Research On The Shipper-Carrier's Vertical Integration Strategy

Vertical integration is the integration between the upstream and downstream of entire industrial chain.Most of the vertical integration between the shipper and the carriers is leaded by the shipper,this is,the shipper invests to establish and lead a fleet.The shipping industry,after continuous evolution and development,has formed a unique operation rule and operation mode which brings strong industry barriers.Vertical integration between shippers and carriers can reduce the resistance of shippers to enter the shipping market.For the carriers involved in vertical integration,integration can bring them stable supply of goods and financial support.In the early 21st century,with the explosive growth of shipping prices,shippers had to bear high transportation costs while facing risks in the transportation link.It was during this period that shippers began to dabble in the shipping market,hoping to ensure the stability of cargo transportation and earning high profits in the shipping market.The development of shipper owned fleet has caused a lot of controversy in the shipping industry.Whether the vertical integration.benefits shippers and whether shippers can effectively deal with risks in the shipping market remains to be verified and proved.Because of the monopoly of the shipper owned fleet,it inevitably bring some interference to the shipping market,of which the effect on the whole market is still unknown,In addition,most of the enterprises participating in the vertical integration of shipping market are state-owned,which implies the vertical integration among stated-owned enterprises should not only consider the interests,but also its impact on social welfare.Finally,the study on the management strategy of the integrated shipper fleet can also provide a reference for the development of the shipper owned fleet in the future.This paper takes this as the background,carries on the thorough analysis and the research to the vertical integration between shipper and carrier.The results show that the vertical integration of state-owned shippers and carriers can positively affect shippers,carriers,market and social welfare.In the end,this paper establishes the Bertrand game model of different product to analyze the operation strategy of the shipper owned fleet,and the analysis suggests that the shipper fleet should also fully participate in the market,so as to promote the diversity of transportation services and drive the demand,and enable the shipper to have more speaking right.The results of this paper have made a certain contribution on the theoretical research on the vertical integration of shippers in the shipping market,and provided a reference for the future vertical integration strategies of shippers,carriers and relevant government departments as well as suggestions for the future business strategies of shipper owned fleet.