Meifeng Luo

A game-theoretic analysis of competition among container port hubs: the case of Busan and Shanghai [1]

Countries throughout the world, and especially within Asia, are investing heavily in container port infrastructure in the hopes of capturing a larger share of global shipping activity for their economies. Many existing ports are emphasizing developing the capacity to serve as a hub port, building deepwater berths with large terminals to facilitate transfer of containers from feeder ships to mother ships for intercontinental transport. We develop a game-theoretic best response framework for understanding how competitor ports will respond to development at a focus port, and whether the focus port will be able to capture or defend market share by building additional capacity. We apply this model to investment and competition currently occurring between the ports of Busan and Shanghai.

A game theory analysis of port specialization—implications to the Chinese port industry

The fast growth of the Chinese economy and its international seaborne trade has escalated the demand for high-quality and efficient port services. “Decentralization” of the port management regime has given local government greater freedom in port development and operational decision-making. However, major port capacity expansion in coastal areas, coupled with the slowing down of both the economy and trade growth over recent years, has led to overcapacity and excessive competition. Although both port specialization and government regulations are called for to address these issues, few studies have investigated the formation mechanism and economic implications of port specialization. This paper uses alternative duopoly games, namely a Stackelberg game and a simultaneous game, to model port competition, where ports provide differentiated services in the sectors of containerized cargo and dry-bulk cargo. Our analytical results reveal that inter-port competition can lead to port specialization in the following three ways. A port can specialize in a type of cargo (1) for which there is relatively high demand, (2) where it has established capacity first, or (3) for services which require prohibitively high capacity costs. Also, it is seen that overcapacity is likely if strategic port decisions are made simultaneously instead of sequentially. These results suggest that if there is a clear market leader, policy intervention may not be necessary. However, if no port has clear market power, then government coordination and intervention may be needed in order to prevent overcapacity and to encourage specialization.

An econometric analysis for container shipping market

This article presents an econometric analysis for the fluctuation of the container freight rate due to the interactions between the demand for container transportation services and the container fleet capacity. The demand is derived from international trade and is assumed to be exogenous, while the fleet capacity increases with new orders made two years before, proportional to the industrial profit. Assuming the market clears each year, the shipping freight rate will change with the relative magnitude of shifts in the demand and fleet capacity. This model is estimated using the world container shipping market statistics from 1980 to 2008, applying the three-stage least square method. The estimated parameters of the model have high statistical significance, and the overall explanatory power of the model is above 90%. The short-term in-sample prediction of the model can largely replicate the container shipping market fluctuation in terms of the fleet size dynamics and the freight rate fluctuation in the past 20 years. The prediction of the future market trend reveals that the container freight rate should continue to decrease in the coming three years if the demand for container transportation services grows at less than 8%.

The economic costs to fisheries from marine sediment disposal: case study of Providence, RI, USA

Abstract Ports worldwide are under pressure to dredge channels and berths to accommodate deep-draft vessels. Marine disposal of the dredged sediments, however, often is a controversial issue due, in part, to potential impacts on commercial and recreational fisheries. We use an integrated framework employing engineering, economic, and biological data and concepts to estimate the economic costs to fisheries from disposal of clean dredged sediments from in and around Providence Harbor, RI, USA. The fishery impacts considered include short-term, direct effects that occur during disposal, long-term effects that arise during the recovery period following disposal, and indirect effects that occur through the food web. Economic damages to commercial and recreational fisheries are assessed for seven potential disposal sites, using conservative assumptions that tend to overstate costs. Damages across sites range from about

Container port systems in China and the USA: a comparative study

256 thousand to

Dynamics and Interactions between Spot and Forward Freights in the Dry Bulk Shipping Market

1.9 million. A series of sensitivity analyses is done in recognition of the many uncertainties involved. The sensitivity analyses increase the estimated disposal costs, but do not affect to relative sizes of costs across sites. Considering all sensitivity analyses simultaneously, estimated damages range from about

Estimation of Optimal Handling Capacity of a Container Port: An Economic Approach

460 thousand to

Analyzing ship investment behaviour in liner shipping

3.4 million between the lowest- and highest-cost sites.

The impact of Panama Canal expansion on the container-shipping market: a cooperative game theory approach

This study compares the evolution of container port systems in China and the USA in terms of port throughput, number of container ports and the concentration level in the container port system, based on the time-series data on these three features over the period 1979–2009 for China and 1970–2009 for the USA. The results show that the densities of container ports in the two countries are similar, and their evolutionary processes are alike, which has led to a comparable market structure in the port industries of the two countries. In addition, the disparities between container ports closely represent the unevenness in the regional economic development. We further compare the port management regimes of the two countries in terms of the administrative processes for port development and expansion, the ownership structure and the providers of port functions, which offer some explanation on the dynamics of port evolution in the two countries. In conclusion, it can be seen that the evolution of the container port system and the management regime in the USA can be a de facto reference for the future development of the Chinese container port system.

Strategic capacity competition and overcapacity in shipping

ABSTRACT Analyzing the interactions between spot and forward freight agreement (FFA) prices in the dry bulk shipping is important as they play a significant role for shipping companies to secure their profits and avoid potential risks in the volatile market. By applying the vector autoregression (VAR) and the vector error correction model (VECM), this paper identifies the long-run and mutual causal relationship between the spot and FFA prices on the BPI T/C and BCI C7 routes. Along with these cointegrating rates, exogenous factors such as the market demand and supply and some economic indices are also recognized as contributing variables for the dynamic movement of the spot and FFA prices. Importantly, the mean-reverting process is justified on both routes with different mechanisms. When the spot and FFA prices deviate from their equilibrium level in the short run, they will be adjusted to their long-run equilibrium more directly and clearly on the BPI T/C route than those on the BCI C7 route. It also indicates that this adjusting power has direction and size asymmetries on both routes. In addition, the impulse analysis indicates that the spot rate is more volatile than its corresponding FFA prices confronting innovations. The results of this study provide a reference to the participants in the dry bulk shipping market on the causes of fluctuation in spot and FFA prices and their interactions, which can be used to promote the risk management in the market.