Liner Shipping Strategy in the light of Fordism, post-Fordism and Porter's generic strategic

Executive summary: The liner shipping industry has faced a number of developments over the last few decades. While some of them reflect the constant search for cost cuttings through economies of scale, others are aimed at shipping lines‟ ambition to become globally integrated. Both strategies are applied in the liner industry while at first sight they seem to contradict each other. This thesis examines how the aim for economies of scale influences shipping lines‟ ambition to become globally integrated, in the light of Fordism, post-Fordism and Porter‟s generic strategies. Fordism, with the main features of standardization and mass-production, is in line with achieving economies of scale, while post-Fordism, with the main features of flexibility and increasing customer choice, reflects the shipping lines‟ ambition to become globally integrated. Porter‟s cost-leadership strategy is in line with the constant cost cuttings liner companies are looking for, while the improvement of customer choice, flexibility and service seem to reflect the differentiation strategy. To determine the state of Fordism this industry is in, the application of the generic strategies first will be discussed. The cost leadership or low-cost strategy was first applied in this industry. Increasing vessel sizes, mergers and acquisitions and strategic alliances on the one hand cut costs while on the other hand these developments alongside economic cyclicality increased freight rate volatility and led shipping companies into a price war through which the previously achieved cost savings evaporated. In order to achieve further cost cuttings throughout the supply chain, shipping companies adopted a vertical integration strategy, resulting in the involvement in terminals, intermodal transport services and logistics services. From a company‟s perspective these last three approaches did not come forth from a differentiation strategy, but just because no further cost cuttings could be achieved at sea, they had to widen the low-cost strategy and integrate throughout the supply chain. From a customer‟s perspective however, this can be seen as differentiation because of the fact that flexibility and choice improved through the application of the vertical integration strategy. The same reasoning holds for the determination of the state of Fordism this industry is in, the industry itself is relatively Fordist, because of the implication of constant cost reductions through economies of scale and trying to gain complete control over the supply chain, the result however, i.e. the perception of customers, can be described as post-Fordist because of the different services that can be chosen and the increased flexibility a shipper now has in worldwide transportation. So aiming for economies of scale does have an enormous influence on the ambition to become a globally integrated shipping line, though it is a completely different influence than one would expect.