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Vertical integration and exclusivities in maritime freight transport

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  • ALVAREZ-SANJAIME, Oscar
  • CANTOS-SANCHEZ, Pedro
  • MONER-COLONQUES, Rafael
  • SEMPERE-MONERRIS, José J.

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.
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Suggested Citation

  • ALVAREZ-SANJAIME, Oscar & CANTOS-SANCHEZ, Pedro & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J., 2013. "Vertical integration and exclusivities in maritime freight transport," LIDAM Reprints CORE 2503, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2503
    DOI: 10.1016/j.tre.2012.12.009
    Note: In : Transportation Research Part E, 51(1), 50-61, 2013
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    3. Nguyen Hoang Phuong, 2019. "Current Status And Solutions To Reduce Logistics Costs In Vietnam. Abstract: Currently, Logistics is a tremendous economic resource for each country. Logistics knows as an economic activity organized ," Malaysian E Commerce Journal (MECJ), Zibeline International Publishing, vol. 3(3), pages 01-04, August.
    4. 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.
    5. 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.
    6. Qu, Chenrui & Zeng, Qingcheng & Li, Kevin X. & Lin, Kun-Chin, 2020. "Modeling incentive strategies for landside integration in multimodal transport chains," Transportation Research Part A: Policy and Practice, Elsevier, vol. 137(C), pages 47-64.
    7. Han, Xiaoya & Liu, Xin, 2020. "Equilibrium decisions for multi-firms considering consumer quality preference," International Journal of Production Economics, Elsevier, vol. 227(C).
    8. 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.
    9. 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.
    10. Wang, Kelly Yujie & Wen, Yuan & Yip, Tsz Leung & Fan, Zuojun, 2021. "Carrier-shipper risk management and coordination in the presence of spot freight market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    11. 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.
    12. 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.
    13. Chuanxu Wang & Lingli Wang, 2023. "Green investment and vertical alliances in the maritime supply chain," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6657-6687, July.
    14. Zhu, Shengda & Fu, Xiaowen & Bell, Michael G.H., 2021. "Container shipping line port choice patterns in East Asia the effects of port affiliation and spatial dependence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    15. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen, 2021. "Investment competition on dedicated terminals under demand ambiguity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).

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    More about this item

    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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