An Analysis of Shipping Agreements: The Cooperative Container Network

The recent economic downturn has intensified the need for cooperation among carriers in the container shipping industry. Indeed, carriers join inter-firm networks for several reasons such as achieving economies of scale, scope, and the search for new markets. In this paper we apply network analysis and construct the Cooperative Container Network in order to study how shipping companies integrate and coordinate their activities and to investigate the topology and hierarchical structure of inter-carrier relationships. Our data set is comprised of 65 carriers that provide 603 container services. The results indicate that the Cooperative Container Network (CCN) belongs to the family of small world networks. This finding suggests that the most cooperative companies are small-to-medium-size carriers that engage in commercial agreements in order to reduce costs and, when in partnership with larger carriers, these cooperative companies are able to compete, especially against the largest carriers. However shipping companies with high capacity engage in cooperation with other carriers by merely looking for local partners in order to increase their local and specialized market penetration.