Competitiveness in the freight transport sector

Competitiveness can be studied at different levels: (i) the firm, (ii) sector, and (iii)

country level (Momaya, 1998). Whereas the dynamics of competitiveness at the firm

and country levels have been widely discussed by Michael Porter (Porter, 1986;

Porter, 1990; Porter, 1998), the concept of competitiveness at the sector level has not

received similar attention (Waheeduzzaman & Ryans, 1996; Momaya, 1998;

Couillard & Turkina, 2014; Latruffe, 2014; Navickas & Malakauskaite, 2015). The

terms sector4 and industry tend to be used interchangeably to define a group of firms

that are active in the same segment of the economy (Bezat-Jarzębowska & Rembisz,

2013). Generally, these firms operate a similar business type, or complement each

other to provide a service/product (Cetindamar & Kilitcioglu, 2013; Figiel & Kufel,

2013; Gilkinson & Dangerfield, 2013). Competitiveness at the sector level is the

result of the collective actions of businesses that operate in that sector (Kaimakoudi

et al., 2014). Momaya (1998) defines sector competitiveness as the extent to which a

business sector:

 Satisfies the needs of customers from the appropriate combination of product/service characteristics;

 Satisfies the needs of its constituents;

 Offers attractive return on investment; and

 Offers the potential for profitable growth.

This definition differs from those provided for firms in the sense that

competitiveness is derived from the collective actions of firms which are not

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necessarily offering the same product/service, but operate within the same economic

sector in order to satisfy the requirements of the end users (such as the rail sector).

This thesis is undertaken in the transportation science with a focus on the logistical

perspective of competitiveness in a freight market. Thus, competitiveness is

determined by the extent to which the logistical capabilities of the rail sector meet

the requirements of the freight market (Tipagornwong & Figliozzi, 2014; Santos et

al., 2015).

Therefore, the latter three elements of sector competitiveness explained by Momaya

(1998) which are related to the constitution (for example workers in terms of safety,

training and benefit programmes) and finance are excluded here. The competitiveness of the freight sector in terms of stakeholders’ satisfaction (excluding customers), investment and profitability are outside the scope of this thesis and

require further research from both financial and stakeholder management disciplines.

The demand for freight service is value driven (Brooks et al., 2012). The determining

factor for the use of a particular transport mode is whether, and to what extent, that

mode is able to adapt to the requirements of the transport industry, and in particular,

freight customers (OECD, 2010). This explanation is consistent with the concept of

competitiveness in terms of an organisation’s capabilities to offer what meets customers’ needs. A customer’s choice of a freight transport service involves a complex trade-off between various monetary and non-monetary factors. Therefore,

having a comprehensive understanding of these factors is necessary to develop and

deliver a competitive freight service to customers. According to Porter (2008),

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product/service. Therefore, it can be concluded that understanding the market

requirements is a critical factor to enhancing competitiveness.

Over the past decade there has been increasing attention on the area of freight mode

choice and identifying the key factors influencing the choice of transport mode from

a customer’s perspective (Meixell & Norbis, 2008; Samimi et al., 2011; Reis, 2014;

Yang et al., 2014). Historically, transportation mode choice was a simple process.

Nowadays, mode choice and carrier selection are becoming a part of the decision-

making process in transportation management that includes identifying relevant

transportation performance variables, selecting the mode of transport and carrier,

negotiating rates and service levels, and evaluating carrier performance (Monczka et

al., 2008; Buehler, 2011; Brooks et al., 2012; Yang et al., 2014). According to

Flodén et al. (2010), understanding the factors behind the choice of freight transport

mode is vital for a freight operator as the information can be used to develop

marketing and transport management solutions and consequently enhance the

competitiveness the freight service.

By reviewing the key literature on the key factors influencing freight mode choice

(Morash & Ozment, 1996; Bolis & Maggi, 1998; Bergantino & Bolis, 2008; Meixell

& Norbis, 2008; Grosso, 2011) and particularly the recent research in this field

conducted by Flodén et al. (2010), Bergantino et al. (2013) and Arencibia et al.

(2015), four key factors appear to influence the decision of freight customers when

choosing a transport mode, these being (i) freight rate, (ii) transit-time, (iii) reliability

(punctuality) and (iv) service availability. In this thesis these are called freight

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in most of the research undertaken on transport competitiveness and they are ranked

significantly higher to other factors by the transport industry (Flodén et al., 2010).

These four factors are also consistent with the view of the Australian freight

forwarding industry that broadly delineates freight types according to time-based and

cost attributes (BITRE, 2009). Therefore, in this thesis the competitiveness of a

freight service in the Australian non-bulk freight market is determined from these

factors. This approach is pivotal in shaping the theoretical framework and

methodological tools of this research for two main reasons. First, competitiveness

can be measured and evaluated in terms of freight service quality. Second, strategies

can be provided to improve the competitiveness of the rail service in relation to each

FSA. The following section discusses how the general systems approach to

competitiveness developed in Section 1.3.2 is applied to the freight transport setting.