International logistics and one-stop shopping. (total service capability of shipping companies)

Introduction

During the last ten years several large carriers have made substantial investments to acquire the in-house capability to provide global transportation and logistics services to international shippers. The term "mega carrier" has been used to denote this new breed of global transportation company. The term "one-stop shopping" is frequently used to describe their total service capability[1].

One-stop shopping presents a significant development which follows directly the arguments made in the common ownership literature[2-5]. One-stop shopping could change the nature of international shipping. It could surpass the traditional way of contracting separately for multiple transport modes and services, with or without the assistance of shipping intermediaries[6]. Under the one- stop shopping concept shippers delegate this responsibility to a single carrier.

The one-stop shopping concept thus far has met with mixed reactions from international shippers, and has produced mixed results for the companies offering such services[7,8]. The literature addressing experiences with one-stop shopping has speculated on the causes of the implementation difficulties experienced by global carriers and the concept's lack of market acceptance[1,9].

It is theorized that the one-stop shopping concept cannot be a success unless the service providers are meeting the expectations of their customers. A condition for meeting customer expectations is understanding these expectations. This article reports on a shipper-carrier comparison study designed to learn about international shipper expectations of one-stop shopping and global carrier understanding of these expectations. The perceptions of a large sample of US importers and exporters are compared with the perceptions of managers at global carriers servicing the US market.

Limitation

The total number of integrated carriers which are in a position to provide one-stop shopping for international logistics to US shippers is estimated to number less than 30 worldwide. The data obtained reflect the perceptions of ten of these carriers, yet they cannot provide the statistical and analytical comfort that a survey of a larger population would yield. This study, therefore, should be considered exploratory in nature, rather than providing conclusive results.

Definitions of one-stop shopping

The term one-stop shopping, to describe total logistics service packages, found usage in trade journals and carrier sales literature during the 1980s. Mahoney[10] describes one-stop shopping as:

The multimodal carrier promises to become a transportation supermarket, where the shipper

will be able to satisfy all needs with "One-stop Shopping". The shipper's shopping list will be

fulfilled with simplified documents from origin to destination and the shipper will receive an

audited computerized printout, just like the housewife at the checkout counter.

Vellenga, et al.[9] associate one-stop shopping with:

the image of a customer seeking to find transportation enterprise that will accept the

shipment, choose the most efficient mode or modes of transport, provide other types of

logistical services, e.g. pick up and delivery, inventory management, proper documentation,

and finally deliver the product in a safe and timely manner at a reasonable cost.

Lalonde[1] refers to one-stop shopping as:

the concept that allows the buyer of transportation services to buy multimodal requirements

(ocean, surface and air) from one carrier. Multifunction services would also be available from

the same carrier and might include warehousing, international information or other services.

Categories of one-stop shopping services

It is useful to devise a systematic breakdown of the services which are associated with the term one-stop shopping. The following break-down employs a hierarchy or "bundles" of functions and services. The first two categories can be considered minimum requirements for the concept's implementation by a global carrier. The third and fourth categories are considered less critical to a carrier's one-stop shopping status, although they are often associated with one-stop shopping capability:

* Connecting transport modes to achieve global movement of goods -- aid/motor/ocean/rail.

* Supporting services to make intermodal transportation run smoothly -- tracking and tracing/electronic data interchange (EDI)/customs link/forwarding.

* Distribution related services that supplement the shipper's distribution function - warehousing/repackaging/relabelling/order picking/ inventory management.

* Tailored logistics services which replace part of the shipper's logistics function - contract logistics or third-party logistics.

Sheffi[11], in his discussion of third-party logistics, classifies integrated one-stop shopping carriers as just one of several types of contract logistics providers. Sheffi divided these providers into several categories: carrier-rooted companies; rail third parties which expand their services into other modes; and shipper-rooted companies. He further distinguished between providers who own transportation assets and those who do not. In Sheffi's categorization, mega carriers offering global logistics service would be called asset-owning, carrier-rooted providers.

Categories of global multimodal carriers

The image of a mega international carrier has primarily been associated with ocean carriers, which, through investments in different modes and service capabilities, have shown considerable growth. Carriers such as …