Sea change in liner shipping : regulation and managerial decision-making in a global industry

306 Pages·2008·20.231 MB·English

by  Brooks, Mary R.

SEA CHANGE IN LINER SHIPPING
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SEA CHANGE IN LINER SHIPPING
REGULATION AND MANAGERIAL DECISION-MAKING
IN A GLOBAL INDUSTRY
Mary Brooks
Centre for International Business Studies
Dalhousie University, Halifax, Nova Scotia, Canada
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First edition 2000
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TABLE OF CONTENTS
Acronyms ix
Key Legal Citations xi
List of Tables and Figures xiii
Acknowledgements xv
1. Introduction to the liner shipping industry and its regulation
Introduction 1
What is liner shipping? 2
The liner shipping industry 4
A history of conference regulation 12
Policies on mergers and cooperative agreements 19
Is this the globalization of shipping? 22
About this book 26
Appendix A: Members of the Box Club 28
2. Literature and theories on firm structure and market behaviour
Introduction 29
The economic literature 29
The strategic management literature 36
Commentary on the economic and strategic management literature 41
Structural options for organizations 43
The failure of organizational redesign 50
Alliance or merger—what makes a successful strategy? 52
3. The strategies of liner companies
Introduction 57
An analysis of industry structure 57
The current business environment 62
Competitive positioning: the firm's existing strategy 68
Formulating a new strategy 69
Strategic response—alliance, ownership or organic growth? 75
The continua of alliances 77
Appendix B: Principal mergers, acquisitions and takeovers 81
4. Keys to successful liner strategy implementation
Introduction 85
Asset management—choice and utilization 86
Network configuration and schedules 89
Revenue management (inside and outside the conference system) 93
Marketing the liner service and monitoring its performance 103
Making the relationship work 106
vii
5. Lessons from other industries: railroads
Introduction 111
The Burlington Northern and Santa Fe merger 114
The Union Pacific-Southern Pacific merger 117
The CSX and Norfolk Southern acquisition of Conrail 123
Management issues in rail mergers 132
Competition issues in rail mergers 136
Lessons for liner shipping? 139
6. Lessons from other industries: airlines
Introduction 143
Air transport liberalization in the EU 147
The BA-AA case 149
The Star Alliance 151
Management issues in airline structural options 154
Competition issues in airline restructuring 157
Lessons for liner shipping? , 160
Appendix C: EU regulatory reform in air transport 163
7. Case studies from the liner shipping industry
Introduction 165
The Sea-Land/Maersk alliance 166
The P&O Nedlloyd merger 171
CP Ships—growth by acquisition 179
The Neptune Orient Lines' acquisition of APL 185
Discussion 190
8. Competition issues in liner shipping
Introduction 195
Philosophy 197
Definition of a conference 199
Defining a consortium 200
Competition issues—defining the relevant market 201
Competition issues—market share and market concentration 205
Competition issues—the ability to impose a "price" rise 209
What constitutes lessening of competition in relevant markets? 212
Constraints on the development of a dominant position 214
Are alliances anti-competitive? 217
Conclusions 218
Appendix D: A compendium of liner regulation (US/EU/Canada) 221
9. The regulatory dilemma: Seeking a harmonized regulatory environment
Introduction 239
The regulatory dilemma 241
Convergence and divergence 244
Guiding principles 253
Setting a new course 259
Bibliography 263
Index 283
viii
ACRONYMS
AA American Airlines ESC European Shippers' Council
ACCOS Advisory Commission on Conferences in EU European Union
Ocean Shipping
FAK freight all kinds
ACL Atlantic Container Line
FCL full container load
ACTA Associated Container Transportation
FEFC Far East Freight Conference
(Australia)
FMC Federal Maritime Commission
ANL Australia National Line
FTC Federal Trade Commission
ANZDL Australia New Zealand Direct Line
GATT General Agreement on Tariffs and Trade
APL American President Lines
GBP pounds sterling (£)
ASC Australian Shippers' Council
GDP gross domestic product
ASK available seat kilometres
HHI Herfindahl-Hirschman Index
ATKs available tonne kilometers
IA independent action
ATFI Automatic Tariff Filing and Information
System IC Illinois Central
BA British Airways ICC Interstate Commerce Commission
BN Burlington Northern IJV international joint venture
BNSF Burlington Northern Santa Fe IPO initial public offering
CEO Chief Executive Officer JIT just-in-time
JV joint venture
CIFFA Canadian International Freight
Forwarders Association KCS Kansas City Southern
CGM Compagnie General Maritime LCL less than container load
CMA Compagnie Maritime d'Affretment Marad Maritime Administration (US
CMB Compagnie Maritime Beige Department of Transportation)
CN Canadian National M1SC Malasian International Shipping Corp.
CNW Chicago & Northwestern MOL Mitsui O.S.K. Line
CP Canadian Pacific MSC Mediterranean Shipping Co.
CRS computer reservation system MSP Maritime Security Program
CSC Canadian Shippers' Council MTC Maritime Transport Committee (OECD)
CSX CSX NAA North Atlantic Agreement
CWA Cooperative Working Agreement NAEC North America east coast
DG IV Directorate IV—Competition Policy NA WC North America west coast
DG VII Directorate VII—Transport NITL National Industrial Transportation
League
DoJ Department of Justice
NLG Dutch guilders
EC Commission of the European
Communities NOL Neptune Orient Lines
ECU European currency unit NS Norfolk Southern
EDI electronic data interchange NTA National Transportation Agency
EEC European Economic Community
ix