A Strategy Serving Global Production Networks

ABSTRACT

Container shipping lines are well aware of the growing importance of global

production networks. While continuing to focus on improving the fundamentals, many shipping

lines have developed a keen interest in other segments of the logistics and transportation market to

offer integrated and worldwide services to global production networks. This paper aims to assess

the overall level of freight integration in thirty-four shipping lines, and provides an insight into the

extent to which freight integration serves as a business model in liner shipping. The results point

to a great variety and range of freight integration in the shipping business. Each carrier leverages

its service portfolio to develop specific capabilities. There is clearly no single best strategy for the

whole liner shipping industry to serve global production networks.

Introduction

Multinational enterprises (MNEs) are the key drivers of globalisation as they rely on

global sourcing and manage extensive network activities while developing longterm

relationships with a limited number of logistics suppliers. Global sourcing enables

MNEs to benefit from differences in the cost and quality of the production factors between

regions in the world. Global outsourcing has become a major driver of world trade and

contributed to the emergence of global production networks. The latter development would

not have been possible without the reduction of legal obstacles to trade. Economic integration

goes on a par with the level of political integration with initiatives such as North

American Free Trade Agreement (NAFTA) and the European Union Single Market at the

regional level and, at the global level, is supported by the continuing evolution of World

Trade Organization (WTO).

Theo Notteboom is an associate professor in the Institute of Transport and Maritime Management

Antwerp (ITMMA) and the Department of Transport and Regional Economics, Faculty of Applied

Economics of the University of Antwerp in Belgium. His email address is theo.notteboom@ua.ac.be.

At the