Concentration of the LNG seaborne trade

Christos Bentsos and Dionysios Polemis

Maritime Business Review, 2025, vol. 10, issue 4, 298-328

Abstract: PurposeThe purpose of this paper is to investigate the evolution of the concentration ratios in the Liquefied Natural Gas (LNG) shipping sector from 2010 until nowadays. This analysis aims to reveal if the structural changes in the LNG sector attracted more market players as well as if the dominating firms increased their market power. Moreover, we examine the concentration indices across different exporting areas and trading routes. Our purpose is to denote if there are either regions or trading routes with monopolistic features, with respect to the ownership status of the market players.Design/methodology/approachFor our analysis, we employ several concentration indices and examine them historically. Namely, we employ the N-Concentration Rate, the Herfindahl–Hirschman Index, the Gini coefficient, the Linda index and the Market rotation rate. For the robustness of our findings, we utilize the Shannon Entropy index, the Rosenbluth, Hall and Tideman Index and the dominance ratio. We use the same metrics across regions and trading routes. Furthermore, we compute the proportion of the state-owned firms. Lastly, we display the Lorenz curve for indicative cases.FindingsThe results of historical data indicate that shares of the dominant players have been reduced but remain high. The concentration rates denote that the market is being unconcentrated but not highly competitive. The exporting regions show that in the areas where national fleets and state-owned operators dominate the trade, the concentration rates are higher and the fleet capacity is unequally distributed. Lastly, the exporting region determines the concentration in the route.Research limitations/implicationsWe avoid employing historical data regarding the operators, due to missing information as for many vessels the operator is specified as “Unknown.” This is attributed to the fact that the data are on an annual basis and these vessels operate in the spot market, changing operators. These vessels account for more than 5% of the annual base. Hence, we provide information regarding the operators only for 2024, utilizing AIS data.Practical implicationsUnderstanding the market structure is useful for stakeholders in the LNG market. Shipowners can utilize our study in their decision-making process regarding entering the LNG market and choosing the route and the number of their vessels. They can define their share in each route and act as freight rate makers or takers. Moreover, our study is useful in deciding whether to act as an operator and choose the best chartering policy. Furthermore, regulators and policymakers in importing regions can evaluate the degree of their dependence and execute energy supply policies with respect to LNG.Social implicationsRegulators and policymakers can address antitrust concerns while legal and consulting firms could advise their clients on mergers and acquisitions and compliance with competition laws.Originality/valueContrary to previous studies, we examine the evolution of concentration indices historically. On the other hand, the previous studies measured the concentration in specific years. Furthermore, we study the concentration patterns within the industry, considering the regional characteristics of the industry, while the previous studies compared the LNG shipping sector, with other sectors like the container. To the best of the authors’ knowledge, our paper is the first one which compares the market structure across the trading routes and also denotes the role of the market players’ ownership structure.

Keywords: LNG; LNG shipping; Concentration; Market structure; Herfindahl–Hirschman Index; Gini coefficient (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:mabrpp:mabr-10-2024-0079

DOI: 10.1108/MABR-10-2024-0079

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