The Changing Role of Own-account Haulage: Evidence from French Shipper Surveys



The Changing Role of Own-account Haulage: Evidence from French Shipper Surveys

Authors

C Cruz, M Guilbault, E Gouvernal, INRETS- SPLOT, FR

Description

Shippers are subject to different forces when they choose between own-account and third-party. The trend is composed of different mechanisms. We examine in greater detail the main trend and its components utilizing original empirical data.

Abstract

Transport economics distinguishes two ways how shippers can secure their transport needs: they either organize and execute the carriage on their own account or they resort to third-party transportation. Generally research efforts focus mainly on third-party transportation. Although economic theory defines the basic features of own-account transportation, little research has been devoted to this practice and to the choice between third-party(TP) and own-account (OA) shippers are faced with. Yet own-account transport represents a significant part of activity (38% of tonnage in France) despite its share in road haulage has decreased over the last decade passing from 49% of tonnage in 1994 to 38% in 2004.

Within transport-intensive economy it has become vital for the firms (shippers) to control transportation resources. Transport generates important direct cost for the firm and it is to be minimized. It also makes the firm extremely dependent on transport system. In our approach we consider that the trade-off between third-party and own-account reflects the degree of integration between the production and transport systems.

In their choice between ?make? or ?buy? shippers are subject to different forces that drive them to one solution or the other. Reliability of transport system is the element of paramount importance in the choice between OA and TP. Good reliability of transport system favours the use of third-party operators. The differences in productivity between the two ways have often been discussed and need to be qualified. The trend of the firms to concentrate on their core business as well as the necessity to optimize the whole transport system lead to greater specialization and to outsourcing of transport service. The outcome of the forces, on the long run, favours the third-party solutions. However, this trend is composed of different mechanisms and the purpose of this paper is to examine in greater detail the main trend and its components.

Our research relies on original empirical data and will focus on road haulage. In 1988 and 2004 two national surveys on freight transport were realised in France (?Shippers Survey 1988?, ?ECHO Survey 2004?). They were particularly geared to deal with the integration between production and transport system. The collected data will be used in this paper to analyse the stated preference for each solution as well as a set of other relevant variables such as characteristics of the firm, characteristics of the shipment, cost, existing alternatives, trip characteristics, strategic modal shifts carried out by the shippers etc. in relation with the use of the two options of road haulage. Own-account and third-party haulage prove not to be two exclusive and strictly opposed choices. They are rather two extremities of a range of solutions (including e.g. fleet leasing, long term contracts, 3PL etc.) shippers have to secure their transport needs. Each solution is provided with a specific function in regard to the freight market. Over the time shippers adjust their strategy according to the market forces combining and balancing different solutions.

Publisher

Association for European Transport