Liner Companies Quasi-centralized Strategic Alliance Instability

The marketing condition of liner shipping business has created a new type of competition, that is, competition from cooperation. In order to reach the goal of economies of scale, liner operators have formed centralization strategic alliance to. provide better services by low cost. For the unchanged situation of "Supply exceeds Demand" in a long term and huge risk of merger among liner operators, they hope "Win-Win" by centralization strategic alliance. However, centralization strategic alliance is permeated with many unstable factors from beginning to end which forces the members of alliance to make decision of whether they will keep alliance constantly.Game theory studies the decision and its equilibrium. According to whether the binding agreement is achieved, the theory can be divided into co-operative game theory and non-co-operative game theory. Practices have proved that game theory has become an effective tool of analyzing and solving competitive and co-operative problems.This paper aims to discuss the major unstable factors of centralization strategic alliance with the help of game theory, which are profit distribution, decision of capacity pooling and freight and payment/future factor. Meanwhile, the paper provides the solutions to keep centralization strategic alliance stable in a long term, that is "Shapley value" and punishment tactics. If the members of alliance can control these parameter and variable well, the instability of centralization strategic alliance will be reduced.This paper intends to point out the instable factors of centralization strategic alliance, then to make use of game theory to analyze problems and solve them so as to make the members of alliance have more confident expectation to the alliance and share the huge profit from alliance. The future trend of liner shipping business is to meet the various demands of customers by forming global centralization strategic alliance. New competition will be launched by advantage of alliance, which will also divide the situation of global liner shipping business. I hope thispaper will be valuable and helpful for the liner operators' decision making.