Cascading effects, network configurations and optimal transshipment volumes in liner shipping

As a consequence of the delivery of large container ships and of the drop in demand since 2008, companies are struggling with low freight rates. In addition, newly delivered container ships have been deployed on the main east–west trades, whereas medium-sized vessels have been pushed to smaller sectors through a phenomenon known as the cascading effect . This article investigates how this effect might lead liner companies to modify their services, such as including additional stops at major hubs. This article proposes a model that factors in potential changes in network configuration from direct to indirect services, and then tests the model with an empirical study of northern Europe/South American services that adds in a call at Tangier or Algeciras to the schedule. The results show that the optimal network configuration depends on vessel sizes and the transshipment volumes to be collected at the hub.