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

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  • 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
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    References listed on IDEAS

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    1. 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.
    2. Zhao, Chuan & Guo, Qidong & Dong, Kangyin & Mo, Lipo, 2024. "Multi-scenario analyses for antitrust immunity policies on shipping alliances: A dynamic tripartite evolutionary game perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 179(C).
    3. Tvedt, Jostein & Hovi, Inger Beate, 2024. "Container shipping: A market equilibrium perspective on freight rates formation post-Covid-19," Transportation Research Part A: Policy and Practice, Elsevier, vol. 179(C).
    4. 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).

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