IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v72y2018icp159-170.html
   My bibliography  Save this article

Modelling the profitability of container shipping lines: Theory and empirical evidence

Author

Listed:
  • Wu, Wei-Ming
  • Huang, Deng-Shing

Abstract

This paper contributes to maritime literature by constructing a theoretical model to empirically examine the determinants of profitability for container carriers. The findings show that theoretical derivations along are not sufficient to completely identify the impacts of changes in variables on the profitability of carriers. By contrast, empirical results of this study show that the impacts on the carriers’ profits are significantly positive with respect to regional economic growth, individual fleet expansion and technological progress, but significantly negative with respect to the expansion of regional fleet capacity and soaring fuel prices. Unexpectedly, growing vessel size brings an insignificant negative effect to the profitability of carriers. According to the implications derived from the theoretical model and empirical study, this study also suggests that quantity-oriented rather than price-oriented strategies will be more effective to improve the profitability of carriers. Emphasizing the effect of shipping alliances on market reactions to freight rate changes and on the improved chances to realize scale economies of larger ships, this paper also provides justification of government regulatory policies granting limited antitrust immunity for container shipping lines.

Suggested Citation

  • Wu, Wei-Ming & Huang, Deng-Shing, 2018. "Modelling the profitability of container shipping lines: Theory and empirical evidence," Transport Policy, Elsevier, vol. 72(C), pages 159-170.
    • Handle: RePEc:eee:trapol:v:72:y:2018:i:c:p:159-170
    DOI: 10.1016/j.tranpol.2018.01.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X16302499
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2018.01.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tran, Nguyen Khoi & Haasis, Hans-Dietrich, 2015. "An empirical study of fleet expansion and growth of ship size in container liner shipping," International Journal of Production Economics, Elsevier, vol. 159(C), pages 241-253.
    2. Wu, Wei-Ming, 2009. "An approach for measuring the optimal fleet capacity: Evidence from the container shipping lines in Taiwan," International Journal of Production Economics, Elsevier, vol. 122(1), pages 118-126, November.
    3. Wei-Ming Wu, 2012. "Capacity utilization and its determinants for a container shipping line: theory and evidence," Applied Economics, Taylor & Francis Journals, vol. 44(27), pages 3491-3502, September.
    4. Panayides, Photis M. & Lambertides, Neophytos & Savva, Christos S., 2011. "The relative efficiency of shipping companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(5), pages 681-694, September.
    5. Sidney Gilman, 1999. "The Size Economies and Network Efficiency of Large Containerships," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 1(1), pages 39-59, September.
    6. Jasmine S. L. Lam & Wei Yim Yap & Kevin Cullinane, 2007. "Structure, conduct and performance on the major liner shipping routes 1," Maritime Policy & Management, Taylor & Francis Journals, vol. 34(4), pages 359-381, August.
    7. Wu, Wei-Ming & Lin, Jenn-Rong, 2015. "Productivity growth, scale economies, ship size economies and technical progress for the container shipping industry in Taiwan," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 73(C), pages 1-16.
    8. 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.
    9. Mike Fusillo, 2003. "Excess Capacity and Entry Deterrence: The Case of Ocean Liner Shipping Markets," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 5(2), pages 100-115, June.
    10. Franck, Bernard & Bunel, Jean-Claude, 1991. "Contestability, competition and regulation : The case of liner shipping," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 141-159, March.
    11. Notteboom, Theo E. & Vernimmen, Bert, 2009. "The effect of high fuel costs on liner service configuration in container shipping," Journal of Transport Geography, Elsevier, vol. 17(5), pages 325-337.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhong, Huiling & Zhang, Fa & Gu, Yimiao, 2021. "A Stackelberg game based two-stage framework to make decisions of freight rate for container shipping lines in the emerging blockchain-based market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    2. Turkay Yildiz, 2019. "Design and Analysis of a Lightweight Composite Shipping Container Made of Carbon Fiber Laminates," Logistics, MDPI, vol. 3(3), pages 1-20, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiawei Ge & Mo Zhu & Mei Sha & Theo Notteboom & Wenming Shi & Xuefeng Wang, 2021. "Towards 25,000 TEU vessels? A comparative economic analysis of ultra-large containership sizes under different market and operational conditions," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(4), pages 587-614, December.
    2. Wu, Wei-Ming & Lin, Jenn-Rong, 2015. "Productivity growth, scale economies, ship size economies and technical progress for the container shipping industry in Taiwan," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 73(C), pages 1-16.
    3. Wu, Wei-Ming, 2009. "An approach for measuring the optimal fleet capacity: Evidence from the container shipping lines in Taiwan," International Journal of Production Economics, Elsevier, vol. 122(1), pages 118-126, November.
    4. Pierre, Cariou & Francesco, Parola & Theo, Notteboom, 2019. "Towards low carbon global supply chains: A multi-trade analysis of CO2 emission reductions in container shipping," International Journal of Production Economics, Elsevier, vol. 208(C), pages 17-28.
    5. Wang, Hua & Meng, Qiang & Zhang, Xiaoning, 2014. "Game-theoretical models for competition analysis in a new emerging liner container shipping market," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 201-227.
    6. Zheng, Jianfeng & Yang, Dong, 2016. "Hub-and-spoke network design for container shipping along the Yangtze River," Journal of Transport Geography, Elsevier, vol. 55(C), pages 51-57.
    7. Nikola Kutin & Zakaria Moussa & Thomas Vallée, 2018. "Factors behind the Freight Rates in the Liner Shipping Industry," Working Papers halshs-01828633, HAL.
    8. Hamid Saeedi & Bart Wiegmans & Behzad Behdani, 2021. "Measuring concentration in transhipment markets: methodologies and application to a European case," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(3), pages 548-568, September.
    9. Grace W.Y. Wang & Su-Han Woo & Joan Mileski, 2014. "The relative efficiency and financial risk assessment of shipping companies," Maritime Policy & Management, Taylor & Francis Journals, vol. 41(7), pages 651-666, December.
    10. Productivity Commission, 2005. "Review of Part X of the Trade Practices Act 1974: International Liner Cargo Shipping," Inquiry Reports, Productivity Commission, Government of Australia, number 32.
    11. Milan Janić, 2018. "Multidimensional examination of the performances of a liner shipping network: trunk line/route operated by conventional (Panamax Max) and mega (ULC - ultra large container) ships," Journal of Shipping and Trade, Springer, vol. 3(1), pages 1-35, December.
    12. Notteboom, Theo E. & Parola, Francesco & Satta, Giovanni & Pallis, Athanasios A., 2017. "The relationship between port choice and terminal involvement of alliance members in container shipping," Journal of Transport Geography, Elsevier, vol. 64(C), pages 158-173.
    13. Francesco Parola & Giovanni Satta & Riccardo Spinelli, 2013. "L?impatto delle strategie corporate sulle performance delle imprese di logistica via mare," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2013(2), pages 201-225.
    14. Petri Helo & Henri Paukku & Tero Sairanen, 2021. "Containership cargo profiles, cargo systems, and stowage capacity: key performance indicators," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(1), pages 28-48, March.
    15. Sun, Zhuo & Zheng, Jianfeng, 2016. "Finding potential hub locations for liner shipping," Transportation Research Part B: Methodological, Elsevier, vol. 93(PB), pages 750-761.
    16. Hyo-Won Kang & Grace W Y Wang & Hee-Seok Bang & Su-Han Woo, 2016. "Economic performance and corporate financial management of shipping firms," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 18(3), pages 317-330, September.
    17. Sergi Ros Chaos & Athanasios A. Pallis & Sergi Saurí Marchán & David Pino Roca & Agustín Sánchez-Arcilla Conejo, 2021. "Economies of scale in cruise shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(4), pages 674-696, December.
    18. Zheng, Jianfeng & Meng, Qiang & Sun, Zhuo, 2015. "Liner hub-and-spoke shipping network design," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 75(C), pages 32-48.
    19. Hofmann, Erik & Solakivi, Tomi & Töyli, Juuso & Zinn, Martin, 2018. "Oil price shocks and the financial performance patterns of logistics service providers," Energy Economics, Elsevier, vol. 72(C), pages 290-306.
    20. Magirou, Evangelos F. & Psaraftis, Harilaos N. & Bouritas, Theodore, 2015. "The economic speed of an oceangoing vessel in a dynamic setting," Transportation Research Part B: Methodological, Elsevier, vol. 76(C), pages 48-67.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:72:y:2018:i:c:p:159-170. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.