Market Concentration and Dynamics in the Liner Shipping Industry

Container-ship sizes also continue to grow and average sizes of new deliveries and vessel deployment are also continuing to increase, bringing fierce market competition in the liner industry. Larger companies tend to order new-building larger ships and deploy these mega ships to main-lines. As for smaller companies, they rarely deploy large container ships due to having difficulties to fill them and arrange join services through mergers or alliances. Mergers and alliances have been important issues in this industry in recent years. Larger ships and market concentration may have potential benefits and drawbacks to the liner shipping companies. They reduce operating costs and also create more over-capacity and competition as well, these cost savings were passed on to the shippers. This market was tense and freight rates remained volatile, low rates leading low returns to the carriers. However, in the long term aspects, the mega trends toward to larger container ships and mega carriers and alliances will lead to more market concentration which may cause the market stability and less competition. Market concentration is related to industrial concentration, which concerns the distribution of production within an industry and market concentration may be used as a measure of competition. The purpose of this paper is to present and predict the future dynamics of this industry and the Herfindahl Hirschman Index (HHI) is applied to measure of the size of companies in relation to the industry and an indicator of the amount of competition among them. This paper analyzes the dynamics of this industry in several aspects of container ship fleet, individual carrier capacity and alliance capacity and derives HHI of the carriers and alliances to measure the market concentration. The results show that there was a dramatic change in 2014, HHI of liner alliances increase to 1,497 with total market share 75.1% so that the four alliances would result in highly concentrated markets and will be presumed to be likely to enhance market power.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: Figures; References; Tables;
  • Pagination: pp 220-227
  • Monograph Title: Proceedings of the International Forum on Shipping, Ports and Airports (IFSPA) 2015: Empowering Excellence in Maritime and Air Logistics: Innovation Management and Technology

Subject/Index Terms

Filing Info

  • Accession Number: 01609604
  • Record Type: Publication
  • ISBN: 9789623677967
  • Files: TRIS
  • Created Date: Aug 8 2016 3:17PM