An economics study of container ports in the global network of container shipping

Abstract

We propose a new measure, called the Container Port Connectivity Index (CPCI), to more accurately reflect the relative importance of container ports within the global network of container shipping. This index is based on both economics and network topology, where the strength of a port is based on its position within the global structure of shipping network and not just on local information, such as the number of TEUs handled or direct links to other ports. As the CPCI produces two separate scores for each inbound and outbound connectivity, we can use them to analyze the economic roles played by each port independently. We also propose a framework for evaluating market stability of a logistics hub in a competitive environment. In particular, we build a model, called the Liner Shipping Cooperative Model, to predict how the community of liners calling at a hub might develop as the result of actions by competitors. We use such a model to study the behavior of shipping lines, as well as the resulting trade-flow changes, as the system gradually moves toward new equilibrium defined by the grand coalition. With this piece of information, a port authority would be able to quantify threats posed by competitors and, consequently, devise counter strategies to safeguard its business against competing ports.