Impact of Number of Shipping Lines on Ports’ Charges and Profits : A Game-Theoretic Model and Case Study

This study aims to explore the impact of changing the number of shipping lines on ports' charges and profits. A two-stage non-cooperative game-theoretic model is developed with two ports and multiple identical shipping lines. At the first stage, the ports decide their container handling charges. At the second stage, the shipping lines make their port of call decision to split cargoes between the two ports. The model is then applied to the case of competition between two ports in New Zealand, namely, the Port of Tauranga and the Port of Auckland, to draw managerial insights. Our study extends the literature on ports' competition by incorporating the competition between shipping lines. Our paper demonstrates that the increase in the number of shipping lines may force ports to decrease their handling charges. Furthermore, we show that each shipping line tends to ship more cargo via the port with lower costs compared to the optimal decision from the industry's point of view (but not from a welfare point of view)