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Capacity utilization and its determinants for a container shipping line: theory and evidence

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  • Wei-Ming Wu

Abstract

Under-utilization of fleet capacity appears to be a long-lasting issue in the container shipping industry. Also, there are some difficulties unsolved while measuring the ratio of Capacity Utilization (CU) of a container shipping line. From the perspective of an engineering approach, the slots capacity installed is the most popular way to represent the capacity output. Since the slots capacity installed lacks theoretical support, this study adopts an economics model to find the capacity output of a shipping line. Further, the derived CU ratio identifies the realized utilization of fleet capacity for a shipping line. Focused on the three largest container shipping lines in Taiwan, this article shows that their fleet capacity are totally under-utilized and the movement patterns of CU ratios are approximately identical. In addition, the variations of CU ratios also suggest that the enactment of Ocean Shipping Reform Act has contributed a positive effect on the capacity utilization of a container shipping line. Finally, by running a regression model to investigate the determinants of CU ratios, the result indicates that demand condition and global shipping alliance are two critical factors to improve the utilization of fleet capacity for a container shipping line.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:applec:44:y:2012:i:27:p:3491-3502
    DOI: 10.1080/00036846.2011.577020
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    Cited by:

    1. Paul Chiambaretto & Ulrich Wassmer, 2019. "Resource utilization as an internal driver of alliance portfolio evolution: The Qatar Airways case (1993-2010)," Post-Print hal-02517645, HAL.
    2. Goel, Rajeev K. & Nelson, Michael A., 2021. "Capacity utilization in emerging economy firms: Some new insights related to the role of infrastructure and institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 97-106.
    3. 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.
    4. Zhou, Yusheng & Li, Xue & Yuen, Kum Fai, 2022. "Holistic risk assessment of container shipping service based on Bayesian Network Modelling," Reliability Engineering and System Safety, Elsevier, vol. 220(C).
    5. 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.
    6. Mohieddine Rahmouni, 2021. "Determinants of capacity utilisation by firms in developing countries: evidence from Tunisia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 13(3), pages 212-245.

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