Source: Adapted from Ghorbani, M., M. Acciaro, A. Transchel and P. Cariou (2022) ”Strategic alliances in container shipping: A review of the literature and future research agenda”. Maritime Economics and Logistics.
The setting of alliances in the container shipping industry relies on several factors with related expectations:
- Financial. The potential to combine container cargo allows for the usage of larger container ships, which drives economies of scale, particularly less bunker fuel per TEU. This can be achieved through the possibility of generating economies of scope by offering a more diverse range of services, from trans-oceanic deep-sea services to regional feeder routes. Considering the high capital investment costs for container ships, a better capacity to combine cargo leads to less capital requirements to invest in additional capacity.
- Market. Alliances offer additional opportunities to increase service frequency, through the combination of their respective ship assets as more ships available results in more frequent port calls. The expansion of network coverage is a notable incentive as shipping lines usually have a regional specialization, implying existing service networks that can be combined and carriers able to service new areas without deploying new ships.
- Operational. Since shipping lines own about half the container assets, alliances can give opportunities to increase the utilization levels for these containers and the related leasing revenues. Further, the container shipping industry has been subject to important fluctuations in demand; alliances have the ability to provide a level of capacity management.
- Tactical. Through the rationalization of service routes, alliances can improve competitive advantages as ships can be deployed to the most profitable services. Further, each alliance member can provide their intermodal services to others, particularly their hinterland connectivity.
- Strategic. Alliance members are able to gain entry into trade routes they were not servicing beforehand, expanding strategic opportunities to gather customers and market shares. A similar advantage applies to the entry into gateways or hubs (transshipment) that alliance partners have a foothold on, particularly through their terminal operating branches. The market can take an oligopolistic character, allowing for a level of control over competition between carriers for cargo and rate setting.
- Managerial. From a managerial perspective, an alliance perspective on ship and container assets allows for a more comprehensive deployment that improves revenue. Through the diffusion of best practices and related information, the managerial skills of the respective workforces should improve. At a high level, a global coordination of the shipping services can be implemented.