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Ocean Shipping Alliances: The Wave of the Future?

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  • Edward J Sheppard

    (Partner, Thompson Coburn, Washington, DC, USA)

  • David Seidman

    (Associate, Thompson Coburn, Washington, DC, USA)

Abstract

Over the last decade, carriers have entered into operational relationships known as alliances to increase their product offerings and to reduce their costs. Carriers have been able to do so because alliances enable partners to rely on and to combine other carriers' operations in addition to their own. Although alliances have drastically improved operational efficiency, larger carriers will not take the logical next step and merge for a variety of reasons. Ironically, regulation through the Federal Maritime Commission is not one of the factors dissuading carriers from consolidating. This paper explains, from the carriers' point of view, the advantages and disadvantages of entering into alliances and explores the history of the US regulatory regime of cooperative agreements, including alliances. Thereafter, this paper analyses the factors that potentially will influence the future of alliances and predicts the effect of each of these factors. Overall, this paper concludes that carriers would prefer to enjoy the benefits of alliances without having to ally or to merge with another carrier; therefore, the real long-term goal of large carriers is the improvement of their services without the aid of another large carrier, regardless of whether the improvement is through an alliance or a merger.International Journal of Maritime Economics (2001) 3, 351–367. doi: 10.1057/palgrave.ijme.9100025

Suggested Citation

  • Edward J Sheppard & David Seidman, 2001. "Ocean Shipping Alliances: The Wave of the Future?," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 3(4), pages 351-367, December.
    • Handle: RePEc:pal:marecl:v:3:y:2001:i:4:p:351-367
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    Citations

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    Cited by:

    1. Mingming Leng & Chunlin Luo & Liping Liang, 2021. "Multiplayer Allocations in the Presence of Diminishing Marginal Contributions: Cooperative Game Analysis and Applications in Management Science," Management Science, INFORMS, vol. 67(5), pages 2891-2903, May.
    2. Cruijssen, F. & Braysy, O. & Dullaert, W. & Fleuren, H.A. & Salomon, M., 2006. "Joint Route Planning under Varying Market Conditions," Discussion Paper 2006-49, Tilburg University, Center for Economic Research.
    3. Wang, Yuhong & Cullinane, Kevin, 2014. "Traffic consolidation in East Asian container ports: A network flow analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 152-163.
    4. Y. H. Venus Lun & Kee‐Hung Lai & T. C. Edwin Cheng, 2008. "A Descriptive Framework for the Development and Operation of Liner Shipping Networks," Transport Reviews, Taylor & Francis Journals, vol. 29(4), pages 439-457, August.
    5. Cruijssen, F., 2006. "Horizontal cooperation in transport and logistics," Other publications TiSEM ab6dbe68-aebc-4b03-8eea-d, Tilburg University, School of Economics and Management.
    6. Fung, Michael K. & Cheng, Leonard K. & Qiu, Larry D., 2003. "The impact of terminal handling charges on overall shipping charges: an empirical study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(8), pages 703-716, October.
    7. 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.
    8. ELENA MAGGI & ILARIA MARIOTTI & Elia Stefano, 2011. "Horizontal, vertical and conglomerate investments in the Italian logistics industry: drivers and strategies," ERSA conference papers ersa10p555, European Regional Science Association.
    9. Michael F. Gorman & John-Paul Clarke & Amir Hossein Gharehgozli & Michael Hewitt & René de Koster & Debjit Roy, 2014. "State of the Practice: A Review of the Application of OR/MS in Freight Transportation," Interfaces, INFORMS, vol. 44(6), pages 535-554, December.
    10. Cruijssen, Frans & Cools, Martine & Dullaert, W., 2007. "Horizontal cooperation in logistics: opportunities and impediments," Other publications TiSEM ab29fad8-1faf-422b-826e-0, Tilburg University, School of Economics and Management.

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