Costs and benefits of the disruptions caused by the pandemic crisis and the container shipping market’s turbulences and their allocation within the global supply chains : an analytical approach

Abstract

PURPOSE: The main aim of the research is to determine the economic and financial effects of adopting aggressive pro fiscal pricing strategies by leading container shipping carriers, operating on a highly concentrated oligopolistic market hit by serious disturbances generated by global pandemic crisis, to indicate main directions and forms of the allocation of extra benefits and costs, induced by the disrupted container shipping markets, among the key logistics links of the global supply chains, and to assessing of the potential aftermath of such effects transfer within the logistics supply chain.

DESIGN/METHODOLOGY/APPROACH: At conducting this research, the following methods were applied: factor analysis (FA), costs/benefits and market analysis (CBMA) based on the evaluation of the container market freight indices, as well as in-depth analysis of many reports, experts’ opinions and statistical data.

FINDINGS: The obtained research results indicate that the extremely strong market position of sea container carriers, achieved as a result of their widely advanced consolidation enables them to implement an aggressive pro-fiscal pricing strategy towards shippers, even in times of global crisis, allows them not only to realize extraordinary financial and economic benefits achieved in a significant part at the expense of shippers and forwarders, and to take action for the further capital integration of the global supply chain.

PRACTICAL IMPLICATIONS: The results of the study clearly indicate that nowadays existing highly consolidated supply side of the global maritime container market, being a result of adopted by international regulatory authorities friendly for shipping operators regulatory mechanism should be changed. It is necessary to modify it, adopting a new regulatory model aimed at limiting the real market power of container consortia as well as their already strong impact on other links of the global supply chains.

ORIGINALITY/VALUE: It has been made an attempt to present how a dual, internally inconsistent, system of regulation of a highly integrated transport market of the oligopolistic type can at the time of a deep crisis and accompanying disruptions of the global supply chains, affect their economic and logistic environment, i.e., deepening the scale of deformation of such global logistics structures, as well as damaging the established level of credibility among their between its participants. This kind of research that may be treated as a case study, can contribute to enriching the existing theory of the functioning of transport markets, in particular the global market for container transport.