Independence or alliance? Shipping lines’ capacity configuration and strategies analysis facing market disturbance risk

ABSTRACT

The COVID-19 pandemic, geopolitical dynamics, and economic instability have profoundly disturbed the market size and competition of shipping lines. In the face of disturbances, shipping lines can implement capacity configuration (replenishing capacity, keeping capacity, and reselling capacity) and form shipping alliances. Considering two homogeneous shipping lines, we use a two-stage approach to investigate shipping lines’ capacity configuration and co-opetition strategies under different market disturbances. The results suggest that the strategy of capacity allocation depends on the trade-off between the market expansion effect and the market shrinkage effect. Moreover, we show that the shipping alliance can ease competition by increasing the freight rate and decreasing shipper demand, which can reduce the impact of disturbance on it. Furthermore, we find that the shipping alliance will keep the overall capacity stability of shipping lines the same.

KEYWORDS:

• Disturbance
• shipping alliance
• capacity configuration
• KKT conditions
• co-opetition

Acknowledgments

The authors sincerely thank the editor and the anonymous reviewers for their constructive and important comments on the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. https://edition.cnn.com/2022/03/01/business/russia-shipping-halt-maersk-msc/index.html

2. RCEP is a free trade agreement among 15 countries in the Asia-Pacific region. This agreement aims to eliminate tariffs and reduce non-tariff barriers to facilitate regional trade and economic cooperation.

Additional information

Funding

This work was supported by National Natural Science Foundation of China [72302030].