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Edited by Kevin Cullinane
Chapter 9: Liner Shipping Networks and Market Concentration
9 Liner shipping networks and market concentration Ricardo J. Sanchez and Gordon Wilmsmeier 9.1 Introduction Because of the ever-increasing role of sea transport in international trade, the potential existence of market concentration and, ultimately, the market power of maritime shipping lines and the impact this might have on maritime trade are of growing interest. Maritime containerized trade is mainly delivered by regular liner services. Lam et al. (2007) argue that the general concentration of the maritime liner shipping industry has developed in parallel to the increase in container ship size. The concentration of shipping capacity in fewer shipping companies implies changes in market efficiency and market entrance, which affects competition in the maritime industry. It can also have implications for international trade, through changes in costs and routing, and thus on the economic development of countries and regions. The authors argue that this might become very evident in smaller markets. In order to reveal the likelihood of potential distortions, it is necessary to consider specific concepts of industrial organization, like economies of scale, density and scope. A discussion of the applicability of the theory of industrial organization is expected to reveal insights into to what extent concentration, expansion and competition influence transport markets, and if the sector exhibits a potential tendency towards anticompetitive behaviour (that is, the use of market power). 9.2 Theoretical framework A number of authors use the Structure–Conduct–Performance (SCP) paradigm in the analysis of maritime transport market dynamics. Their findings provide evidence that higher concentration...
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