Over the last decade, carriers have entered into operational relationships known as alliances to increase their product offerings and to reduce their costs. Carriers have been able to do so because alliances enable partners to rely on and to combine other carriers' operations in addition to their own. Although alliances have drastically improved operational efficiency, larger carriers will not take the logical next step and merge for a variety of reasons. Ironically, regulation through the Federal Maritime Commission is not one of the factors dissuading carriers from consolidating. This paper explains, from the carriers' point of view, the advantages and disadvantages of entering into alliances and explores the history of the US regulatory regime of cooperative agreements, including alliances. Thereafter, this paper analyses the factors that potentially will influence the future of alliances and predicts the effect of each of these factors. Overall, this paper concludes that carriers would prefer to enjoy the benefits of alliances without having to ally or to merge with another carrier; therefore, the real long-term goal of large carriers is the improvement of their services without the aid of another large carrier, regardless of whether the improvement is through an alliance or a merger.International Journal of Maritime Economics (2001) 3, 351–367. doi: 10.1057/palgrave.ijme.9100025
Beginning in the early 1900s, the United States instituted a regulatory scheme similar to the British ‘conference system’, which handled oversight of the international ocean shipping industry. This design was initially embodied in the Shipping Act of 1916. Various incarnations of the Shipping Act occurred throughout the 20th century, the most significant action resulting from passage of the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998. Sparked by these regulatory changes, the US Federal Maritime Commission (FMC) – the governmental body overseeing implementation of the maritime regulatory laws – took on a more interventionist role. Until recently, European nations (and later the European Union) had chosen a more laissez-faire approach to regulating their ocean carriers and shippers. The US and European regulatory regimes vary in their approach to, jurisdiction of, and enforcement of regulations governing conduct of shippers, carriers, and intermediaries involved in ocean shipping. In part, these contrasting regulatory perspectives have led to sometimes significantly different economic consequences. For example, as the Shipping Act stands today, non-vessel-operating common carriers (NVOCCs), commonly referred to as ‘freight forwarders’ in Europe, are not permitted to enter into contract rates with their shipper-customers but instead must publish a tariff rate covering every shipment they handle. Several of the larger, diversified NVOCCs that offer a variety of logistical services, filed petitions with the FMC requesting that they be granted the authority to offer confidential contract rates. By many accounts, the FMC's new NVOCC ‘service arrangement’ rulemaking has halted yet another round of comprehensive changes to the US regulatory approach to liner shipping for the time being. Maritime Economics & Logistics (2005) 7, 56–72. doi:10.1057/palgrave.mel.9100124
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.