Shippers’ willingness to use flexible transportation services

Abstract

Factors driving the choice of shipper firms for services of logistics service providers have long been recognized in the freight transportation literature. However, the willingness among shippers to choose flexible transportation services, where the service package can be adapted during planning and execution, has received less attention. In particular, little is known about the contextual circumstances under which shippers would be inclined to select such flexible transportation service. In this study, experimental scenarios and discrete choice modeling are used to investigate the willingness among shippers to use flexible transportation services. We estimate multinomial logit, mixed logit, and latent class models for a sample of nearly 200 global shipper firms and calculate willingness-to-pay measures for flexibility. The findings indicate that flexible services are essential in demand-volatile markets. Since logistics services may provide external flexibility for shipper firms, we also study which related internal flexibilities in supply chains drive these choices. In particular, our findings show that it is mainly the volume flexibility of shippers that mediates the choice of flexible transportation services.

Keywords Transportation flexibility, Flexible logistics services, Demand volatility, Volume flexibility, Logistics service provider, Discrete choice modeling.