Analysis of determinant factors in the choice of freight services provider

Abstract

Choice making in freight demand is critical to any firm as transportation cost can reach as much as 75% of the total cost of finished and shipped goods. The knowledge of the factors that influences the choice decision making for shippers will be of particular interest to carriers and the shippers alike. The study therefore set out to determine the factors that influence the choice of carriers for companies; evaluate the factors and degree of influence or level of significance of these factors or attributes. Five (5) firms’ decision-making processes were studied for a combined total of 508 road trucking choice decision for what type or who does the shipment of their products and raw materials to and away from their respective manufacturing plants between January and June 2014. The firms were given a set of attributes or factors so that they are ranked using Likert scale of 1 to 5 to identify their level of significance. Multiple regression technique was used to establish the relationship between the factors and the choice of carriers. Regression analyses using analysis of variance, variance inflation factors and t-Test was done at 95% confidence level. The results showed that freight charges, quality of service, trust, price elasticity of freight demand and customer relations were the most significant factors/attributes that influenced the choice of a carrier in the five hundred and eighty shipments recorded for all firms in the study