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Verifying liner Shipping Alliance’s stability by applying core theory

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  • Yang, Dong
  • Liu, Miaojia
  • Shi, Xiaoning

Abstract

The core is a vital concept in cooperative game theory and has been widely used in analyzing alliance’s stability. It is especially interesting to apply core theory in liner shipping market due to the latter’s exceptional characteristic of non-homogeneous cost curves as well as divisible and fluctuant demand. Having observed some new phenomena and trends in the industry, this paper studies the economic performance and stability of liner shipping alliance by applying core theory where business cooperation is partly realized by delivering joint-service with mega container ships. To demonstrate the core situation in liner shipping alliance, a cost function is first identified on the basis of two assumptions regarding cooperation: 1) sharing or pooling vessels and 2) deploying mega container ships if needed. Taking cost functions as basis, two conditions of approaching core may be groomed, i.e., collective rationality and individual rationality. The first condition is discussed from the perspective of market, while the second condition is studied within the alliance. Stability of liner shipping alliance is then observed based on these two conditions. An illustrative case study is conducted in order to show some implications and explicitly clarify the theory.

Suggested Citation

  • Yang, Dong & Liu, Miaojia & Shi, Xiaoning, 2011. "Verifying liner Shipping Alliance’s stability by applying core theory," Research in Transportation Economics, Elsevier, vol. 32(1), pages 15-24.
    • Handle: RePEc:eee:retrec:v:32:y:2011:i:1:p:15-24
    DOI: 10.1016/j.retrec.2011.06.002
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    4. Rau, Philipp & Spinler, Stefan, 2017. "Alliance formation in a cooperative container shipping game: Performance of a real options investment approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 155-175.
    5. Daniele Crotti & Claudio Ferrari & Alessio Tei, 2020. "Merger waves and alliance stability in container shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 446-472, September.
    6. Mohammad Ghorbani & Michele Acciaro & Sandra Transchel & Pierre Cariou, 2022. "Strategic alliances in container shipping: A review of the literature and future research agenda," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(2), pages 439-465, June.
    7. Evangelos Kounoupas & Angeliki Pardali, 2015. "Adding some context to port marketing: Exploring the content and measurement of market orientation in the port industry," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(1-2), pages 3-26, january-m.
    8. 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.
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    10. Chun, So Yeon & Kleywegt, Anton J & Shapiro, Alexander, 2011. "Revenue management in resource exchange seller alliances," MPRA Paper 34657, University Library of Munich, Germany.
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