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Vertical integration and exclusivities in maritime freight transport

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  • CANTOS-SANCHEZ, Pedro

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain)

  • MONER-COLONQUES, Rafael

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain)

  • SEMPERE-MONERRIS, José J.

    (Department of Economic Analysis and ERI-CES, University of Valencia, Spain and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • ALVAREZ-SANJAIME, Oscar

    (Department of Economic Analysis and ERI, University of Valencia, Spain)

Abstract

A key recent theme in maritime freight transport is the involvement of shipping lines in terminal management. Such investments are costly but allow liners to provide better service. Most of these new terminals are dedicated terminals but some are non-exclusive and let rivals access them for a fee. In this paper, we show that a shipping line that builds its own terminal finds it strategically profitable i) to continue routing part of its cargo through the open port facilities, and ii) to keep its terminal non-exclusive. In this way, the liner investor pushes part of the rival's freight from the open to the new terminal. Besides, under non-exclusivities, the shipping lines offer a wider variety of services, total freight increases and the resulting equilibrium fares are higher than with a dedicated terminal.

Suggested Citation

  • CANTOS-SANCHEZ, Pedro & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & ALVAREZ-SANJAIME, Oscar, 2011. "Vertical integration and exclusivities in maritime freight transport," CORE Discussion Papers 2011015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2011015
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    References listed on IDEAS

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    Cited by:

    1. Llano, C. & De la Mata, T. & Díaz-Lanchas, J. & Gallego, N., 2017. "Transport-mode competition in intra-national trade: An empirical investigation for the Spanish case," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 334-355.
    2. Sanchez Rodrigues, V. & Pettit, S. & Harris, I. & Beresford, A. & Piecyk, M. & Yang, Z. & Ng, A., 2015. "UK supply chain carbon mitigation strategies using alternative ports and multimodal freight transport operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 78(C), pages 40-56.
    3. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    4. Hong-Oanh Nguyen & Anthony Chin & Jose Tongzon & Mahinda Bandara, 2016. "Analysis of strategic pricing in the port sector: The network approach," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 18(3), pages 264-281, September.
    5. Sheng, Dian & Li, Zhi-Chun & Fu, Xiaowen & Gillen, David, 2017. "Modeling the effects of unilateral and uniform emission regulations under shipping company and port competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 99-114.

    More about this item

    Keywords

    freight transport; shipping lines; vertical integration;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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