Inland terminals: competitive advantage as a need for new entrants

Abstract

The present paper revolves around the question, how a sound expansion and development strategy can support new terminals entering the market. It lists potential favourable competitive conditions of a new player and contrasts them with the drawbacks of competing against a well-established terminal with a strong customer base. It sheds light on the relevance of market penetration of established terminals to ensure their long-term success. A novel contribution of the research is the combination of different methodological analyses, including the phenomena of path dependence and insights gained in innovation diffusion models. We develop a generic stock and flow (system dynamics) model of the competition between two rival terminals and use a terminal’s price sensitivity to reflect its competitive conditions. The results of the sensitivity analysis demonstrated that the higher the initial market share of an existing terminal, the more new entrants are forced to win customers through their innovative demand. Switching costs may additionally drive them out of the market, even if they offer a perfect substitute. The system behaviour shows the system archetype success to the successful, while the attractiveness of the new offer can serve as a leverage point. 

Inland Terminal | Competition | System Dynamics | Price Sensitivity | Success To The Successful

References

1. De Souza, G. A., Beresford, A. K., and Pettit, S. J. (2003). Liner shipping companies and terminal operators: internationalisation or globalisation? Maritime Economics & Logistics, 5(4).
   
2. Kavirathna, C. A., Kawasaki, T., & Hanaoka, S. (2019). Intra-port coopetition under different
   combinations of terminal ownership. Transportation Research Part E: Logistics and Transportation Review, 128, 132-148.
   
3. Luo, M., Liu, L., and Gao, F. (2012). Post-entry container port capacity expansion. Transportation
   Research Part B: Methodological, 46(1), 120-138.
   
4. Maier, F. H. (1998). New product diffusion models in innovation management—A system dynamics perspective. System Dynamics Review: The Journal of the System Dynamics Society, 14(4), 285-308.
   
5. Mandl, C. E. (2019). Managing Complexity in Social Systems. Cham, Switzerland. Springer International Publishing.
   
6. Protic, S. M., Fikar, C., Voegl, J., and Gronalt, M. (2020). Analysing the impact of value added
   services at intermodal inland terminals. International Journal of Logistics Research and
   Applications, 23(2), 159-177.
   
7. Pujats, K., Golias, M., and Konur, D. (2020). A Review of Game Theory Applications for Seaport
   Cooperation and Competition. Journal of Marine Science and Engineering, 8(2), 100.
   
8. Senge, P. (1990). The fifth discipline: the art and practice of the learning organization. Doubleday, New York
   
9. Sice, P., Mosekilde, E., Moscardini, A., Lawler, K., and French, I. (2000). Using system dynamics to analyse interactions in duopoly competition. System Dynamics Review: The Journal of the System Dynamics Society, 16(2), 113-133.
   
10. Sterman, J. (2010). Business dynamics. Irwin/McGrawHill.
    
11. Van Reeven, P. (2010). The effect of competition on economic rents in seaports. Journal of Transport Economics and Policy, 44(1), 79 -92.
    
12. Wang, J. and Sun, S. (2017). The Game about competition and cooperation in port group. In Proceedings of the 23rd International Conference on Industrial Engineering and Engineering  Management 2016, Bali, Indonesia; Qi, E., Shen, J., Dou, R., Eds.; Atlantis Press: Paris, France, 215–219.
    
13. Yip, T. L., Liu, J. J., Fu, X., and Feng, J. (2014). Modeling the effects of competition on seaport terminal awarding. Transport Policy, 35, 341-349.
    
14. Zhuang, W., Luo, M., and Fu, X. (2014). A game theory analysis of port specialization—implications to the Chinese port industry. Maritime Policy & Management, 41(3), 268-287.