Structural Factors Underlying Mergers and Acquisitions in Liner Shipping

Mike Fusillo
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Mike Fusillo: The Louis Berger Group, Inc., New York, NY

Maritime Economics & Logistics, 2009, vol. 11, issue 2, 209-226

Abstract: The virtual disappearance of liner shipping conferences from US markets and their elimination in European trades create a significant risk that in place of these collusive price-setting groups, the industry could become increasingly consolidated. The absence of the conference pricing cushion could end up giving an advantage to large, cost-efficient carriers who will drive smaller players from the market. During this competitive process, shippers could see lower freight rates and better service but as the industry consolidates towards oligopoly, there is the risk that shippers will be faced with fewer alternatives to move their goods, lower service quality and significantly higher prices. The impact on merchandise trade could be substantial. This paper is intended to reveal basic structural characteristics of the liner shipping industry that could point to more accurate predictions of future consolidation activity. In particular, a series of mergers and acquisitions in the industry will be examined against the backdrop of industry structure and regulatory constraints. Ultimately, a Poisson model is formulated and estimated to extract and quantify the structural factors that increase the likelihood of horizontal merger and acquisition activity. Maritime Economics & Logistics (2009) 11, 209–226. doi:10.1057/mel.2009.3

Date: 2009
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