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1、YIZHI LU JOHN DINWOODIE Comparative Perspectives of International Freight Forwarder Services in China Abstract Recent rapid decentralization and international trade growth in China prompted shippers to outsource traditionally in-house international freight fonvardiiiii functions to specialists. Comp
2、arative analysis of perceived .aps between shippers requirements and forwarders service provision revealed that although generally satisfied, shippers valued enhanceil warehousing, tdue-addin. payment and tailored services, ami payment advances more than fonvarders, bur doubt the capability of asset
3、-based providers. Shippers perceived lower milities from usintf forwarders to facilitate the (low of goods and information, Imt greater benefits from reduced investments in logistics activities. Lon-term cooperative relationships, considered beneficial but no! commonplace, yielded pcrceival cost, co
4、mpetitive, and investment benefits. In pursuing clear business strategies, principally diversification. forwarders in China cxperiem eci major external injluc/u cs from state eminent, chanfiin internaiional trade patterns, technical developments, and resource availability. Business process reenginee
5、ring could assist them in facing upcoming challenges. International freight forwarders (IFF) are international trade specialist(s) who can provide a variety of functions lo facilitate the movement of cross-border shipments (Murphy and colleagues 1992). In the United States they recently experienced
6、tremendous volatility (Murphy and Daley 2001), but momentous developments in the Peoples Republic of China (China) often go unheeded in international reviews (Coyle and colleagues 1996). SINO- TRANS, a single state-owned enterprise (SOE), monopolized foreign trade transportation services from 1950-1
7、985, until an Opening and Reionn policy spawned 1.600 competing IFFs. As China accedes to the World Trade pers outsource to IFFs in China and evaluate freight forwarder services and partnerships with shippers. Forwarder business strategies and external inlluences on them are considered. To supplemen
8、t a sparse literature defining current industrial trends, inlerviews were conducted with the China International Freight Forwarders Association (CIFA), a non-commercial inslilute authorized to participate in international freight business on behalf of Chinas transport enterprises. The results of a s
9、ubsequent survey are discussed. Finally a model for re-engineering IFF businesses in China is presented and avenues for further research are considered. Organization (WTO) and international trade grows, new challenges loom. In considering the changing role of IFFs in China, this study surveyed shipp
10、ers changing requirements, expectations, and gaps in service provision. Ten working propositions explore why ship- Mr. Lu is a postgraduate student in international logis- tics. Institute of Marine Studies, University of Plymouth, Plymouth, Devon, UK PL4 8AA. Mr. Dinwoodie is senior lechirerintnwspo
11、rtstudiesandcoordinatorofpostgrad- uate taught programs in inlernational shipping, interna- (ional logistics, and port management, Institute of Marine Studies University of Plymouth; e-mail jdinwoodie(dply- mouthMCMk. WHY OUTSOURGE TO IFFS? From 1950 to 1990, annual world trade growth of 5.8 percent
12、 by volume (Kitson and Michie 1995) generated substantial international transport movements, demanding that corporate participanis develop dynamic logistical dis- tribution systems that satisfy changing requirements (Lambert and Stock. 1993). Channel approaches (Wood and colleagues 1995) defined par
13、allel processes including the physical distribution, international transaction, and documentation involved in international marketing. related respectively to flows j goods. 18 TRANSPORTATION JOURNAL Winter information, and payment. For Chinas logisticians experienced in domestic commerce, internati
14、onal movements posed unfamiliar docu- mentation and problems negotiating the terms of international sales defining where to exchange goods, payment， and assign responsibility for freight charges and insurance. Without appropriate logistical systems to deliver the right products and quantities at the
15、 right place and lime, customers forgo the temporal and spatial utilities of trade. Consequently, specialist IFFs conversant in international trade procedures burgeoned to meet traditional shippers third-party requirements. However, although shippers expectations in the U.S. are clarifying (Evers an
16、d Johnson 2000: Holcomb and Manrodt 2000), they remain poorly documented in China. Chinas shippers laced the ubiquitous choices of providing logistical functions in-house, owning logistics subsidiaries through setting up or buying a logistics firm, or outsourcing the Iunction and buying the service
17、using contract or third-party logistics (Razzaque and Sheng 1998). Logistics activities involving transportation, warehousing, and inventory management, as traditional internal support functions in Western firms, were subservient to core functions including production and marketing. Pressures to sus
18、tain competitive advantage, serve customers better, and refocus on core business induced contract logistics (Bradley 1994), with tailored and multidimensional logistical services linking several activities, seeking improved services and ilexibility alongside low total costs. Contracts, being longer-
19、term and more complex, take longer to negotiate and incur higher switch costs. Third-party logistics relates to external companies performing functions traditionally conducted in-house (Lieb and colleagues 1993). and optimally, a strategic dimension based on long-term cooperation and partnership (Vi
20、rum 1993). Western motivations for outsourcing depend to varying degrees on labor/skill, market, uncertainty, and financial factors. Labor and skills factors involve the social division of labor, organizational redeployment, or benchmarking, including retrenchment to core business (Muller 1992) and
21、small companies requiring technological expertise and assistance (Maltz 1994). Market factors caused by seasonal and geographical fluctuation may favor out sourcing requiring only sufficient contracts to service current demand (Bradley 1994), offering greater flexibility in adapting to market change
22、s and affording access to leading-edge technology (Sheffi 1990). Uncertainty factors arise from global markets and foreign sourcing that generate complex supply chains where managers in-house may lack specific knowledge of customs and infrastructure, complex just-in-time operations, or emerging tech
23、nology (Razzaque and Sheng 1998). Financial factors arise from converting fixed costs to variable costs, economies of scale and scope, and a leaner organization (Schary and Skjott-Larsen 1995). The first proposition tests whether these factors apply in China. PI: Labor!skills, market, uncertainty, a
24、nd financial factors are imponant reasons why Chinas shippers use freight fonuirders. FREIGHT FORWARDER SERVICES When evaluating and selecting a logistics service provider, shippers consider iheir service requirements in operational terms, including performance on chosen dimensions. These include pr
25、ice/cost. transit time and precision of inventory control, the overall contribution to performance, and risk and cost criteria (Schary and Skjott-Larsen 1995). Expertise may predominate (Murphy and Daley 1997), and while the quality of management and its control processes, its flexibility in meeting
26、 new. unforeseen requirements, and financial stability are issues, precise criteria vary between assetowning third-party operators and managers of service provision. On the downside, shippers who outsource risk losing control over the flow of materials. Third-party operators may fail or be acquired
27、by companies with inferior services or geographic coverage. Full cost data to evaluate outsourced logistics activities may he unavailable, or the objectives of different internal units within the shipping organization may conflict or lack inter-organizational cooperation (Schary and Skjott-Larsen 19
28、95). Before considering the criteria for selecting a logistics ser- vice provider, proposal 2 is that local shipper/IFF perceptions of fonvarders, capabilities differ. P2: Shipper/IFF evaluations of the useful 2002 IFFS IN CHINA 19 ness of services provided hy freight fonvuriicrs in China differ. Kn
29、own selection criteria var, by type of ser- vice provider (Africk and Calkins 1994). Regarding services, asset-based providers might be transportation-based, providing carriers and sometimes warehousing while managing dedicated operations, or warehouse-based, providing warehousing and sometimes tran
30、sportation. Services of integrated or hybrid service providers are procured either Irom parent organizations or through alliances or partnerships. Management-based providers procure transportation and often warehousing services, offering all types of management services. Costs depend on the scale ec
31、onomies of asset- based providers and leverage and management fees for others. Service quality depends on the providers for asset-based providers, but providers suppliers for others. Risk is probably low for large asset-based providers, but higher for small management-based providers. It is proposed
32、 that shipper/IFF ratings of different types of forwarders coincide. P3: Shipper/IFF ratinfs of the abilities of differeni types of freight forwarders to meet market needs coincide. Today, integrated freight forwarding involves reporting information on shippers movements to clients, with implication
33、s lor production schedules and taking responsibility for all stages in the transport chain (Biirdsley 2000). An IFF may also perform traditional import/export administration (BIFA 1997), or increasingly, “integrated logistics company” functions (Murphy anti Daley 2001). “Breadth of service defines a
34、n IFFs ability to satisfy a wide variety of shippers, both geographically and functionally. In the U.K., core activities include forwarding of freight, arranging or carrying out of transport operations, receipt of group and individual consignments, issue and procurement of transport documents and wa
35、ybills. organization of group consignments, activities of customs, sea and air cargo agents, and goods handling operations (Bardsley 2000). Ancillary activities include courier activities, arrangement of freight insurance, cargo handling. storage and warehousing, and supporting transport activities.
36、 “Depth of service” defines capabilities in meeting expectations of shippers requiring a similar service or service package. Small forwarders compete in specialist markets serving particular countries or commodities (Murphy and colleagues 1992). Electronic data interchange (EDI) and the Internet con
37、tinue to redefine the role of intermediaries, such as IFFs (Murphy and Daley 2CK11). Chinas IFFs may inter alia book ships holds and warehouses, supervise freight Ioad- ing/unloading and assembling/dismantling of containers, and manage multi-forms of international through iransportation and internat
38、ional express delivery. They may make customs declarations. undergo customs quaranline/inspec- tion and insure and prepare related bills and cerlilicates, pay transport charges, and settle accounts (MOFTEC 1995). Both shippers and IFFs rate these services highly. P4: Shippers/IFFs rare the utility o
39、f services provided by freight forwarders highly. SHIPFKR/IFF PARTNKRSHIPS IN CHINA Richardson (1993) noted that Western logistics partnerships demand a good understanding of both partners businesses. Increased partnership efforts typically share common goals of attaining superior quality conformanc
40、e, cooperating on cost reduction programs with a mini- mizalion of risks, and sharing expertise and new technology. In a strategic alliance, there is commitment to jointly improve quality and pro- ductivily to reduce overall costs. Buyers and suppliers in strategic partnership utilize joint problem-
41、solving efforts to develop mutual responses to changes in the marketplace (Gentry 1993). Outsourcing success rests on an open and honest environment, key management, coherent and effective internal measurement, finunce. and commercial arrangements (Razzaque and Sheng 1998). Il is proposed that bolh
42、shippers and IFFs consider a long-term relationship desirable. P5: ShippersIlFFs consider a lon-tenn cooperative relcitionsliip desirable. Since 1985, when EAS International Transport Company Limited joined SINO- TRANS. both have operated throughout China, using terminals and service networks tailor
43、ed to 20 TRANSPORTATION JOURNAL Winter the import/export needs of a centralized planning economic system. Subsequent foreign trade growth and containerization engendered 1,600 IFFs, 25 percent involving foreign investments, often through joint ventures or liaison offices, creating many business and
44、employment opportunities. Proposal 6 is that many shippers have experienced a long-term contract with an IFF. P6: Shippers have had a long-term contract with a freight forwarder. Successful partnerships have often concentrated on relatively tew partners, engendering better pricing and service. In im
45、plementing joint improvement efforts with partners, formal systems for measuring partners performance have employed two-way feedback systems and allowed partner performance lo determine routing choices and rate levels (Gooley 1994). I( is proposed that shippers rely on few forwarders. P7: Shippers c
46、urrently use few freight forwarders. Empirically, third-party operations often reduce investment in logistics activities including capital investment in facilities, equipment, information technology, and manpower (Razzaque and Shenc 1998). Increased competitive power in users core business stems fro
47、m coordinated production and shipping schedules, reduced inventory, and improved inventory turnover rate. These resull in faster transit times, less damage and paper work, and improved on-time delivery (Richardson 1995), enabling quicker responses to miirketing, manufacturing, and distribution chang
48、es. Finally, reduced overall cost accrues lo specialist third- party logistics providers in 丨 heir core business (Lieb 1992). China can expect decades of growth, but the success of third-party logistics, still maturing even in the U.S. (Murphy and Poist 1998), will depend on posits that local shippe
49、rs experience reduced investment, increased competitive power, and reduced cost. P8: A long-term cooperative relationship between a shipper/IFF leads to higher utilities in: P8a: Reduced investment in logistics activities P8b: Increased competitive power in core business activities P8c: Reduced overall cost in the international logistics process BUSINESS STRATEGIES AND EXTERNAL INFMKNCES ON IFFS Mei (2001) identified strategic options of diversification, specialization transport service, and differentiation lor Chinas IFFs. Div