A game-theoretic approach to evaluating the competitiveness of container carriers in the Northeast Asian shipping market
Asia Pacific Journal of Marketing and Logistics
ISSN: 1355-5855
Article publication date: 11 September 2017
Abstract
Purpose
In times of increasing shipping risks and uncertainty, the purpose of this paper is to analyze fiercely competitive shipping markets in the Asia-Pacific region and help the carriers develop the optimal pricing schemes, shipping networks (e.g. routes and shipping frequency), and future investment plans.
Design/methodology/approach
This paper develops viable maritime logistics strategies based on the non-cooperative game theory which determines the optimal vessel size/type, shipping route, and shipping frequency, while taking into account multiple cost components and unpredictable shipping market dynamics.
Findings
This study revealed that the container carrier’s optimal shipping strategy was insensitive to changes in freight rates, fuel prices, and loading/unloading fees at the destination ports. However, it tends to be more sensitive to an increase in the shipping volume than the aforementioned parameters. In other words, aggressive pricing schemes and drastic cost-cutting measures alone cannot enhance carrier competitiveness in today’s shipping markets characterized by overcapacity and weak demand.
Originality/value
This paper is one of a few attempts to identify a host of factors influencing the container carrier’s competitiveness using the game theory and develop an optimal shipping strategy in the presence of conflicting interests of multiple stakeholders (e.g. carriers, shippers, and port authorities). To validate the rigor and usefulness of the proposed game-theoretic model, the authors also experiment it with an actual case study of container carriers serving the Northeast Asian shipping market.
Keywords
Citation
Park, B.-I. and Min, H. (2017), "A game-theoretic approach to evaluating the competitiveness of container carriers in the Northeast Asian shipping market", Asia Pacific Journal of Marketing and Logistics, Vol. 29 No. 4, pp. 854-869. https://doi.org/10.1108/APJML-09-2016-0163
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited