Strategic integration of the inland port and shipping service for the ocean carrier

This study analytically investigates the competition and alliance strategies between one ocean carrier (OC) and one inland shipping company (IC) in a vertical container shipping chain. The OC decides the freight rate of the deep-sea shipping service, while the IC determines the freight rate of the inland waterway service including the charges of both shipping and port services. We examine and compare the outcomes under three strategies: vertical separation, vertical-horizontal competition and alliance. The if-then entry threat and excess revenue-sharing contract mechanisms for the OC to exercise the vertical-horizontal competition and alliance strategies are proposed, respectively.