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Aligning supply chain transportation strategy with industry characteristics: Evidence from the US-Asia supply chain

Jian-yu Fisher Ke (Management and Marketing Department, University of Wisconsin-Eau Claire, Eau Claire, WI, USA)
Robert J. Windle (Department of Logistics, Business and Public Policy, Robert H. Smith School of Business, University of Maryland, College Park, MD, USA)
Chaodong Han (Department of e-Business and Technology Management, Towson University, Towson, MD, USA)
Rodrigo Britto (Department of Strategy, University of Los Andes, Bogotá, Colombia)

International Journal of Physical Distribution & Logistics Management

ISSN: 0960-0035

Article publication date: 5 October 2015

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Abstract

Purpose

The purpose of this paper is to propose that transportation modal mix in global supply chains is a result of the strategic alignment between industry characteristics and supply chain strategies.

Design/methodology/approach

Using annual US trade statistics and manufacturing industry data for the years 2002-2009 between the USA and its top 12 Asian trading partners, this study applies various regression methods to examine key factors associated with the transport modal decision.

Findings

The results show that industry characteristics have an impact on the transportation modal mix in global supply chains. Manufacturing industries use more air freight and less ocean freight when facing positive sales surprises, high-monthly demand variation, a high-contribution margin ratio, a high cost of capital, and increased competition.

Practical implications

The findings provide important insights for logistics managers and freight forwarders. While transportation cost remains an important concern, a logistics manager must also consider non-cost factors such as competition, working capital, and demand uncertainties in their modal decisions. Freight forwarders should be supply chain solution providers who consider all of these industry factors and suggest a proper mix of transportation modes for their customers.

Originality/value

This study is among the first efforts to examine the impact of industry characteristics on the transportation modal mix in global supply chains. This study first develops a theoretical framework for the modal choice decision for international transportation movements and then, using an extensive and innovative data set, provides new findings regarding current air freight practices in global supply chains.

Keywords

Citation

Ke, J.-y.F., Windle, R.J., Han, C. and Britto, R. (2015), "Aligning supply chain transportation strategy with industry characteristics: Evidence from the US-Asia supply chain", International Journal of Physical Distribution & Logistics Management, Vol. 45 No. 9/10, pp. 837-860. https://doi.org/10.1108/IJPDLM-06-2014-0130

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited