation strategies

Saedi

Wiegmans

Behdani

et al. 2017

Research in Transportation Business & Management

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To cope with an intense and competitive environment, intermodal freight transport operators have increasingly adopted business practices -like horizontal and vertical business integration-which aim to reduce the operational costs, increase the profit margins, and improve their competitive position in the market. These strategies and business practices could potentially affect the competition level in the IFT market by increasing the market concentration. The impact can be on the separate submarkets (e.g., transshipment market or mainhaulage market) or the whole market for IFT services at the network level. To investigate the impact of these business practices on the market structure of IFT networks, we present a model to analyze the market structure of IFT submarkets and extend the results to the network level. Using this multi-level market analysis model, we can evaluate the decisions made by firms and the market outcomes that result. The application of the presented model is also illustrated using a numerical example. The numerical example shows, for instance, that the impact of a merger, as a business practice, on the competition level in an IFT market -and its submarkets-depends on the merger type (horizontal and vertical). Furthermore, different indicators that "represent" market structure and competition, might react differently to a merger in an IFT network.

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The economics of concentration in shipping: Consequences for the VLCC tanker sector

Cited by 9 publications

References 15 publications

A global model for the estimation of transport costs

A global model for the estimation of transport costs

Capacity management by global shipping alliances: findings from a game experiment

Analyzing competition in intermodal freight transport networks: The market implication of business consolidation strategies

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