Ocean carrier alliances and the impact on container freight rate

Abstract

Container shipping is widely known as the most cost-effective means of transporting manufactured goods worldwide. However, the current dynamics of the shipping market which started around Q2 of 2020 due to COVID-19 disruption of global supply chain seems to be eroding this inherent benefit of Liner shipping. This study seeks to establish that whilst the outbreak of COVID-19 and disruption of global supply chain may be unplanned, blanking of sails by ocean carriers is planned. Explanatory research method was adopted for the study while market power served as the explanatory framework. Consequently, the study identified indicators of market power that reveal the stronghold of carrier alliances influence in the container shipping market. The study discovered as follows: (i) carrier alliances are critical part of modern shipping and evolving, (ii) skillful capacity management is the New Normal in container shipping, and (iii) final consumers bear the economic brunt of freight rate increases.