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A comparative analysis of port selection factors.

Several years ago, Gentry conducted important research into purchasing's involvement in transportation decision making.(1) Her research revealed that purchasing was both heavily involved with inbound transportation activities and had significant responsibility for inbound transportation decisions. What did not emerge from her research, however, was information concerning whether the results applied to domestic purchasing, international purchasing, or a mixture of the two.

This is an important consideration, especially since situational factors can have a major influence on transportation decisions.(2) Therefore, purchasing quite possibly has a different level of involvement in transportation activities when associated with domestic sourcing rather than with international sourcing. Similarly, purchasing's responsibilities for inbound transportation might differ according to whether the sourcing is domestic or international in nature.

While Gentry points to the minimal research on the interface between purchasing and transportation, even less information concerning purchasing's involvement in international transportation decisions has been reported. This article approaches this literature gap by looking at one possible decision facing the purchasing manager in global transportation, namely, what purchasing managers view as the important factors in water port selection.

This article builds on previous research by Murphy and colleagues concerning factors used by various parties in their selection of international water ports. Previous studies have reported the viewpoints of worldwide water ports (1988), water carriers (1989), U.S.-based international shippers (1991, 1992b), and international freight forwarders (1992a).(3)

One reason for collecting these various perspectives is that each of the aforementioned parties has a distinct interest and role in the global logistics pipeline. That is, water ports themselves provide a variety of distribution-related services, while ocean carriers, freight forwarders, and shippers represent customer segments for water ports.

Previous studies dealing with U.S.-based international shippers appear to generally have an "outbound" focus. Demographic characteristics of the international shippers suggested that many have jobs which deal primarily with outbound shipments (i.e., job titles such as traffic manager, transportation manager, director of traffic, vice-president of traffic, and so on). As a result, these respondents would seemingly represent the "U.S. shipper-foreign consignee" path illustrated in Figure 1.

U.S.-based purchasing managers engaged in global sourcing, by contrast, would likely be part of Figure 1's "foreign shipper-U.S. consignee" path. Given such an inbound perspective's absence from previous studies on water port selection, three major research questions will be addressed in this article:

1. What do purchasing/materials managers view as the important factors in water port selection?

2. Are the responses to these factors affected by the respondents' role in transport choice decisions?

3. How do the current results compare to previous port selection studies with respect to the perspectives of a) international shippers and b) water ports?

DATA AND METHODOLOGY

Information for this article came from a larger study on international sourcing practices which was sent to a regional sample of 350 randomly selected members of the National Association of Purchasing Managers (NAPM). The regional composition included managers from northern West Virginia, western Pennsylvania, and Ohio. Fifty-one usable responses were received, representing a 15 percent response rate.

This regional sample was chosen in part because of resource constraints; however, the authors believed that responses from a relatively small and homogeneous geographic area would be superior to those from a wider, more heterogeneous area. Ohio, western Pennsylvania, and northern West Virginia were chosen because businesses within this region have excellent opportunities to use different transportation modes in their global purchasing practices. The respondents represent a broad cross-section of industries, and, as such, exhibit a wide array of cargo types, value, and volume.

One concern of a 15 percent response rate is the possibility for nonresponse bias. Armstrong and Overton have suggested that nonresponse bias can be addressed by comparing early and late respondents, because late respondents are more likely to share commonalities with nonrespondents than with early respondents.(4) Thus, in the present study, responses received within ten days of the initial mailing were compared to those received after this time. No statistically significant differences (at the .05 level) between early and late respondents existed, suggesting that nonresponse is a minor issue.

With respect to demographic characteristics, responding organizations reported median revenues of $70 million, with a range of $1 million to $8.4 billion. The number of employees ranged from 5 to 75,000, with a median of 1,650. As for job titles, 60 percent of the respondents were either purchasing managers or purchasing agents; 25 percent were either directors or vice-presidents of purchasing. On average, respondents had been in these jobs for slightly more than six years.

RESULTS

Important Factors in Water Port Selection

Respondents were asked to use a 1 (very unimportant) to 5 (very important) scale to evaluate the port selection factors listed in Table 1. Their responses, presented in Table 2, indicate that shipment information is the most important port selection factor, followed by loss and damage performance.

The strong showing of shipment information is likely related to the fact that purchasing controls the flow of materials into a firm. Cavinato has pointed out that good information is essential to effectively controlling this flow of materials.(5) Likewise, the second place finish of loss and damage is congruent with a study of purchasing managers where "care in handling" ranked very highly in terms of carrier selection.(6)

Alternatively, the least important selection factors for purchasing professionals involved a port's ability 1) to handle large volume shipments and 2) to deal with large and/or odd-sized freight. Their lesser importance relative to loss and damage performance and shipment information suggests that purchasing managers place greater emphasis on a port's "finesse" and less on its "brawn."

A port's "finesse" refers to its ability to provide customers with value-added services beyond mere physical operations (a port's "brawn"). Some ports, referred to as operating ports, have total responsibility for the provision of these physical operations (e.g., truck/rail unloading, operation of container yards). Other ports (non-operating ports) lease piers, docks, and the like to interested parties such as ocean carriers and stevedores, who provide the appropriate services. Whether operating or nonoperating, the ports themselves are still responsible for customer service. However, the degree of direct involvement may be influenced by who is responsible for cargo throughput.(7)

Influence of Respondent's Role in Transport Choice Decisions

As for the respondent's role in transport choice decisions, the industrial business literature has argued that purchasing decisions are often subject to multiple buying influences. These buying influences are categorized into six distinct roles: initiators (recognize the need for a product or service), gatekeepers (control information and/or access to decision makers), influencers (have input into decisions), deciders/buyers (make the buying decision), purchasers (implement the purchase), and users (use the purchased product).(8)

To identify the respondents' role in transport choice decisions, they were asked to describe their participation in six aspects of the transport buying process. Table 3 presents the six statements used to ascertain respondents' participation in transport choice decision; these six statements were evaluated across a scale ranging from "strongly disagree" to "strongly agree."

Responses to the six statements allowed for classification of respondents as initiators, gate-keepers, influencers, buyers, purchasers, or users. Because the activities performed by users and influencers are nearly identical,(9) that is, agreement or strong agreement with each of the six statements in Table 4, we combined them as "user-influencers."

For this article, the responses of user-influencers (27 percent) were compared to all other respondents, a group that will be referred to as nonuser-influencers (73 percent). These nonuser-influencers have a variety of responsibilities in transport choice decisions; however, they did not meet all necessary requirements to be classified as initiators, gatekeepers, buyers, or purchasers. (The authors will provide their classification methodology for these roles upon request.)

Results from comparisons of the user-influencers to the nonuser-influencers are presented in Table 4. In terms of absolute values, none of the t-tests are statistically significant; however, seven of the nine factors are more highly rated by the user-influencers. Furthermore, the Spearman coefficient of rank correlation, which compares the relative importance (i.e., the with-in-group rankings) of the nine factors across the two groups, is calculated to be .833. This value is statistically significant at the .01 level, indicating minimal ranking differences between the two groups.

In fact, Table 4 shows that four of the factors have identical rankings, while two have ranking differences of .5. The largest ranking discrepancy, 3.5 levels, occurs with equipment availability, which tied for second in importance among nonuser-influencers, while ranking sixth among user-influencers. Indeed, the top four factors among the user-influencers--shipment information, loss and damage performance, low freight charges, claims handling abilities--reinforce the earlier notion of a port's "finesse" rather than its "brawn."

Comparisons to International Shippers and Water Ports

Using information from previous studies of water port selection by Murphy and colleagues, oneway analysis of variance was used to compare the mean scores of purchasing managers, international shippers (both large and small), and water ports across port selection factors. Results of the oneway analyses, presented in Table 5, show six statistically significant (at the 0.5 level or better) factors, with the strongest disagreements involving large volume shipments and claims handling ability. The ports assigned a much higher rating to large volume shipments than did either the purchasing managers or shippers, while the ports gave a much lower rating to claims handling ability than did the purchasing managers or shippers.

Duncan multiple range tests were used to identify significant differences among the ports, shippers, and purchasing managers for the six significant oneway analyses. As shown in Table 5, the purchasing managers are more likely to disagree with the water ports (five significant differences) than with the shippers (one significant difference). Note also that the water ports and shippers emerged with five significant differences.

Information on the Spearman coefficients of rank correlation, also presented in Table 5, indicates minimal ranking differences between the purchasing managers and shippers, but important ranking differences between the purchasing managers and the water ports. The most pronounced of these differences involve shipment information, ranked first by the purchasing managers, compared to seventh by the water ports. Another key ranking discrepancy involves large volume shipments, ranked fourth by the ports and eighth by the purchasing managers.

The information in Table 5 indicates that purchasing managers have a port selection profile similar to that of their outbound colleagues, the shippers. On the other hand, there are pronounced rating and ranking differences between the purchasing managers and the water ports in terms of port selection factors. Indeed, the findings in Table 5 reinforce the idea that ports tend to be more concerned with their "brawn" (e.g., heavier emphasis on equipment availability and large volume shipments), while purchasing managers are more concerned with a port's "finesse" (e.g., strong emphasis on shipment information).

CONCLUSIONS

An empirical study of U.S. purchasing managers revealed that shipment information and loss and damage performance are the most important factors in selecting water ports for international shipments, while large volume shipments and large and odd-sized freight are the least important factors. Analysis of these findings by the respondents' role in transport choice decisions discovered minimal differences between those actively involved in the port selection process and those who are less involved in the process.

However, there were numerous differences when the views of purchasing managers were compared to those of worldwide water ports. Several of the more notable differences involved shipment information (ranked first in importance by purchasing managers, compared to seventh by water ports) and large volume shipments (ranked eighth by purchasing managers, versus fourth for water ports).

Previous research had indicated that a number of worldwide water ports tailor their offerings to appeal to ocean carriers, such as by emphasizing goods handling capabilities. While ocean carriers may be a port's most immediate and tangible customers, Figure 1 clearly emphasizes that ports have other customer segments, such as traffic managers (shippers) and purchasing managers (consignees).

Failure to consider the needs and wants of these other customer groups can have noticeable consequences for a port's economic performance. A port having adequate physical capabilities ("brawn") must also develop and nurture a customer service perspective ("finesse"). Indeed, one reason given for improved business at the Port of Baltimore is that joint labor and management teams have made in-person sales visits to win back accounts previously lost to other East Coast ports.(10)

With this in mind, the findings from the present study are of the "good news, bad news" variety for port management. The good news for port management is that the port selection profile of purchasing managers is similar to that of their outbound colleagues, the shippers. As a result, in attempting to make themselves more responsive to shippers and receivers, ports can emphasize the same variables without fear of alienating one group or the other.

The bad news, as pointed out earlier, is that purchasing managers tend to place a different emphasis on certain selection factors (e.g., shipment information) than do ports. Moreover, although the results indicate similarities between purchasing managers and shippers in terms of factor importance, there is no way of knowing how these parties perceive the various alternatives.(11) For example, measures of shipment information which might be acceptable to purchasing managers, such as when a shipment will be delivered, may be unacceptable to shippers, who might prefer information about where shipments are currently located. Further research is necessary to identify the various groups' perceptions of transport selection factors.

ENDNOTES

1 J.J. Gentry, Purchasing's Involvement in Transportation Decision Making, Center For Advanced Purchasing Studies/National Association of Purchasing Managers, 1991.

2 M.R. Brooks, "An Alternative Theoretical Approach to the Evaluations of Liner Shipping," Maritime Policy and Management, Vol. 11, No. 1, 1984, pp. 35-43.

3 P.R. Murphy, D.R. Dalenberg, and J.M. Daley: "A Contemporary Perspective on International Port Operations," Transportation Journal, Winter 1988, pp. 23-32; "Assessing International Port Operations," International Journal of Physical Distribution and Materials Management, Vol. 19, No. 9, 1989, pp. 3-10; "Analyzing International Water Transporation; the Perspectives of Large U.S. Industrial Corporations," Journal of Business Logistics, Vol. 12, No. 1, 1991, pp. 169-190. P.R. Murphy, J.M. Daley, and D.R. Dalenberg: "Profiling International Freight Forwarders: A Benchmark," International Journal of Physical Distribution and Logistics Management, Vol. 22, No. 1, 1992(a), pp. 35-41; "Port Selection Criteria: An Application of a Transportation Research Framework," The Logistics and Transportation Review, September 1992 (b), pp. 237-255.

4 S.J. Armstrong and T.J. Overton, "Estimating Nonresponse Bias in Mail Surveys," Journal of Marketing Research, August 1977, pp. 396-402.

5 J.L. Cavinato, Purchasing and Materials Management, (St. Paul, MN: West Publishing, 1984).

6 Same reference as endnote 5.

7 The authors acknowledge helpful comments from an anonymous reviewer about operating and non-operating ports.

8 R.W. Haas, Industrial Marketing Management, fourth edition, (Boston, MA: PWS-Kent, 1989).

9 F.E. Webster and Y. Wind, Organizational Buying Behavior, (Englewood Cliffs, NJ: Prentice-Hall, 1972).

10 P.W. Valentine, "Baltimore's Ships Come In," Washington Business, appearing in the August 16, 1993 issue of The Washington Post, pp. 1, 12-13.

11 H.B. Burdg and J.M. Daley, "Shallow-Draft Water Transportation: Marketing Implications of User and Carrier Attribute Perceptions," Transportation Journal, Spring 1985, pp. 55-67.

Table 1. Port Selection Factors Used in this Study

Has loading and unloading facilities for large and/or odd-sized freight

Allows for large volume shipments

Has low freight handling costs

Provides a low frequency of loss and damage Has equipment available

Offers convenient pickup and delivery times

Provides information concerning shipments

Offers assistance in claims handling

Offers flexibility in meeting special handling requirements
Table 2. Port Selection Factors

 Mean Standard
Factor Score Deviation

Shipment information 4.06 1.29
Loss and damage performance 3.98 1.36
Low freight charges 3.89 1.17
Equipment availability 3.89 1.27
Convenient pickup and delivery 3.83 1.27
Claims handling ability 3.80 1.28
Special handling ability 3.54 1.24
Large volume shipments 3.19 1.30
Large and odd-sized freight 3.15 1.50
1 = very unimportant; 5 = very important


Table 3. Statements on Respondents' Roles in Transport Choice

I play an important role in collecting information about the features of different water ports.

I play an important role in determining features my firm would need from a water port.

I play an important role in evaluating different water ports.

I have a major influence on the final selection of a water port for my firm's operations.

I play an active role in negotiating the prices and terms for water ports my firm uses.

I identify my firm's operational need for a water port.

TABULAR DATA OMITTED

TABULAR DATA OMITTED

Mr. Murphy, EM-AST&L, is associate professor of business logistics, John Carroll University, University Heights, Ohio 44118; Mr. Daley, EM-AST&L is associate dean and professor of marketing, John Carroll University.
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Author:Murphy, Paul R.; Daley, James M.
Publication:Transportation Journal
Date:Sep 22, 1994
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