Market structure of short sea shipping in northeast Asia

Abstract

Purpose: Short-sea shipping (SSS) plays an important role in regional transportation networks by supporting regional trade and improving inter-modality. In particular, countries in north-east Asia, such as China, South Korea and Japan have been served well by local SSS services. While SSS markets in Northeast Asia (NEA) have been developed by bilateral routes with sub-markets, the market structure of each sub-markets varies depending on concentration and competition levels as well as government intervention. The purpose of this paper is to analyse the market structure of SSS markets in the Northeast Asia. Design/methodology/approach: Herfindahl–Hirschman Index (HHI) and concentration ratio are adopted to measure the market concentration from 2013 to 2017 for SSS markets in NEA. Additionally, the balance between supply and demand is investigated by measuring the capacity utilisation factor (CUF) based on slot capacity. Findings: The market structure in the NEA SSS markets is influenced by firms’ behaviour under different levels of governmental intervention. Shipping firms in a market with more governmental intervention in market entry tend to focus on balancing supply and demand rather than increasing market share, whereas firms in a market with less intervention (and more competition) tend to increase their market share by pursuing efficient capacity management. Research limitations/implications: The period of data set is limited to 2013–2017. Furthermore, prices or revenue for specific routes are not available. Originality/value: This paper sheds light on the market structure and behaviour of players in SSS market. In addition, the work has value to measure capacity utilisation based on slot capacity.