Choosing logistics service suppliers: customers` perspective in benchmarking container terminals

Development of a customer-oriented model that allows benchmarking of container terminals. This model takes into account the consumer's preferences regarding the importance of certain attributes of a port. Typology of consumers based on their preferences.

Рубрика Менеджмент и трудовые отношения
Вид дипломная работа
Язык английский
Дата добавления 30.10.2017
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Such type of customers concerns the logistical role of a port, which is in our case represented by the attributes of developed transportation network and easiness of delivery of containers. Moreover, he cares about the speed of services provided in a port, pointing that timeliness and qualified personnel are also significant. Such type of customers is constant user of port services, who has to go there quite often, and because of it he cares about the process of delivery the cargo.

Diagram 3.7 Ranking of attributes for the type 4

In this case the ranked order of alternatives differs from the previously considered. The Diagram 3.8 indicates it. Petrolesprt is the leader for such type, which is given the aggregate index of 0,75, and it dominates the next alternative with 64% probability. FCT follows Petrolesport, lagging not too much. ULKT is also quite close to the FCT, and has 0,65 index of attractiveness. Sea Fish port is again the outsider with 0,24 index. It should be noticed that besides Petrolesport, each alternative dominates the next one with 100% probability.

Diagram 3.8. Ranking of alternatives for the type 4

These results correspond to those from the customer questionnaire to some extent: Petrolesport is chosen indeed most often, followed by FCT. However, ULKT is chosen by the customers only in the fourth place, while out results show it has the third rank. Sea Fish port is again ranked to be the leas preferred. If we compare it with the expert results, we can see that this is the only case, when the results completely coincide. The ranking from expert is 100% the same, which APIS provides for such type of preferences.

The 5th type of customers` preferences

This type of the customers is also concerned with storage conditions, as the third type, but also he needs developed transportation network along with the opportunity to choose the time for taking the cargo. Such type of customers cares about the integrity of port into the whole logistics network. The problem of choosing the port for such type of the customers is connected to the problem of logistics optimization, in terms of both costs and location. As storage factors are important, this type of customers deals with import cargo transportation quite often. He also might transport special cargo, which needs existence of special condition in storage terminals. The importance of developed transportation routes might indicate that cargo will further transported to the distant locations.

The factors of storage services (X3 and X10) are placed foremost and together account for around 0,5 weight. Developed transportation factor (X8) is also important, but in less extent, as it has the third position. The opportunity to choose the time for cargo taking out comes after X8 and has almost the same weight for this type. The attributes and values are depicted in the Diagram 3.9.

Diagram 3.9 Ranking of attributes for the type 5

The alternatives are ranked in the way as the Diagram 3.10 indicates below. Moby Dick has become the most attractive alternative for such type of the preferences. It has 0,75 aggregate index, followed by ULKT, which has 0,71 index of attractiveness. After ULKT the large gap takes place, and Sea Fish port comes the third with the index of 0,43. Petrolesport and FCT are ranked the last as the most non-attractive for this type of customers.

Diagram 3.10. Ranking of alternatives for the type 5

The results do not coincide with those, obtained from the questionnaire. They indicated the preferences of Petrolesport and Sea Fish port over Moby Dick. The reason might be that this type of customers in the questionnaire indicated that they do not follow any scheme about the estimating the ports when choosing it. They do not coincide either with those, obtained from the expert point of view.

Such typology of preferences reflects the difference between existing customers` preferences. In the second chapter we presented the hypothetical scheme that could be implemented in order to differentiate customers` preferences. After conducting the survey we identified 5 types of customers` preferences, and now we would like to see, whether the suggested scheme corresponds to the reality or not, and whether the identified types could be distinguished according to the considered criteria (the type of cargo transportation, frequency of appealing to the maritime company`s services, and the independence of decision-making).

3.3.3 Scheme of customers` typology

The factual results indicate that customers indeed differ based on the suggested criteria. However, the observed typology is different from the suggested scheme. It also has 3 levels, but with less complicated structure. The real scheme, identified with the use of questionnaire, is presented below.

Figure 3.1 Scheme of customers` typology

The Figure 3.1 above depicts, how the typology of customers is connected to the general information about customers. In contrast to the suggested in the Chapter 2 scheme, this one eliminates the occasional customers, who called the service once, seldom, or from time to time, leaving only the category of regular customers. They include frequent and constant ones. All 3 types of transportation exist, however, not for every category. For example, the constant customers usually do either export operations or export-import ones. Frequent customers also can perform export-import operations, but they also can transport import cargo. Neither of categories demonstrate the outsourcing of decision about port choice to the managers of the chipping companies, but two other options take place: customer either make a decision just by themselves, independently, either they listen to the opinion of the shipping line`s managers, but make final decision independently. We match up the identified types of customers` preferences with the abovementioned criteria. For example, the storage services appraisers perform either pure import or export-import operations: this type of customers` needs excellent storage services in order to keep the import cargo for some time. However, in order to build more proper scheme of customers` typology, more customers need to be surveyed.

If to speak about the relational part in the decision-making process, one type of the customers indicated the importance of existence of personal relations for decision-making, while the rest finds it unimportant. However, even for that type, which indicated the importance of personal relations, this factor is not the only one, influencing the decision. Even if some types indicate that they make the decision, taking into account the recommendations from the shipping company, only one has denoted the high importance of this factor for decision-making. As for the order of decision-making, 4 types of customers agree with the statement that they first choose shipping company, and after a port. But one type has the opposite preferences - port is chosen first, and the shipping company second. This is the type that seeks for the excellent storage and customs service.

3.4 Managerial implications

The results of the empirical study indicated that there is a difference in the way, how freight forwarders choose a port. The difference exists in preferences, concerning attributes of ports, along with the difference in the process of choosing.

Both for shipping companies and ports the results of this study provide the insight on how their customers choose a port, what kind of preferences they have, what are their needs. As shipping companies offer complex solution, including the services of ports, the impression from port`s services affects overall impression from the shipping company`s services. That is why this is not only ports that are interested in the results of this study, but shipping companies as well. Moreover, our survey revealed some preferences about the important characteristics for shipping companies as well. We found that such attributes as ability to track moving of containers, speed of service delivery, qualification of employees and price affordability are the most important factors for freight forwarders when choosing a shipping company. It means that freight forwarders concern not only with the financial issue of the transportation, but the quality of service delivered as well. Even though in crisis times shipping companies incur cost-cutting measures, these measure should not be connected to the factors listed above because they are crucial for customers.

From the ports` perspective, this study gives an insight on how the decision-makers choose ports. The understanding of factors influencing customers` behavior is essential to deliver the right services. Our study revealed that not for every type of the customers costs play the major role. They do, for two of them, but together with other attributes that are not less important. More and more attention is paid for the quality of service provided, for the storage services, for the convenience of using a port, and port`s connectivity. That is why ports should develop not only internal services and facilities, but also do not forget about the importance of obtaining the access to the main road and rail routes. The port is often not the final point of destination, and cargo moves further, using different modes of transportation. That is why port plays important role for overall logistics, and for customers it is of great importance to choose an optimal port for further cargo transportation.

Delivered in port cargo is left for some time in the storage zone, especially the import cargo. Some cargo needs special conditions for storage, some cargo are stored for a long time and because of this customers want to be sure that cargo will be safe. They are also interested in keeping the costs of storage down because storage costs usually account for large sum of spending for the container shippers. That is why ports, which offer storage service should further develop it towards better customer satisfaction. Moreover, such attributes as cargo safety and port safety turned out to be also important for customers. It means that ports should not forget about keeping these characteristics on the high level.

Ports should deeply understand the main types of its customers and their needs so as to suggest better offering for them. As long as the whole industry is turning toward more technologically developed, ports should also keep up with this trend. Our study revealed that there is a type of freight forwarders, which seeks for technologically developed services. In previous studies such findings did not appear. It means that new type of customers started to appear - those who seek for technological integration of the port. It is not a surprise - more and more freight forwarders itself offer technically integrated solutions to its customers (shippers), and they expect such type of services from its providers.

From the perspective of freight forwarders, this study suggests the framework to benchmark the ports, according to the preferences. Using this model, they can choose the most suitable for them solution, while having an opportunity to look at the overall rank of alternatives to choose. If customer seeks more the technological services of ports, they should choose FCT. For the type of customers, which values simplicity and is cost-concerned, the best option is to choose ULKT. The same alternative is the best for those forwarders, who seek for quality of storage customs services. Other type of preferences tells about importance of the integration of port in overall logistics and about the speed of services provided. For customers with such system of preferences the best alternative is Petrolesport. At last, customers, who care about storage and logistics state of a port, should choose Moby Dick. A customer with any other preferences can also get the ranked alternatives, in conformity with system of preferences about port`s attributes. For implemented model no exact values for weights of attributes are needed, just the preferences about the importance of different characteristics.

As our study revealed, customers do not use any formal evaluation of ports when choosing it. However, they have some preferences and needs, which they can rank in terms of importance for them. They can`t do it for each of the attributes. But they can outline those, which they appraise the most. Our model helps to identify the most attractive alternative for freight forwarders, which have only understanding of what they expect from port and the services it provides.

The considered problem exists not only in the field of maritime transportation, but also in any other logistics field. In our study we consider services provided by container terminals and ports. Our methodology can be implemented for other industries, like rail transportation, for example, for assessing the rail container terminals. The methodology can be extended, but this study provide the basis for the assessing the terminals from customers` perspective.

3.5 Limitations and restrictions

The goal of this study is to develop customer-oriented benchmarking model to choose container terminal. The sense of customer-orientation is that we suggest several types of customers` preferences, which differentiate customers, and present ranked container terminals.

Due to the limited amount of received questionnaires, this study presents a few types of customers. With higher response rate we could elaborate more proper and thorough typology. It is also possible for future research to see the distribution of customers` preferences in order to understand, what kind of customers represents the hugest part and the smallest one.

Another limitation and the opportunity for future research is to increase the scale of estimation of attributes` importance. In this study we used the scale from 1 to 5, which did not allow us to choose higher precision for estimation of weights in APIS. It is possible to get more precise estimations of weights, if the scale would be from 1 to 7, or from 1 to 10. However, it also leads to some difficulties, concerning the way, how respondents could differentiate between these marks.

Moreover, we could not include such attributes and distances and existence of personal relations in our model because the respondents did not provide the personal evaluation of these attributes towards container terminals. In such case, it would be more individual solution, not for the type of the customers, but more for an individual customer.

In general, the problems of how freight forwarders choose a port/terminals and what solution can be suggested are underexplored. Different mathematical models can be implemented for solving a problem of assigning the best alternative to a customer.

Conclusions

Shippers and freight forwarders face the problem of selecting a port when they need to deliver a cargo using the maritime mode of transportation. This decision plays a strategic role - the right choice of a port could shorten the lead time, reduce costs, increase speed, and overall, enhance the effectiveness of logistic chain. Thus, it is of great importance to make a right decision choosing a port that would the best satisfy the specific needs.

In this study we considered the freight forwarders` perspective, as the main group of a port`s customers. After reviewing relevant literature we found that little attention is paid to this specific group of customers, whereas in real life a decision on selecting a port is often taken by them. When considering shippers` perspective, we found that preferences determined on a set of meaningful to the customer port attributes vary within this group of customers, thus resulting in different solutions to the problem of port selection. Therefore, it was suggested that preferences of freight forwarders are also different and, thus, a port selection would vary with regard to the type of the preferences determined over the port`s attributes.

In order to provide the best solution for each type of customers` preferences we developed the benchmarking model to choose a container terminal. On the basis of the literature review and an interview with industry expert, a set of attributes that customers could consider important for a port to possess was identified. After that we conducted a survey aimed at revealing the customers` preferences on the importance of port`s attributes and the ports. The next step was to benchmark ports for each of specified preferences that were detected through the questionnaire. For this purpose we implemented the AIRM methodology and based on it computer program APIS.

In this study we identified 5 types of customers, and for each, we provide the solution:

· The first type is characterized by the strong need in high-quality infrastructure, sound port facilities and qualified personnel to manage these facilities. Moreover, the customer of this type relies on recommendations form shipping company employees while making his decision choosing the port. For such type of preferences the best alternatives are: FCT and Petrolesport.

· The second type of the customers seeks for costs optimization and good port reputation and high speed of delivering services. For such type the best option is to choose ULKT.

· The same alternative is suggested for the customers, who expect high-quality storage services and appropriate custom clearing procedure along with optimal costs.

· For freight forwarders, who care the most about the logistics costs and overall convenience of delivery, the best alternative is to choose Petrolesport.

· The five type of the customers, which looks for both excellent storage services and logistics, the best option - Moby Dick.

Customers` preferences concerning ports not always coincide with those, provided by APIS. This means that customers do not always follow the rational procedure of port`s estimation. Moreover, one type of customers pointed out the importance of personal relations, which can be the determinant of the choice.

All in all, the results correspond to the existing market conditions of Saint-Petersburg ports, ULKT is known more for dealing with simple and “cheap” cargo, while Petrolesport and FCT concentrate more on delivering complex services. http://www.rbc.ru/spb_sz/17/05/2016/573acbc39a79475d19f2225c?from=main

If to speak about the relational part, we found that there are types, for which existence of personal relations matter, and for which recommendations from shipping companies are important. However, this is not the case for every type. Moreover, we found that in some cases the choice of a port is made taken into account the opinion of the managers of a shipping company. It means that ports should pay attention not only to the relationships with its final customers, but also with shipping companies.

Overall, customers concern not only about the price, but also about the service and logistics. The suggested model would allow to a customer with certain preferences to obtain the solution of a best-suited port. For shipping companies, this study gives an insight on what customers seek for when choosing a port and shipping company. The understanding of customers` needs is necessary for suggesting the best transportation solution. For ports itself, this study provides the typology of customers` preferences. Ports, thus, can evaluate, which criteria are needed for improvement in order to satisfy customers` needs. They also can adjust services for each type of the customers.

The problem of terminal selection appears in different logistics field. Provided in this thesis methodology of port benchmarking for different types of customers can serve as a base for the problem of terminal selection in railway industry, for example.

To conclude, we achieved the set goal, and answered the research questions. The customer-oriented benchmarking model is suggested so as to give the best port alternative for each type of the customers.

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Appendix

This survey is conducted in order to identify customer preferences in choosing a port / container terminal and a shipping company (line) for cargo shipping. Please, answer the questions listed below. Filling out the questionnaire will not take a lot of time, you will need approximately 5-7 minutes. Thank you!

Question

Answer

General information about a client

1

Evaluate the frequency of calling on the Maersk Line services

1. Once

2. Seldom

3. From time to time

4. Frequently (on a monthly basis)

5. Very often (on a weekly basis)

2

The reason for calling on mainly concerns:

1. Export of cargo
2. Import of cargo

3. Both export and import

3. Transportation inside company

3

Who makes a choice of a port?

1. Independently

2. Shipping line`s managers

3. Individually, but taken into account the recommendations from shipping line`s managers

4. Other______________________

4

Evaluate, please, to which extent you agree with listed below statements: where 1 -completely disagree, 5 -completely agree):

· In first turn, I choose shipping line, and only then a port/ terminal of calling

· In first turn, I choose a port/terminal, only then a shipping line

· The choice of a port/terminal is made by using a scheme that allows me to evaluate every particular terminal

1…....2…….3…….4…….5

1…....2…….3…….4…….5

1…....2…….3…….4…….5

Часть 1. Choice criteria

1. Please mark the importance of each of the following criteria for you when choosing a port / container terminal (where 1 - unimportant at all, 5 - very important). If there are other criteria which in some degree is important to you, but not listed below, select them, please, at the end of the table in the line "Other".

Criteria

1

Technical infrastructure

1…....2…….3…….4…….5

2

Special equipment

1…....2…….3…….4…….5

3

Availability of storage services

1…....2…….3…….4…….5

4

Timeliness of loading/unloading of containers

1…....2…….3…….4…….5

5

Cargo safety

1…....2…….3…….4…….5

6

Custom clearing procedure

1…....2…….3…….4…….5

7

Qualified personnel

1…....2…….3…….4…….5

8

Delivery in and out of containers

1…....2…….3…….4…….5

9

Port safety

1…....2…….3…….4…….5

10

Distance from departure point to port

1…....2…….3…….4…….5

11

Distance from destination point to port

1…....2…….3…….4…….5

12

Developed transportation network around port

1…....2…….3…….4…….5

13

Opportunity to choose the time of cargo taking out

1…....2…….3…….4…….5

14

The conditions of cargo storage in port

1…....2…….3…….4…….5

15

Port reputation

1…....2…….3…….4…….5

16

The absence of drugs cases in port

1…....2…….3…….4…….5

17

Recommendations from shipping company

1…....2…….3…….4…….5

18

Existence of personal relations in port

1…....2…….3…….4…….5

19

Total expenses

1…....2…….3…….4…….5

Other:

20

1…....2…….3…….4…….5

21

1…....2…….3…….4…….5

22

1…....2…….3…….4…….5

Please indicate the numbers of 5 the most important criteria for you from those listed above, placing them in order of importance.

If you have certain preferences regarding container terminals, indicate them, please below, having ranked alternatives from 1 to 5.

Petrolesport

First Container Terminal

Moby Dick

ULKT

Sea Fish Port

Other

Part 2. Please mark the following criteria for selection of a maritime shipping company line, according to the degree of importance for you (where 1 - not important, 5 - very important).

1

Opportunity to track the location of a container

1…....2…….3…….4…….5

2

Simplicity of order making

1…....2…….3…….4…….5

3

Rapidness of service provision

1…....2…….3…….4…….5

4

Availability of managers

1…....2…….3…….4…….5

5

Qualifications of managers

1…....2…….3…….4…….5

6

Acceptable price for transportation

1…....2…….3…….4…….5

7

Individual approach

1…....2…….3…….4…….5

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