The accelerated globalization of logistics activities over the last several decades has spurred a rapid expansion of port facilities all cross the world. However, the recent slowdown of international trade, coupled with a global financial crisis, has created an on-going glut of international port facilities throughout the world. Although the abundance of port facilities provides more transshipment options for carriers and shippers, it makes the port selection decision more complex and difficult. To cope with this new set of challenges, this paper proposes a hybrid data envelopment analysis (DEA)/ analytic hierarchy process (AHP) model that is designed to identify factors specifically influencing transshipment port selection, evaluates the extent of influence of those factors on a transshipment port selection decision, and then determines the most critical ones among various factors. To illustrate the usefulness of the proposed hybrid DEA/AHP model, major container hub ports in Far-East Asia were analyzed.
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.
Because seaports handle a vast majority of international trade, their efficiency and use can dictate the prosperity and growth of the global economy. Given their increased strategic roles in the global economy, many port authorities wanted to develop wise port investment plans for continually improving or expanding the port infrastructure. Such plans often begin with the assurance of needed port finances through strategic port pricing. One critical element of strategic port pricing includes an optimal determination of port charges, which, in turn, may influence the ocean carrier's shipping behavior including the choice of vessel size, shipping service routes, and shipping frequency. Considering the aforementioned interdynamics among port efficiency, port finance, and ocean carriers' port selection decisions, this article proposes a mathematical model based on non-cooperative game theory that helps port authorities and terminal operating companies develop the most desirable port charging policy. To validate the rigor and usefulness of the proposed game-theoretic model, we applied it to solve actual port charge problems encountered by three competing seaports in Korea.
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