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Posted: January 24th, 2024
Analysis of the impacts of strategic alliances on the liner shipping industry: case of Asia - Europe route
Liner shipping is a vital component of global trade, transporting about 80% of the world's containerized cargo. Liner shipping companies face various challenges in the competitive and dynamic market, such as overcapacity, low freight rates, high fuel costs, environmental regulations, and geopolitical uncertainties. To cope with these challenges, liner shipping companies have formed strategic alliances, which are cooperative agreements among two or more carriers to share resources and coordinate operations on certain routes or regions.
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Strategic alliances have significant impacts on the liner shipping industry, especially on the Asia - Europe route, which is one of the busiest and most profitable routes in the world. This paper aims to analyze the impacts of strategic alliances on the liner shipping industry from three perspectives: operational, economic, and environmental.
Operational impacts
Strategic alliances enable liner shipping companies to improve their operational efficiency and service quality by sharing vessels, terminals, networks, and information. By sharing vessels, carriers can increase their fleet utilization, reduce their operating costs, and offer more frequent and reliable services to their customers. By sharing terminals, carriers can optimize their berth allocation, reduce their port congestion, and enhance their intermodal connectivity. By sharing networks, carriers can expand their market coverage, diversify their service portfolios, and increase their route flexibility. By sharing information, carriers can enhance their coordination, collaboration, and transparency among alliance partners and customers.
Economic impacts
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Strategic alliances also have positive economic impacts on the liner shipping industry by increasing the market concentration, bargaining power, and profitability of alliance members. By forming strategic alliances, carriers can reduce the number of competitors in the market and increase their market share and dominance. This can lead to higher freight rates and lower price volatility for alliance members. Moreover, strategic alliances can enhance the bargaining power of carriers against other stakeholders in the supply chain, such as shippers, ports, terminal operators, and regulators. This can result in lower input costs and higher service standards for alliance members. Furthermore, strategic alliances can improve the profitability of carriers by generating economies of scale and scope, synergies, and cost savings.
Environmental impacts
Strategic alliances also have beneficial environmental impacts on the liner shipping industry by reducing the greenhouse gas emissions, fuel consumption, and waste generation of alliance members. By sharing vessels, carriers can reduce the number of ships deployed on a route and optimize their sailing speed and route design. This can lower the carbon footprint and fuel consumption of alliance members. By sharing terminals, carriers can reduce the port emissions and waste generation of alliance members by minimizing their port stay time and optimizing their terminal operations. By sharing networks, carriers can reduce the empty container repositioning and multimodal transportation of alliance members by balancing their cargo flows and enhancing their intermodal integration.
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Conclusion
In conclusion, strategic alliances have significant impacts on the liner shipping industry from operational, economic, and environmental perspectives. Strategic alliances enable liner shipping companies to improve their operational efficiency and service quality, increase their market concentration and bargaining power, improve their profitability, and reduce their environmental impacts. However, strategic alliances also pose some challenges and risks for the liner shipping industry, such as antitrust issues, coordination problems, information asymmetry, and alliance instability. Therefore, liner shipping companies should carefully evaluate the costs and benefits of joining or leaving an alliance and adopt appropriate strategies to manage their alliance relationships.
References
- Cariou P., Fedi L., Dagnet F., 2017. The new dynamics of container shipping: The potential effects of increased consolidation. Research in Transportation Business & Management 25: 18-25.
- Lee P.T.W., Hu K.C., Chen T.L., 2019. Impacts of mega vessel deployment on container transshipment ports' competitiveness: The case study of Kaohsiung Port. Transportation Research Part A: Policy and Practice 120: 132-145.
- Wang K., Ng A.K.Y., Lam J.S.L., Fu X., 2020. The impacts of port infrastructure and logistics performance on economic growth: The mediating role of seaborne trade. Journal of Transport Geography 82: 102556.
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