Is Carrier Choice Different for 3PLs and other End-shippers? Some Preliminary Findings

As companies have increasingly sought to outsource their non-essential activities, there has been a dramatic rise in the use of the services of external companies (often referred to as Third Party Logistics Companies or 3PLs) to organize transportation logistics. Little is known about the degree to which their choice of carriers differs from that of traditional end-shippers. Because this sector is expected to grow in the future and thereby to exert more influence on the way freight is shipped, understanding any differences that they might manifest in carrier choice is useful in itself, but also potentially critical in evaluating the potential for rail to increase its share of freight. This paper presents some findings of a unique shipper carrier-choice stated preference survey of shippers in the Quebec City-Windsor Corridor. The survey was conducted during the fall of 2005. The survey was designed explicitly to evaluate shipper preferences for the carriage of intercity consignments, and particularly their preferences for carriers that contract the services of rail companies to carry these shipments via trailer on flat car (TOFC). Preliminary analysis suggests that 3PLs behave differently from other end-shippers, and in particular, are even more mistrustful of the use of rail to move their consignments than other end shippers. Among other things, this suggests that increasing rails share of freight faces tremendous challenges.