An evaluation of the factors that determine carrier selection

The selection of freight transport mode in cities like Hong Kong, with little land, is in some
respects obvious. The deciding criterion for mode/carrier selection is based on the selection
of either the lowest total transport cost or the shortest transit time for the cargo. The peculiar
nature of each transport mode, namely; rail, sea, road and air, will definitely earn their own
places when shippers need to make a decision on their shipments. The nature of the cargo
will also affect the choice of carrier/mode when they are transported in break bulk.
Fortunately, the invention of ISO containers in the late 1950s eliminated and overcame the
shortfall in some transport modes. With the extensive usage of ISO containers hereafter,
shippers can now enjoy a much freer choice of transport mode.
When China started its open-door policy in the late 1970s, many local (Hong Kong)
manufacturers relocated their factories to the Pearl River Delta (PRD) due to the low labour
and land costs. Delivery of shipments was mainly carried out by Hong Kong freight
forwarders as they had been in business with the shippers for decades. Road transport was the
only mode choice available at that time due to the inflexibilities in other transport modes such
as sea and rail. Progressively, these factories were relocated northwards at a later time due to
the gradually increasing labour and land costs. Freight forwarders were then faced with a
prolonged delivery time due to the stringent Customs regulations in China as well as a
progressive increase in the physical distance between the factory and the loading port in
Hong Kong. The continuous developments in adjacent ports in Southern China offered
freight forwarders an opportunity to revise the route of consignments so that the lowest cost
and shortest transit times were achievable. Nowadays, consignments from the PRD region can be transported to the loading ports via at least three transport modes, namely, sea (barge),
road (truck) and rail.
In addition to physical constraints in the mode/carrier selection, the mode choice in China is
further complicated due to the inflexible Customs regulations and government policies on tax
rebates.
Considerable research has been done on mode and carrier selection for bulk cargo in Western
countries. However there is no explicit study on the mode choice in China. This thesis studies
factors that will affect the shippers’ mode/carrier choice and ascertains the unique key factors
that will affect their mode/carrier choice in the PRD for their overseas consignments. From
this study, it was observed that shippers irrespective of the consignment size and cargo value
prefer to use a loading port that is reliable and efficienct in operation. This is the first thesis
written about carrier mode choice in China applying systematic and rationale methods to
express the mode selection criteria in PRD area. The results were achieved by using the
pairwise comparison method - Analytical Hierarchy Process (AHP) method so that rigidity of
the results is academically accepted. Nevertheless, further study on the mode choice can be
carried forward through assessing buying behaviour and the shipper-carrier relationship.