Liner concentration


Liner conference

From the beginning to the end

Liner conference


Maintain a stable schedule and freight

Provide optimal capacity

Consolidate the supply capacity to the trade

With stable freight income, liners can plan for future expansion and improvement on service

Liner conference


Control market freight rate

Incur additional administration charges

Provide shelter for the least efficiency carrier


The chapter end


US Shipping Act 1987

Ocean Shipping Reform Act 1998


Regulation 4056/86 exemption for LC

Regulation 870/95 exemption for consortia

EC competition rules

Failed to promote competitive freight rates

The results


Stable rate

FMC Federal Maritime Commissioner


Chaotic situation

Freight dropped to lowest rate

Liner concentration

refer to UN ECLAC paper


Liner companies, especially large one, cluster their services around a particular location

Government’s promotion of port efficiency

Alliance formation

Optimal vessels deployed in the trade

Impacts of Concentration - 1

Lower unit cost – leads to lower freight rate

Disproportion return on investment – due to keen competition, company need to pass the profit to customer

Overcapacity – on certain trade lanes but not the global situation

Why high fixed costs and weak conference can give this impression ?

Impacts of Concentration - 2

Freight rate fluctuation

High fixed costs induce high marginal pricing. To capture market share, in short run, company will only set to cover only marginal costs


Unstable formation, why ?

Expansion of the trade lane from EW to NS

Due to cascade effect of newly deploy large vessels

Trans-shipment volume increase

Port will gain with trans-shipment services

Impacts of Concentration - 3

Create trans-shipment centre

Even the port can provide good service at low price, it depends on its location

Segmentation of smaller liner company

Focus on a particular segment in the market

Change of government policy

Depend on the attitude of individual government


Concentration benefit everyone in the industry

Extend to wide coverage – spreading

Beware of the vertical integration as it may turn into cartel operation

How about the smaller players (liner + port) ?

Small players


Cooperate or focus on a particular segment of market


Accept the reality and cooperate with regional ports

Promote trade, encourage more users to use the port

Regulatory bodies

Accept the trends in globalisation and privatisation and open up the market for competition

For the trainer

The abolition of liner conference and results

Relationship between Liner concentration and short sea shipping

Impact on port – status of port