Strategic alliances in liner shipping: efficiency or market power?

Summary Collusion between shipowners has existed for more than a century and stems from the characteristics of the liner market. The alliances on a global scale of capacity since 1994 now bring together 13 of the world's top 20 shipping lines and are justified mainly by the exploitation of economies of scale and operational synergies and raise the question of the gains (efficiency) and losses (market power) that they bring. The estimation of density economies on east/west shipping routes precedes a model of optimal fleet allocation for the 13 shipowners operating within the 4 main strategic alliances in 1997. It tests the hypothesis of operational synergies and emphasizes that a strategic alliance may seek to increase market share and/or geographic scope of services. The reorganization of services into star networks leads to a hierarchization of high and low density networks analyzed by the evolution of container traffic in 110 European ports from 1988 to 1998. The hierarchization reinforces the divergence of interests between port and maritime operators (generalized costs) and pushes handling operators to a similar process of consolidation. This new balance of power between actors is illustrated by dedicated terminals that imply exclusive access within a port. A queuing model contrasts the potential gains for shipowners obtaining exclusivity (waiting time) with the potential losses (port occupancy rate). In the end, it appears that strategic alliances may correspond, according to hypotheses on network externalities, to the construction of barriers to entry through horizontal and vertical integration and ultimately lead to a change in the regulation of regular lines.