An approach for measuring the optimal fleet capacity: Evidence from the container shipping lines in Taiwan
AbstractExcess capacity emerges as a persistent problem in the shipping industry and plays an essential role in determining the level of ocean freight. Consequently, the optimal fleet capacity has become a critical and frequently discussed issue within the container shipping industry. In practice, the designed capacity of a vessel is the most popular approach for measuring the fleet capacity for a shipping line. Despite this, it continues to lack the operational and economical reasonableness necessary to properly define or measure the capacity provided by a shipping line. This study has developed an economic model to find the optimal fleet capacity. In turn, the corresponding installation ratios have been computed to examine the level of excess capacity present and evaluate the performance of fleet development for three container shipping lines in Taiwan. The findings suggest that the shipping lines with deep-sea service routes are likely to deliberately hold excess capacity. Thus, the strategy of holding excess capacity to deter entry and maintain market power may have implicitly played a crucial role in determining the scale of fleet capacity for a container shipping line.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Production Economics.
Volume (Year): 122 (2009)
Issue (Month): 1 (November)
Contact details of provider:
Web page: http://www.elsevier.com/locate/ijpe
Excess capacity Container shipping Optimal fleet capacity;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Coelli, Tim & Grifell-Tatje, Emili & Perelman, Sergio, 2002.
"Capacity utilisation and profitability: A decomposition of short-run profit efficiency,"
International Journal of Production Economics,
Elsevier, vol. 79(3), pages 261-278, October.
- COELLI, Tim & GRIFELL-TATJE, Emili & PERELMAN, Sergio, 2001. "Capacity utilisation and profitability: a decomposition of short run profit efficiency," CORE Discussion Papers 2001052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn.
- Abdul Azeez, 2001. "Utilization of optimal capacity in Indian manufacturing, 1974-1996," Applied Economics Letters, Taylor & Francis Journals, vol. 8(9), pages 623-628.
- Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-83, June.
- Sjostrom William, 2004. "Ocean Shipping Cartels: A Survey," Review of Network Economics, De Gruyter, vol. 3(2), pages 1-28, June.
- Mike Fusillo, 2003. "Excess Capacity and Entry Deterrence: The Case of Ocean Liner Shipping Markets," Maritime Economics and Logistics, Palgrave Macmillan, vol. 5(2), pages 100-115, June.
- Imai, Akio & Nishimura, Etsuko & Papadimitriou, Stratos & Liu, Miaojia, 2006. "The economic viability of container mega-ships," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(1), pages 21-41, January.
- Sjostrom, William, 1989. "Collusion in Ocean Shipping: A Test of Monopoly and Empty Core Model s," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1160-79, October.
- Nelson, Randy A, 1989. "On the Measurement of Capacity Utilization," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 273-86, March.
- Telser,Lester G., 1987. "A Theory of Efficient Cooperation and Competition," Cambridge Books, Cambridge University Press, number 9780521306195, December.
- Viton, Philip A, 1981. "A Translog Cost Function for Urban Bus Transit," Journal of Industrial Economics, Wiley Blackwell, vol. 29(3), pages 287-304, March.
- Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
- Don Taylor, G. & Love, Doug M. & Weaver, Miles W. & Stone, James, 2008. "Determining inventory service support levels in multi-national companies," International Journal of Production Economics, Elsevier, vol. 116(1), pages 1-11, November.
- Pirrong, Stephen Craig, 1992. "An Application of Core Theory to the Analysis of Ocean Shipping Markets," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 89-131, April.
- Caves, Douglas W & Christensen, Laurits R & Swanson, Joseph A, 1981. "Productivity Growth, Scale Economies, and Capacity Utilization in U.S. Railroads, 1955-74," American Economic Review, American Economic Association, vol. 71(5), pages 994-1002, December.
- von Ungern-Sternberg, Thomas, 1988.
"Excess Capacity as a Commitment to Promote Entry,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 37(2), pages 113-22, December.
- Thomas VON UNGERN-STERNBERG, 1988. "Excess Capacity as a Commitment to Promote Entry," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 8801, Université de Lausanne, Faculté des HEC, DEEP.
- Osborne, Martin J. & Pitchik, Carolyn, 1983.
"Cartels, Profits, and Excess Capacity,"
83-09, C.V. Starr Center for Applied Economics, New York University.
- Dixit, Avinash, 1980.
"The Role of Investment in Entry-Deterrence,"
Royal Economic Society, vol. 90(357), pages 95-106, March.
- Dixit, Avinash, 1979. "The Role of Investment in Entry-Deterrence," The Warwick Economics Research Paper Series (TWERPS) 140, University of Warwick, Department of Economics.
- Rodriguez-Alvarez, Ana & Tovar, Beatriz & Trujillo, Lourdes, 2007. "Firm and time varying technical and allocative efficiency: An application to port cargo handling firms," International Journal of Production Economics, Elsevier, vol. 109(1-2), pages 149-161, September.
- Sidney Gilman, 1999. "The Size Economies and Network Efficiency of Large Containerships," Maritime Economics and Logistics, Palgrave Macmillan, vol. 1(1), pages 39-59, September.
- Michael C Ircha, 2001. "Serving Tomorrow's Mega-Size Containerships: The Canadian Solution," Maritime Economics and Logistics, Palgrave Macmillan, vol. 3(3), pages 318-332, September.
- Mike Fusillo, 2004. "Is Liner Shipping Supply Fixed?," Maritime Economics and Logistics, Palgrave Macmillan, vol. 6(3), pages 220-235, September.
- Kayakutlu, Gulgun & Buyukozkan, Gulcin, 2011. "Assessing performance factors for a 3PL in a value chain," International Journal of Production Economics, Elsevier, vol. 131(2), pages 441-452, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.