Keywords: carrier assortment decision, carrier selection criteria
The reason for this chapter is to examine past literature that is made available regarding the subject of carrier variety. The first portion of this chapter will begin with global maritime review. Next, the concept of logistics management and the problems linked to transport and customers will be mentioned. Finally, the finish of the chapter will analyze the issues linked to carrier selection including important determinants in shippers’ producing decision process.
2.2 Global Maritime Overview
According to UNCTAD (2008), over 80 percent of world merchandise trade by quantity carried by sea since it supports worldwide trade and globalization. In 2007, the volume of worldwide seaborne trade reached 8.02 billion tons. The quantity improved of 4.8 percent from the prior year. Dry out cargoes were the largest share of great loaded. The environment merchant fleet expanded by 7.2 percent during 2007 to at least one 1.12 billion deadweight tons (dwt) at the start of 2008. Key loading areas were situated in developing countries which are 63.2 percent while designed countries accounted as 33.3 percent. Due to high demand for shipping capability, vessel order rises at highest level which it really is 12 times higher that it was in June 2002. The most notable 35 shipowning countries alongside one another manipulated 95.35 percent of the world fleet. By Might 2008, the world containers fleet reached 13.3 million TEUs. Furthermore, the containership sector is usually buying larger ship to attain economies of scale to reduce costs. However, in the entire year 2007, the containership industry was effected by larger fuel price, a weakening US dollar, a strengthening Euro, and an elevated supply of newbuilding coming online. Oil price impacted directly to bunker expense level which resulted higher bunker fuel value for 73 percent in Rotterdam, 76 percent in Singapore and 79 percent in Los Angles. Furthermore, maritime transport tends to have further discussions such as security and air pollution and climate improvements. The industry is more concerns on environmental concerns because heavy oil burned in shipped benefits in higher level of sulphur oxide and nitrogen oxide emissions.
International trade is the main driver of container movement. In the entire year 2005, North and East Asia is the most crucial driver of container trade that was accounted for 50 percent of export trade. In the entire year 2015, North and East Asia is expected to increase its world marketplace share by approximately 12 percent while North America and Europe are anticipated to reduce market share by 5 and 7 percent respectively. In other world, North and East Asia trade was the key driver of global container circulation in the year 2005, and it features potential to grow until the year 2015. The estimated and forecast growth costs for complete container trade (Figure 2.1) tend to reach up to 235.7 million TEUs in the entire year 2015, and the substance growth rate through the period 2005 – 2015 is definitely 7.6 percent per annum. This estimation is complete origin-destination containers just. The empty containers aren’t included.Relating to Drewry Delivery Consultants ( ) as cited by UNCTAD (2008), container trade is expected to reach 287 million TEUs and surpass 371 million TEUs by the entire year 2020.
2.2.1 Impacts of Credit Crisis on International trade
2.3 Logistics Management
Logistics management may be the process that relates to plan, implement and control the efficient, effective movement and storage of merchandise, services, and information in both the manufacturing and provider sector from the point of origin to the point of consumption in order to meet customers’ need. Logistics management is to regulate raw materials, in method inventory and finished merchandise(Stock and Lambert, 2001).
Gecowets (1979) explains about logistics concept that
“The five privileges of a logistics program are supplying the right product at the right place at the proper time in the right condition for the right cost to those consumers consuming the products.”
According to Quayle and Jones (2001), logistics can be defined as the process that needs management and co-ordination of most activities from sourcing and acquisition, through creation and through distribute channel to customers. The authors also make clear that the purpose of logistics is to develop competitive benefit through the simultaneous accomplishment of high customer support levels, optimum investment and affordability. Furthermore, the authors explain about the business capabilities within the scope of logistics operations or understand as “logistics mix” which include planning and online marketing strategy, purchasing, production planning, safe-keeping and material handling, inventory operations, warehouse and stores, transfer, customer service, and technical support. Relevant toBowersox et al. (2007), logistics pertains to the management of order processing, inventory, transport, and the combo of warehousing, elements handling, and packaging (Figure 2.2).
However, Croom, Romano, and Giannakis (2000) do analysis on critical literature overview of supply chain, and they conclude supplying chain has lack of universal definition as the way of supply chain has been created, so that it leads to different viewpoint.
Business functions in logistics management:
- Facility Network
- Warehousing, Materials Handling, and Packaging
- Integrated Logistics Management
- Order Processing
Logistics requirement have increased to serve consumers who would like and demand quicker response times and more convenient offerings. Moreover, additionally it is pressured by consumers linked to the prices, so the company needs to control its supply chain as efficiently as possible (Coyle, Bardi, and Langley, 2003).
2.3.1 Need for Logistics
Ballou (1999) clarifies that logistics is about creating value in terms of time and place, so excellent logistics management means the activities that contribute to the procedure of adding value. Logistics supervision is related directly to minimising the cost that may derive advantages to the consumers and to the firm’s shareholders. Logistics management can consequence of the revenue squeeze and potential earnings leverage because it is the area to significantly save cost which has greater effects in the firm’s profitability that increasing sales volume could have(Stock and Lambert, 2001).
2.3.2 Challenges in Logistics Management
Meixell and Norbis (2008) claims there are plenty of forces that bring about new issues in logistics management. A number of them originate in the shipper community, carrier community and consumers themselves such as the growing concern for the environmental impact of the merchandise they purchase. In the research, the authors also describe five logistics difficulties that influence transport decision which are transport potential shortages, international development, economies of scale, secureness concern, and environmental and energy use concerns.
Transport Capacity Shortage
The issue is relevant to all or any transport modes. In engine carriers, capacity is limited because of tighter hours-of-assistance regulation, driver shortage, and higher toll that stress truck capability (Meixell and Norbis, 2008). Maloni and Jackson (2005) report that worldwide marine container volumes own increased over modern times, but North America ports and their supporting container distribution possess not increased capacity consequently. LaLonde (2004) studies that fuel cost effect the large carriers that may cause a wave of personal bankruptcy and a consequence of reduction of industry capacity. The author also mentions about driver shortage which includes resulted in some truck parked against the fence for the lack of drivers. Railroads are functioning at or near capacity and they have been reluctant to produce a huge investment, so it put more pressure on electric motor carrier industry and additional truck on road.
Meixell and Norbis (2008) claim that international expansion is a challenge for logistics management since it involves activities linked to international trade such as for example providing satisfactory transport and safe-keeping, getting items through custom, delivering to foreign position in timely manner at an acceptable cost. According to Hines (2004), customers have become more demanding regarding requiring unique features or adaptations to a typical product. Therefore, the challenge is that suppliers have to fulfill the individual consumer demand profitably by integrating the supply chain process to fulfill the demand.
Economies of Scale
The issue relate with shipment size because total truckloads can minimize the cost associated with the capital expenditure for apparatus. Economies of scale also involves in managing of inventory. It really is cheaper to ship instances than ship individual units and in addition cheaper to deliver in pallets than to ship individual situations (Meixell and Norbis, 2008). The idea is much like Stock and Lambert (2001). The authors clarify that inventory is necessary if a firm is to realize economies of level in purchasing, transportation, and manufacturing. In addition, when the firm buys material in larger quantity, it reduces transport price per unit because full truckload and rail car shipments get lower transfer rate than smaller shipments of less than truckload (LTL) or less than carload (LCL) quantities.
Security issue and offer chain must relate along because terrorist attack can impact the business operation (Meixell and Norbis, 2008). Sheu, Lee, and Nihoff (2006) also do analysis about logistics security programmes, and they claim that the efficient operation of international logistics damaged by the September 11 tragedy. In Unites States, new security measure added cost approximately $151 billion annually. However, the necessity of security and proficiency should stay harmony because if the need is overwhelming, it can cause delay of logistics method.
Environmental and Energy Concerns
A developing concern over the environment and energy problems to logistics managers (Meixell and Norbis, 2008). According to Wu and Dunn (1994), logistics is a part of firm that should become environmental friendly, and the purpose of logistics managers have already been increasing because their decision own a major effect on environment. They should deliver the green products to consumers to keep the nice image of the company. However, the issues of logistics managers can be that how exactly to incorporate environmental management ideas to their daily decision making procedure. The writer also mentions about mode collection impacting on the environment. Rail and barge make use of less energy than road haulage and oxygen cargo. Marphy, Poist, and Braunschweig (1994) claim that logistics managers have the best capability to influence environmental concern involving pollution and natural resources preservation.
According to Benson, Bugg, and Whitehead (1994), International Maritime Organisation (IMO) and very similar regulatory bodies provide a variety of study to improve environmental consciousness and consequent tougher regulatory on the surroundings. Marine pollution can be a matter of essential oil pollution after mishaps at sea or the deliberate discharge of pollutants in the process of washing tanks. The pollution also comes from losing overboard of containers or deck cargoes of chemical compounds, fertilizers and similar products. Air pollution benefits from emissions, and noises pollution also come from busy roads or near significant airports. In the result, companies will need an environmental audit to review their operation regularly with the planning and adoption of training programmes to create knowing of environmental issues.
2.4 Role of Transportation in Logistics Management
Transport is a major element of the logistics management since it pertains to the movement or flow of merchandise from point-of-origin to point-of-consumption. Transport is one factor in creation of time utility since it can determine how fast and how regularly products move in one indicate another (Share and Lambert, 2001). The
decisions about logistics management linked to transport includes operating one’s own transfer versus hiring transport, method, carrier, and service assortment, method of freight consolidation, auto routing and crew and trip scheduling, and products selection, replacement, and acquisition (buy, lease, or lease)(Vogt, Pienaar, and Dewit, 2002). According to Coyle, Bardi, and Langley (2003), transportation cost represents roughly 40 to 50 percent of total logistic cost and 4 to 10 % of the product selling price, so the authors conclude that transfer decisions directly affects the total logistics costs. In logistics perspectives, three elements that are fundamental to move performance include cost, swiftness, and consistency. The cost of transport is the repayment for going between two locations and the expenses related to maintaining in-transit inventory. Logistical system should utilize transportation that minimizes total program cost, so it means that the lowest priced method of transport may not result in the cheapest cost of logistics. Speed of transport may be the time required to complete a particular movement. Faster transport services may charge higher, hence selecting method of transportation should stay balance between speed and cost of services. Finally, consistency displays the dependability of transportation which always shows as the most important attribute of quality transport (Bowersox et al., 2007). Quayle and Jones (2001) also mention in the same way that firm should concern with the factors associated with reliability, time, and price tag.
2.4.1 Setting of Transport and Characteristics
According to Ballou (1999), the railroad is an extended hauler which moves the raw materials and low valued created products. The writer also explains there are two legal forms which are common carriers and private carriers. A common carrier sells its transportation service to all or any shippers, but non-public carriers are possessed by shippers with the most common intent of serving just the owner. The good thing about railroad is to move large tonnage over long distance, but drawback of railroad is usually having great fixed cost due to expensive equipment, right-of-way and tracks, switching back yards, and terminal. Nevertheless, railroad has low adjustable operating expense (Bowersox et al., 2007).
Motor carrier is a part of any firm’s logistics source chain because almost every logistics operation needs the motor pickup truck from the smallest pickup to the greatest tractor-semitrailer combination. Much like railroads, motor carriers own two types which are for-hire and private carriers. Motor carriers typically transport created commodities over relatively brief distance. The commodities include textile and leather products, rubber and plastics etc. The major advantages is ability to provide assistance to any location. On the other hand, weather condition and highway site visitors can disrupt motor provider and effect transit period reliability. Unlike railroads, motor carriers have high variable cost, but low fixed cost(Coyle, Bardi, and Langley, 2003).
Air carriers give you a very fast and fairly expensive mode of transportation. Airlines have a high fixed expense in infrastructure and products. The commodities will be the high-valued products or time-sensitive emergency shipments that have to travel a long range. The shipments that happen to be significantly less than 500 pounds including high-value but light-weight and high-tech goods are suited for airline carriers (Chopra and Meindi, 2007). Regarding to Benson, Bugg, and Whitehead (1944), the benefit of air carriers are direct flight practical to all ports of the environment and speed higher than any other method of transport. However, disadvantages are high freight charge, possible delay because of bad weather, more limitations on size and pounds.
Cuneo (2003) promises that more than 90 percent of community trade travels in containers aboard sea – going ships, and about 20 million containers move through 220 ports all over the world every year. Shipper may use water carriers in combination with other setting of transport. Water program on the average is slower than rail and availability and dependability could be effected by bad weather. Loss and damages cost from water carriers are believed low relatives to different modes. However, product packaging is more concerned to protect goods during handling when loading and unloading operation(Ballou, 1999).
2.4.2 Critical Adjustments in Transport
According to Coyle, Bardi, and Langley (2003), there are five major areas of change which happen to be deregulation of the U.S. ocean liner industry, intermodalism, shipment control, trade policies, and currency fluctuation. The Transport Work of 1984 and the Ocean Reform Act of 1998 may be the greater reliance on the market destination to control rate. So, the elimination outcomes in more charge negotiation, the proper of conference carriers to consider independent action on rates and provider contract which response to the regulations of supply and demand. According to Stock and Lambert (2001), the deregulation has resulted in increased inter-intrafirm competition, higher pricing freedom, flexibility in routing and scheduling. It has increased the need of marketing oriented, and shippers have significantly more carriers to select. Secondly, intermodalism means the usage of two or more transport mode which can offer something to the shipper-customer that appears to be smooth (Coyle, Bardi, and Langley, 2003). Intermodal transfer is a combo to take good thing about the inherent economies of every and thru provide an integrated service at lower total expense (Bowersox et al., 2007). Next, shipment control means hi-tech communication system that may deliver effective interaction and control system. Buyer can track the progress of the shipments. In addition, trade guidelines can impact just how of transportation. Some countries set up protective barrier to restrict import things, so delay of custom made procedure can happen which also lead to delay shipments. Finally, fluctuation in environment currency can significantly affect logistics decision such as for example choice of transport function and carrier. Definitely, benefit of currency also affects freight costs and importing and exporting quantity which also affect traffic of transfer (Coyle, Bardi, and Langley, 2003).
2.5 Logistics Approaches Related to Customers
Logistics and Marketing
Zinn (2000) mentions that logistic and advertising should get together because logistics operations is developed to provide value to consumers and fulfill customers’ need. Therefore, the necessity of advertising and logistics integration has got been more increasing. Customer support is often the key website link between logistics and advertising.Coyle, Bardi, and Langley (2003) claim that if the logistics program has problems, and customers will not get a delivery as promised, the business could lose future product sales. The logistics method is to deliver and produce the nice products at the proper cost, but if there are some mistakes with the process, the customers will be satisfied. As a result, it has a link between advertising and logistics operations. Innis and LaLonde (1994) found that both of logistics and advertising contribute to client satisfaction because marketing is in charge of creating and handling demand while logistics is usually accountable for fulfilling demand.
The Function of Logistics in Establish CUSTOMER SUPPORT Levels
Logistics operation serves a particular important advisory function since the goal of marketing division is to improve sales, but sometimes they disregard the cost to accomplish them. The logistics department can outline the alternative method of delivering products to customers and help to calculate the cost for different degree of service. They can help to determine the level of customer support and pricing plans (Marphy and Wood, 2004). Regarding to Coyle, Bardi, and Langley (2003), there are four dimensions of customer support from a logistics perspectives. They contain period, dependability, convenience, and communication. Time relates to order cycle time, lead period, and replenishment time. Purchase cycle should be consistent with reasonable length. Dependability is more crucial than lead time for a few customers. It affects directly to inventory level and stockouts price. Moreover, dependability also means safe delivery and right order. Connection involve with accurate details and electronic movement of information. Finally, ease is understood as overall flexibility. Logistics service should be adaptable for different consumers.
2.5.1 Partnering Marriage between Carriers and Shippers
Ellram and Hendrick (1995) describe partnership as a romantic relationship between two firms that committed for a time frame share mutual information, risks, and rewards of the partnership. Relevant to Mohr and Spekman (1994), partnership is defined as independent businesses who share goals, shoot for mutual gain, and acknowledge a high level of mutual interdependent. Cooke (2000) claims that supply chain operations and collaborative transport control propel transport customers and their service providers toward more powerful mutually beneficial associations. Dwyer et al. (1987) make clear that buyer-seller relationship must have a basic list of critical success factors for strategic alliance. It includes detailed planning foe future exchange, elevated measurement and qualification, posting benefits and burden, reduced uncertainty, shared efficiency and excessive switching costs. Ellram (1991) also identify that trust between firm, transfer of necessary information, mutual dependence, and sharing of new technology will be the key attributes of fruitful relationship in buyer-seller partnership.
Traditionally, marriage between shipper and carriers was arm length transaction. Each of them tries to maximize its interests with little interest within their both relationship. Nevertheless, both of these have begun to identify the mutual rewards by developing alliance (Lambert and Inventory, 2001). Relating to Gibson, Rutner and Keller (2002), the study discovered that trust, effectiveness, and overall flexibility are the most important determinants to build up and manage long-term cooperative partnership between carriers and major shippers. Byme (2004) clarifies that when fuel value are rising substantially, carriers have no choices, but need to increase price. It could affect romance between carriers and shippers. The perfect solution is of the condition is to improve collaboration between shippers and carriers. Carriers must have end-to-end processes such as for example load planning, tendering and delivery confirmation. Technologies such as for example sharing tracking and transaction information are also important to collaborate. Lu (2003) claims that effective services result in successful partnering relationships.
2.6 Carrier Assortment Decision
The decision making method is the stage that includes mode choice and carrier selection that may identify relevant transport overall performance variables, select setting of transfer and carrier, negotiate prices and service levels, and evaluate carrier overall performance (Monczka et al., 2005). Stock and Lambert (2001) claims that mode and carrier variety is crucial because shipper can decrease the number of carriers with whom they conduct business. When shippers have great volume, they get bigger discount and higher-level of service that bring about lower transport costs. Meanwhile, carriers prefer to handle fewer shippers with large steady volume over long time period. Burdg and Daley (1985) claimed that the procedure of selection is involved with behavioural approach which include environmental and organizational elements. The overall performance of the transfer carrier may influence the potency of the complete logistics function of a company and the procedure of carrier selecting can be an essential to the company’s achievement. However, the research explored that regulatory and industry changes are drivers for change in transportation choice attributes (Norbis and Meiwell, 2008).
In addition, Gattorna and Walters (1996) declare that there are five elements that are influent the choice of transport containing business characteristics and philosophy, industry structure, product characteristics, customer characteristics, and environmental problems. Firstly, the business should concern its advertising, financial, and operation strategies. Marketing can determines
customer support offer and customised to meet up different customers’ necessities. Financial is also associated with the profit objectives. Secondly, market structure is essential consideration. In competitive industry, delivery may be the key factor influencing customers’ assortment. Thirdly, product characteristics are participating with pounds, size, and condition. Next, customer qualities can impact on profitability. The company should check customer account, order cycle, and buyer after-sales service requirements. Finally, environmental concerns can influence transportation decisions because in some countries, authorities is influent in transport policy.
2.6.1 Selecting and Making Decision Process
Figure 2.3 Four decision stages
- Post-choice Evaluation
- Problem Recognition
According to Stock and Lambert (2001), there are four decision phases (Shape 2.3) take place in the mode/carrier selection decision which are issue recognition, search, choice, and post-choice evaluation. First of all, the problem recognition may be the stage that is affected by a number of factors such as customer orders, dissatisfaction with existing setting/carrier, and changes in the distribution habits of firm. Next, consumers will come to search process that they scan a variety of information sources. The possible source can be their past encounters, carrier product sales calls, existing company transport record, printed materials such as for example advertising brochures, and buyers. This technique can take a considerable of time. Therefore, the important stage is choosing. There are numerous critical features concerned in this level, and executives will choose the mode/carriers that meet their requirements. Finally, transfer executives measure the choice performance. Many businesses use many techniques such as for example cost studies, audits, on-time pickup and delivery functionality, and damage/claims reviews although some of these use statistical analysis.
2.6.2 Behavioural Techniques Linked to Transport Study
Gray (1982) presented three assumptions associated with carrier choice. First of all, Economic Positivism is discussed that economic value related to the organization which determines the utilization of transport. This approach related to price and earnings. The firm attempts to increase short term earnings and minimize short-term cost in a trading. The next approach is called technological positivism which is associated between the physical aspects of commodity such as weight and volume and the transport system such as speed and frequency. The last strategy is perceptual approach which linked to user interpretation of the problem instead of on physical attributes.
2.6.3 Important Features in Selecting Carriers
To make a decision, customers need to recognize value in order to make a selection, so this component will review the crucial attributes for shipper to make the selection carrier requirements. Lu (2003) surveyed Taiwan Shippers and discovered that the five most important carrier https://testmyprep.com/lesson/easy-tips-on-how-to-write-a-reaction-paper service characteristics are availability of cargo space, low damage and loss record, accurate documentation, stability of advertised sailing program, and courtesy of inquiry. The study also found that there’s a significant correlation between timing related, prices and warehouse service, so it can imply that to meet customers, carrier program should combine these exact things along. Mater and Gray (1993) explored that shippers in Irish Ocean market concerned the virtually all five factors to select carriers which are a fast response to challenges, on time collection and delivery, value for money price, and good romance with carriers. Regarding to Kent and Parker (1999), the mail survey was sent to 125 companies which divided into 50 import shippers, 50 export shippers, and 25 overseas containership carriers. Shippers recognized the top elements for selecting carrier which will be reliability, equipment availability, service frequency, rate changes, reduction and damage, and monetary stability. The study also discovered that the factors of selecting carriers between import and export shipper will vary in the factor of door to door transportation rates. The research also figured service factor is important factor for export buyers. Gibson et al. (1993) reported that the main element conditions for carrier selection includes a willingness to meet service hints and tips on how to write an opinion essay expectation, a recognised history of outstanding overall performance, a willingness to focus on continuous improvement, the opportunity to handle special requirements and emergencies and a willingness to meet cost goals.
Tengku Jamaluddin (1995) investigated the service characteristics that are important in carrier selection procedure, and the effect indicated the very best five service elements which will be knowledgeability, freight charge, cargo treatment and handling, punctuality and transit time, and service frequency. Chiu (1996) assessed the performance of liner shipping in shippers’ perspectives. The effect indicated that the six most significant service attributes has a prompt responses from a carrier to any concerns, transit time, stability, documentation services, a find of delay, and advice about loss and damage promises.Lu (2007) examined from past exploration and questionnaire study of 230 shipping and delivery executives to find out the important essential of capacities for liner shipping products and services. The review concluded that transit time and regularity of provider are ranks as significant requirements in the context of liner delivery products and services. Saleh and Das (1974) found that reliability of transit period, consistency operating, company image and specialized handling abilities are important carrier attributes. Coulter et al. (1989) reviewed the past research and employed the relevant criteria to develop questionnaire. The resulted showed that dependability of performance is considered 1st and follow by Insurance of assistance provision, quality of service, personalizing elements and handling support. McGinnis (1990) found that there are six factors influent transport choice which are freight amount, reliability, transit time, reduction/damage/claims processing/tracing, shipper market thought and carrier considerations.
Carriers usually do not really understand which selection criteria have a tendency to influence a shipper’s choice of carriers. Carriers can drop competitive advantage if they still understand in different ways with shippers which definitely results in a reduction in market share. Moreover, the study found many carriers’ perceptions that will be significantly different from what shippers wish. Carriers rated personal relations with the carriers as very important while shippers rated the factor only moderately important. Regular calls by carrier product sales representatives, gift and gratuities offered happen to be overrated by carriers, but shippers rated as somewhat important or not crucial. In addition, the research concludes that four standards which were vital that you shippers had been underrated by carriers, and four criteria which were less vital that you shipper were rated as well highly by carriers. It appears that carrier so not correctly appreciate the level of significance placed on some of selection requirements by shippers(Abshire and Premeaux, 1991). Gibson et al. (2002) study both of shippers and carriers and discovered that carriers rank trust, effectiveness, and flexibility as the very best attributes. Relating to Evers, Harper, and Needham (1996), if carriers neglect to provide in accurate photo of services, it can result in dissatisfaction and in the end the replacement of this carrier with another carrier. Burdg and Daley (1985) claim that distinct perceptions between carriers and shippers possess managerial implications for carriers to reevaluate their advertising ways of improve its effectiveness.
2.6.4 Cost Determinants
According to Benson, Bugg, and Whitehead (1994), costing can be an accounting method which allocates expenditure to particular actions. Coyle, Bardi, and Langley (2003) make clear that if efficiency is measured by expense, an individual the main system not really operating at its lowest cost may donate to the system’s overall productivity. Water transport is the cheapest method in logistics context, but if firm has extra cost in inventory positioning with connected with increases in warehouse, the additional cost could be greater by using water transport. Therefore, transport decision have to concern related areas such as inventory and warehousing.
In carrier assortment decision context, a standard set of cost a shipper generally must evaluate including freight cost, the inventory holding costs of inventory in the pipeline, the inventory carrying costs of cycle stock at the getting location, the inventory holding costs of the mandatory safety at the getting location and the purchase cost require to produce the inventory to load the pipeline. These main costs differ depending after the method and carrier that a firm select to supply freight transport companies (Liberatore and Miller, 1995).
2.6.5 Service Determinants
Transport service top quality is recognized to be considered a critical factor to achieve a differential advantage over competition (Cotham et al, 1969). Frankel (1992) explores that there are nine requirements indicating the major quality concerns regarding to liner shipping service. They include stability of service, time of service and protection of delivery time, availability of promised or advertised capacity, cargo safety, reliability and maintenance, cargo stream control and monitoring, documentation and details flows effectiveness, expense control, billing and cost management, service position control and projection, intermodal operations. Bengtson (1992) explains that quality shipping relates closely to safeness and environmental protection concerns. According to Thai (2008), the study is to explore program quality in maritime assistance, and the result shows that the new service top quality dimension is public responsibility. The study show that cultural responsibility related quality elements in maritime transport such as for example responsible behavior and activities regarding basic safety and environmental concern. The study also discovered that the foremost and second the very first thing are knowledge of customers’ needs and necessity, and staff’s frame of mind and behavior in assembly customers’ requirement. Moreover, elements related to the customer-focused management element, understanding customers’ demands and requirements, constant improvement, and shipment security and safety are ranked respectively. Dependability of service performance, quickness of service functionality, and providing support in regular manner are received high mean score respectively.
2.6.6 Cost Vs Service Criteria
The effects of some research showed that expense of service element is placed more important than other service conditions. McGinnis (1990) pointed out that service observed to become more importance than freight rates. The effect is relevant to many researches. Lambert et al. (1993) explored that high quality customer support, accurate billing are located more important than rates. The research also suggested that to produce a differential edge, a carrier should do consistently and it can result in justify a premium value. Dunn (1982) reported that service variables should be considered first and cost thought should be considered second. Morash and Calantone (1991) found that service consideration (promptly delivery, reliability, and secure delivery) are believed above cost element in carrier selection process. Burdg and Daley (1985) concluded from 407 questionnaires mailed that shippers located more importance on provider requirement than on transport cost, but carrier understood that cost come first. The study of Foster and Strasser (1990) is pertinent to Morash and Calantone in the point that carrier don’t have the good understanding what attributes to choose carrier of shippers. Shipper regarded as service factor a lot more than cost factors, but carriers comprehended in contrary.
However, there are a few research found that shipper considers cost standards before service criteria. Brooks (1984) discovered that exporters in Eastern Canada place price of service the main and follow by regularity of sailing, standing, transit period, and directness of sailing. Suthiwartnarueput (1988) found that cost of support is the most important attribute and follow by punctuality, transit times, regularity of sailings, and directness of sailing and earlier loss and damage experiences. Gibson et al. (2002) found that shippers rank cost, performance and trust as the main attributes.