Fleet mix in container shipping operations

Abstract

In the context of container shipping, carrying capacity can be one of the resources for better firm performance. Shipping is one of the most capital intensive industries as carriers need to acquire ships to offer shipping services to their customers. Although it seems intuitive for carriers to deploy mega ships to achieve cost efficiency, it requires a balance between shipping services and ship size in determining their fleet mix. This study provides empirical evidence to examine the issue of scale operations and service scope in the container shipping industry. Our findings suggest that carrying capacity of shipping firms positively affect their firm performance. As fleet mix is concerned with the number of ships and the size of ships, we used path analysis to examine the impact of number of ships and average ship size on firm performance. In comparing the magnitude of the effect, the number of ships has stronger impact on firm performance than ship size. In this study, we also introduce a ‘SCOPE’ framework which consists of the dimensions concerning service frequency, customer value, optimal vessel size, ports of call and extensive market coverage, which is useful for shipping managers to determine their fleet mix in liner shipping services. © 2009 Inderscience Enterprises Ltd.