Selection of Key Variables in this Research and the Research Objectives

A large number of researchers have investigated and identified the important factors that influence freight transportation or modal choice decisions in different transportation sectors. McGinnis (1990) reviewed the literature and found that freight transportation choices are typically influenced largely by freight rate, reliability, transit time, loss/damage/claims processing/tracing, and market considerations as viewed by shipping and carrier agents. Service attributes were more important than freight rates, on average, but freight rates remain an important attribute and in some segments, rank higher than service. Lambert, Lewis and Stock (1993) summarized 166 attributes in the carrier selection process and identify that respondents placed greater import on high-quality customer service and accurate billing but were less concerned with price as long as the rates they paid were competitive. Tiwari, Itoh and Doi (2003) summarized several decision factors related to transportation mode choice. These included route factors, including frequency, capacity, convenience, directness, flexibility and transit time; cost factors, including freight rate, and other costs; and service factors, including delays, reliability, damage and loss, quick response, documentation, tracing capability and cooperation between shipper and carrier. Brooks (1984; 1985) identified the determinants of shippers’ choice of a container carrier. She found that smaller shippers mostly base their choice on cost; whilst, frequency of sailings, reputation, transit time and directness of sailing, as well as other service factors were more important than cost for large shippers and forwarders. The importance of various freight liner shipping service attributes have also been examined within the literature, with two notable studies contrasting shipper and carrier decision processes (Jamaluddin and Shah 1995; Chiu 1996). In the current research, based on the above studies, the key containerised maritime transport attributes

67

influencing shippers’ choice are investigated, including freight rate, transit time, reliability, damage rate and frequency.

Transportation service factors or quality attributes have been found to take precedence over other factors (Brooks 1984; Tiwari, Itoh and Doi 2003), and including costs (Lambert, Lewis and Stock 1993; Chiu 1996; Danielis, Marcucci and Rotaris 2005). This suggests that shippers are willing to trade off price for improvements in quality and reliability in transportation services. However, since freight transport is a derived demand originating from shippers’ propensity to trade, a firm’s freight transport decisions can be expected to be influenced by organisational and SCM characteristics. Therefore, investigation of the importance/value of transport service attributes in freight choices decisions should not be isolated but integrated with other SC decisions or wider SCM strategies.

For example, Magala and Sammons (2008) suggest that port choice modelling should be conducted within the paradigm of a port being an element in a wider value-driven SC. The importance of transport service attributes will be expected to vary with each company’s own management strategy, such as a JIT policy, and will affect shippers’ transport decisions. For example, firms applying JIT in American Manufacturing plants give significantly higher emphasis to rate, customer service, claims handling/follow-up, and equipment availability/service flexibility in the ranking of carrier selection attributes relative to firms operating under different strategies (Bagchi, Raghunathan and Bardi 1987). Transit time and reliability were dominant factors for companies using JIT principles or serving the consumer market directly, service frequency was also significant, and cost was important particularly for low value commodities for shippers in Italy and Switzerland (Bolis and Maggi 2003). Shippers’ freight transport decisions are also expected to be affected by company size, production, and transport distance, etc. Danielis, Marcucci and Rotaris (2005) reveal that the type of goods shipped also influence shippers’ preferences; the company size was related negatively to the intensity of preference for quality attributes; the shorter the travel time the more important time and reliability become relative to cost; the adoption of JIT strategy increases the preference for reliability while outsourcing strategies have no influence on shippers preferences. Beuthe and Bouffioux (2008) indicate that freight transport qualitative factors: service frequency, transport time, reliability of delivery, carrier’s flexibility and safety, are important in shippers’ modal choice decisions, and their relative importance varies according to transport distance, cargo value, cargo categories, as well as transport mode.

68

Their results reveal that 1) for short distances (less than 300 km) deliveries, shippers focus on minimising trucking costs, and transport quality factors are less important whilst transport time appears negligible; for intermediate distances (between 300 and 700 km), time and reliability gain more attention than cost factors; cost plays a dominant role in longer distance (more than 700 km) deliveries. 2) Cost becomes more important and becomes the greatest concern for low-value goods; time and reliability are relatively important for middle-value goods, while service flexibility and safety are more important if cargo is of high-value. 3) Shippers’ preference profiles vary with the categories of goods they shipped. For example, time, reliability, and flexibility are much more important than cost for shippers shipping minerals, fertilisers, and agricultural products, whereas, cost is the determinant attribute for the shipments of metal products. 4) Transport time and reliability are important factors for rail shippers, while shippers operating on waterways are more concerned about time and the flexibility of response to unexpected service demands. 5) Transport time and reliability are the two critical qualitative transport attributes, whilst adopting certain pricing policies may also be an effective way to induce better balanced modal shifts. The regulation/de-regulation of transportation industries or government policies particularly new security measures also influences shippers’ transportation choices. McGinnis (1990) reviews the carrier attribute literature before and after deregulation, and found that shippers’ freight choice was affected by freight rates, reliability, transit time, loss/damage/claims processing/tracing, and market considerations from the shipping and carrier agents’ point of view.

The key variables used in studies employing choice modelling to determine SC transport choices have tended to focus on factors influencing shippers’ choice behaviour in their transportation decision process. The key containerised maritime transport attributes influencing shippers’ choice investigated in this research are freight rate, transit time, reliability, damage rate, and frequency. The current research attempts to model shippers’ maritime transportation choices within the SC perspective. Therefore, the impacts of different product, shipment, company, and SC characteristics on shippers’ transportation decision will be examined herein.

The first research objective of this study is to identify and quantify the key transport attributes influencing shippers’ containerised maritime transport decisions, as well as any interaction impacts these have with various SC and organisational differences, including geographical location, product, company/SC characteristics, and industry regulation or policy.

69

The second objective is to quantify the transport related SCD costs through exploring the trade-offs amongst identified maritime transport service attributes under a scenario of a SCD event, and to identify the discrepancy and variation of shippers’ preferences for maritime transport service attributes with a SCD for different shipments, in different industries and companies, as well as SCs. To the best of the author’s knowledge, no scholarly work has collected data regarding how companies perceive transport related SCDs and what they do to respond and address them. Further, no attempts to quantify the costs of disruptions using measures applicable and useful from a transportation planning perspective have been made. Meanwhile, this research is the first time modelling containerised maritime transport service attributes based on an integrated SC perspective.

The next section states the hypotheses that would be examined through discrete choice modelling and SURE modelling in this study.