Core Criteria Affecting Intention To Select A Supplier Of Less Than Container Load.doc

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MINISTRY OF EDUCATION AND TRAINING
University of Economics Ho Chi Minh City

DANG NGOC HOANG
CORE CRITERIA AFFECTING INTENTION TO
SELECT A SUPPLIER OF LESS THAN
CONTAINER LOAD (LCL) IMPORT SERVICE
IN HO CHI MINH CITY
MASTER THESIS IN ECONOMICS

MINISTRY OF EDUCATION AND TRAINING
University of Economics Ho Chi Minh City

DANG NGOC HOANG
CORE CRITERIA AFFECTING INTENTION TO
SELECT A SUPPLIER OF LESS THAN
CONTAINER LOAD (LCL) IMPORT SERVICE
IN HO CHI MINH CITY
Major: Business Administration
(Research)
Code: 8340101
Master Thesis in Economics
Supervisor: Dr. Tran Thi Thanh Phuong.

COMMITMENTS
I commit that: “Core criteria affecting intention to select a supplier of Less
Than Container Load (LCL) import service in Ho Chi Minh city” is my own
research, which is based on the study and guidance of Dr. Tran Thi Thanh Phuong.
This thesis includes accurate referencing cited from the vast majority of research
carried out by reputable authors in the world with detailed in-text citations. The
content and results of the analysis are honest and have not been published in any
form before, so the comments, evaluations and conclusions are reliable.
Ho Chi Minh City, 2018.
Dang Ngoc Hoang.

TABLE OF CONTENTS
BACK COVER PAGE
COMMITMENTS
TABLE OF CONTENTS
LIST OF ABBEREVIATIONS
LIST OF TABLES
LIST OF FIGURES
ABSTRACT
CHAPTER 1
INTRODUCTION...................................................................................................... 1
1.1 Introduction: ..................................................................................................... 1
1.2 Purpose of the study: ........................................................................................ 3
1.3 Novelty value and significance of the Study.................................................... 4
1.4 Subjects and Scopes of study: .......................................................................... 4
1.5 Limitation of the Study:............................................Error! Bookmark not defined.
1.6 The thesis structure:.......................................................................................... 5
CHAPTER 2
LITERATURE REVIEWS ........................................................................................ 6
2.1 Definition and roles of international freight forwarders. ................................. 6
2.1.1 Definition of international freight forwarder:............................................ 6
2.1.2 Roles of international freight forwarder: ................................................... 7
2.2 Definition and roles of consolidator and less than container load (LCL)
service:.................................................................................................................... 9
2.2.1 Definition of consolidator and less than container load (LCL) shipment: . 9
2.2.2 Roles of consolidator and less than container load (LCL) import
shipment:............................................................................................................. 9
2.3 Standard Operating Procedure (SOP) of Consolidator for LCL Import
Shipment:.............................................................................................................. 12
2.4 The overview of less than container load (LCL) service in Ho Chi Minh City.
13
2.5 Purchasing, Purchasing process and Behavioral Intention:............................ 14
2.6 Factors influencing freight forwarder selection..........................................................18

2.7 An overview of related researches that analysis factors affecting to select a
supplier of LCL service. ........................................................................................ 21
2.8 Proposed Research Model and The Scale of Variables: ................................. 27
2.8.1 Proposed research model: ......................................................................... 27
2.8.2 The measurement scale for selected factors: ............................................ 29
CHAPTER 3
RESEARCH METHODOLOGY .............................................................................. 33
3.1 Research Process. ............................................................................................ 33
3.2 The qualitative research: ................................................................................. 35
3.3 The tools and method of survey: ..................................................................... 35
3.4 Target respondents and the sampling. ............................................................. 36
3.5 Measurement scales: ........................................................................................ 36
3.6 The quantitative analysis: ................................................................................ 38
CHAPTER 4
DATA ANALYSIS ................................................................................................... 40
4.1 Demographical Data of the Respondents: ....................................................... 40
4.1.1 Position of respondents: ............................................................................ 40
4.1.2 Business type of respondents: ................................................................... 41
4.1.3 Consolidators were chosen by respondents. ............................................. 42
4.1.4 Commodities were imported by LCL import service. .............................. 43
4.1.5 Frequency of using import service: .......................................................... 44
4.1.6 Markets imported LCL cargo into Vietnam: ............................................ 44
4.1.7 The Level of Factors on Customer Selection Intention to use LCL
Service. .............................................................................................................. 45
4.2 Reliability analysis: ......................................................................................... 46
4.3 Exploratory Factor Analysis (EFA): ............................................................... 48
4.3.1 EFA for independent variables: ................................................................ 49
4.3.2 EFA for dependent variable: ..................................................................... 51
4.4 Correlation Testing .......................................................................................... 52
4.5 Multiple Regression Analysis. ........................................................................ 54
CHAPTER 5
CONCLUSION AND RECOMMENDATIONS ...................................................... 59
5.1 Conclusion of the Study .................................................................................. 59
5.2 Limitation and future research ........................................................................ 60
5.3 Recommendations to LCL import supplier. .................................................... 61

5.3.1 Recommendations for Responsiveness.................................................... 61
5.3.2 Recommendations for reliability: ............................................................ 62
5.3.3 Recommendations for Empathy .............................................................. 63
5.3.4 Recommendations for Rates.................................................................... 63
5.3.5 Recommendation for Assurance.............................................................. 64
5.3.6 Recommendations for resource ............................................................... 64
REFERENCE
APPENDIX

LIST OF ABBEREVIATIONS
CBM: Cubic Meter.
KMO: Kaiser – Meyer – Olkin
KPI: Key Performance Indicator.
LCL: Less Than Container Load
EFA: Exploratory Factor Analysis.
EXW: Ex-Work.
FOB: Free On Board.
FCL: Full of Container Load.
SOP: Standard Operating Procedure.
SPSS: Statistical Package Software For Social Science.
Sig.: Significant Value.
TEU: Twenty-foot Equivalent Units

LIST OF TABLE
Table 2.1 Dimension of container according to ISO standard..................................10
Table 2.2 The measurement scales of Banomyong et al (2005) research. ...............25
Table 2.3 The overview of factors influencing selection international freight
forwarders and consolidators in related researches. .................................................26
Table 2.4 Research Hypotheses................................................................................32
Table 3.1 Measurement scales factors affect selection intention LCL import
supplier......................................................................................................................36
Table 4.1 Position of respondents.............................................................................41
Table 4.2 Business type of respondents....................................................................42
Table 4.3 Consolidators were chosen by respondents..............................................42
Table 4.4 Commodities were imported to Vietnam by LCL import service............43
Table 4.5 Frequency of using LCL import service...................................................44
Table 4.6 Markets imported LCL cargo to Vietnam ................................................45
Table 4.7 Mean and standard deviation of six predictors.........................................45
Table 4.8 Reliability Statistics..................................................................................47
Table 4.9 KMO and Bartlett’s Test of Independent Variables.................................49
Table 4-10 Rotated Component Matrixa for Indepentent Variables. .......................50
Table 4.11 KMO and Bartlett's Test.........................................................................51
Table 4.12 Rotated Component Matrix for The Dependent Variable. .....................52
Table 4.13 Correlations.............................................................................................53
Table 4.14 Model Summaryb ...................................................................................54
Table 4.15 ANOVAa
................................................................................................55
Table 4.16 Coefficientsa
...........................................................................................55
Table 4.17 The results of testing all hypotheses......................................................57

LIST OF FIGURES
Figure 2.1 Proposed research model………………………………………..28
Figure 3.1 The research process ....................................................................33

ABSTRACT
Importers and manufacturing factory in Vietnam are using more of their no
inventory strategy to reduce storage cost and catch up with the changing need of the
market. Thus, there is significant change on quantity of import purchase order, from
Full Container Load (FCL) into Less Than Container Load (LCL), but more in
frequency of shipments. The consolidator who is supplying the shipping service for
LCL import shipments must always respond to their customers’ demand to ship
LCL cargo with competitive cost, short transit time and good at handling service
quality. This study was conducted to find out the variables which impact the
customer’s intention to select the supplier of LCL import service. Understanding the
customer’s behavioral intention will be one of the keys to competitive advantage,
which improves the organization’s service level.
The requirements for LCL import service providers are becoming more severe,
customers want their cargo must be shipped on time without delay and fastest
service, cargo must be handled safely and always receive a willingness on resolving
troubles and updating information also.
The criteria selected to examine the impact on customer selection intention to
use the LCL import supplier based on the previous studies written by authors of the
same topic in the world. The result of research did showed that all six factors
included Responsiveness, Rate, Resource, Assurance, Empathy, Reliability would
positively affect customer intention to select the company's service, while the
Responsiveness, Reliability, Empathy factors were the best significant impacts. The
findings will be the foundation for choosing strategy to develop a better service and
getting more on LCL import shipping market share.
Keywords: Selection Intention, Less than container import service, Ho Chi
Minh City.

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CHAPTER 1
INTRODUCTION
1.1 Introduction:
Less than container load (LCL) import shipment is the small purchase order
which cannot be shipped by full of container load (FCL) transportation mode
because of the limited budget. The small shipments will be placed with an
organization called consolidator who provides the collecting and shipping LCL
import service. Consolidators combine a large amount of LCL shipments from
different shippers and arrange with the same schedule and destination to utilize
container space and reduce cost (Vitasek, 2006). The consolidator buys the FCL
ocean freight from carrier and sells the LCL ocean freight to the freight forwarding
companies or direct shippers based on the cubic meter (CBM) of volume.
The number of LCL shipments imported to Vietnam is increasing which was
mentioned in Vietnam Logistics Reports in 2017. The report showed that the global
maritime shipping market was expected to exceed 730 million TEU of full of
container method while the volume of consolidated container reached 500 million
TEU in 2017 and expected to increase %30 in 2018 (Ministry of Industry and
Trade, 2017). This figures demonstrated that more importers and manufacturing
factories select “Just In Time” strategy with no inventory to reduce the storage cost,
shipping cost and make sure that their import goods and materials can follow up the
trend of market. In case of keeping zero inventory, many smaller order will be
shipped with higher frequency, it’s a good solution for supply chain management.
Thus, LCL import shipment becomes very common in logistics business and LCL
import shipping market between consolidators in Vietnam becomes more and more
competitive.

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Nguyen Hanh Tam (2017) reported Shipping gaze magazine that there are
more than 3000 forwarders and more than 100 consolidators in Ho Chi Minh city.
The LCL shipping market has been become highly competitive when many global
consolidators penetrate Vietnam market. The annual sales volume of import ocean
freight in Less than Container Load (LCL) to Vietnam is accounted for more than
100 million shipments. Most of them are exported from Europe, Asia, USA with
over %70 of Asia, over %20 of Europe and %10 of USA and others.
In order to create the competitive advantage and expand the marketshare,
consolidators must improve to create their competitive advantages in providing LCL
import service. Most previous researches were related to the factors influencing to
LCL service quality or intention to select LCL supplier for export shipments. For
instant, namely Dang Huynh Kha (2015) focused on finding the factors which affect
to decision to select a supplier of LCL export service, Bien Thi Mai Duyen (2014)
concentrate in finding the criteria influencing to the LCL export service quality.
Pisoot (2010) researched on the factors impacting on the selection intention supplier
of LCL export service. Banomyong et al (2005) researched on influential factors
toward exporter and importer on selecting service from freight forwarder in
Thailand. None of these mentioned factors influencing intention to select a LCL
import service supplier in Vietnam. Recently, many import shipments were
controlled booking ocean freight at Viet Nam in order to earn more trading profit.
Consolidators are more focusing on approaching and offering quotation for these
import shipments from destination side instead of origin side.
This study will focus on the criteria which impact on a customer's intention to
select a LCL import service supplier. The thesis will research on retail importers,
freight forwarding companies and also consolidators who co-load out their
shipments when they are not able to serve by their own service to find out what the
best factor is. The relevant theories will be reviewed in the next chapter.

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1.2 Purpose of the study:
The less than container import service market in Vietnam is more and more
competitive because of considerable increasing demand. The importers in Vietnam
are using more less than container load service instead of full of container load
service to reduce shipping cost and storage cost. Therefore, the consolidators who
provide the less than container load import service must understand customer’s
purchasing intention behavior to establish the suitable business strategy and
perceive the strong important factors which affecting the customer intention to
select a import consolidators. The consolidators who focus on the right and core
factors will be create the competitive advantages.
The research was conducted to help the consolidators in Vietnam understand
the customer's behavioral intention to select a transportation service, Identifying the
core criteria and comparing the level of each factor which influence intention to
select to a supplier of LCL import service. Through identifying and evaluating core
criteria influencing the intention to select a LCL import consolidator, propose
alternatives to improve quality of LCL import, create the competitive advantages.
Six factors were used in this study: Reliability, Rates, Resources, Assurance,
Responsiveness and Empathy. The research model is an interpretation of the
component from researches of Parasuraman et al (1988), Pisoot (2010), Yael et al
(2009), Matear & Gray (1993), Banomyong et al (2005), Min (1994) and Le Tan
Buu et al (2014) which are related to buyer's intention to select a freight supplier.
All these factors are significantly important because they directly affect to
company’s service performance to attract customer in current business situation.
Therefore, three specific research questions are:
What are the factors influencing intention to select a LCL import consolidator?
How the factors influencing to selection intention a LCL import consolidator?
How to improve LCL import consolidation service quality?

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1.3 Novelty value and significance of the Study
After searching the key works which was related to this study topic for reference.
The author detected that there have been a lot of studies researching on the factors that
affect the selection of logistics services to be implemented such as Matear
& Gray (1993), McGinnis et al (1995), Banomyong et al (2005), Yael et al (2009) ,
Le Tan Buu (2014), etc. These studies focus on the factors that influence on the
quality of logistics services or the choice of logistics service provider. A few studies
focus on the core criteria influencing to decision to select Less than container load
export service or factors affecting to Less than container load export service quality
like: Pisoot (2010), Dang Huynh Kha (2016), Bien Thi Mai Duyen (2014), etc.
None of studies mentioned the factors influencing selection intention Less than
Container Load service for importation aspect.
The consolidators have just focused on approaching LCL import shipments for
recent years to sell LCL ocean freight at Vietnam When more importers and
manufacturing factories tend to control the responsibility for booking LCL import
ocean freight at destination side. The Incoterms of EXW, FOB, FCA have commonly
been signed in the commercial contracts created the opportunity to develop the LCL
import ocean freight business for consolidators in Vietnam. The findings derived from
this study will significantly contribute to the critical success factors of import
consolidation business. It will clearly reflect the reasons why customers select a LCL
shipping supplier. Besides, the importance of each selection criterion will surface,
together with the strengths of the relationship between reliability, rate, resource,
assurance, empathy as well as the responsiveness and the intention to select the service.
This will contribute much to the improvement of LCL import service quality in the
future. Moreover, combined with other critical success factors identified in other
studies, the six factors examined in this thesis can form a set of generalized success
criteria factors which can be a useful suggestion for operators in the field.
1.4 Subjects and Scopes of study:

Subjects of study:

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Selection intention and core factors influencing the selection intention of a
LCL import consolidator.
Scope of the study:
The study revolved around import-export enterprises, freight forwarding,
consolidator in Ho Chi Minh City. The research was carried out for importation.
The target respondent:
The respondents are members in logistics companies or import enterprises in
Ho Chi Minh city. They are working as import customer service, import manager,
inbound sea freight manager, pricing manager or director of company… who has
the responsibility for making decision to select a supplier of LCL import shipping
service.
320 questionnaires were issued to respondents and received 300 valued
questionnaires.
Time frame of research:
This thesis was conducted from April 2018 to August 2018.
1.5 The thesis structure:
The content of this thesis will be presented in five chapters as below:
Chapter 1: Introduction.
Chapter 2: Literature reviews.
Chapter 3: Research methodology.
Chapter 4: Data analysis.
Chapter 5: Conclution and recommendations.

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CHAPTER 2
LITERATURE REVIEWS
This chapter mainly introduces theories which are proposed by many scholars
in academic field, and theoretical model in order to create foundation for this study.
Firstly, the general introduction is about definitions of international freight
forwarders, consolidators; the roles of international freight forwarders, consolidators
and LCL import shipments. Secondly, the Standard operating procedure of LCL
import shipment was mentioned to help audience understand about handling of LCL
shipments. Thirdly, the overview of previous related researches were synthesized to
present the definitions of factors influencing selection intention an supplier of LCL
import service. Finally, this chapter proposes theoretical model which its constructs
and hypotheses are discussed.
2.1 Definition and roles of international freight forwarders.
2.1.1 Definition of international freight forwarder:
There have been many different definitions of international freight forwarder,
this study adopts the definition of international freight forwarder from paper of
Murphy (1992, p.203): “An international trade specialist who can provide a variety
of functions to facilitate the movement of cross-border shipments. The functions
provided by international freight forwarder include: delivery and distribution
services; handling payment arrangements; assistance in paperwork required for
deliveries; and organizing local and international shipping; information services;
insurance; customs services; warehousing and consolidation services”. The other
definitions of freight forwarder is a service broker that provides service for or on
behalf of exporter or importer in delivery operations. Service starts from packing
cargo into pallet, booking the ocean freight , then loading into the container,
transportation, import and export entry and customs clearance formalities, preparing
the import-export documentation, trucking inland to the warehouse of buyer, etc.

7
2.1.2 Roles of international freight forwarder:
In a paper of Slater (2007, p.160), he stated that a forwarder is expected as a
firm specialize in international physical distribution. The forwarding agent is
established to handle the managerial detail, selection and the structure of an
international physical distribution operation. To compare with it, Barrar & Davies
(1985) mentioned the purpose of a forwarder is being an export specialist who takes
an active role in promotion for the documentation and transportation process. In
some extent, the direct customers are not professional in integrating further
downstream, therefore, they are less proactive in estimating the cost of shipping
than their logistics partner. In spite of many studies about forwarding, Barrar &
Davies (1985) concluded that the forwarder’s function is hard to determine because
of the development from its original meaning. He also stated that in the time before
the industrial revolution, an organization who owning none of goods and
transportation mode was emphasized. In recent years, the forwarders seem to serve
more activities namely the cost and freight, routing advisor and also the online track
and trace system. Likewise, the role of an international freight forwarder is added
by Perlman (2009, p.29), he regards a forwarder as an international solution expert
advising the trading companies the movement of cross-border consignments. The
feature of an international forwarding company includes delivery and distribution,
handling documentation, international payment, local trucking and worldwide
shipping, custom broker, insurance, warehousing and consolidation service.
Pisoot et al (2010), has mentioned nine duties of a freight forwarder as follows.
First is Custom Broker: a clearance broker for an exporter (sender/consignor) or
importer (receiver/consignee); Second is forwarding agent of international shipping
service for exporter’s and importer’s consignments. Third is Transportation provider
who provides air, sea and rail modes shipping service; Fourth is Packing service for
cargo. Fifth is Warehousing sharing their own warehouse or co-operate with other
suppliers. Sixth is service for labor, stevedores in container stuffing. Seventh is
multimodal transports which can be seen as a delivery service in multiple modes of

8
transportation. Eighth is Logistics service which operates the cargo distribution.
Last but not least is Business consultant who consult and give advice for import and
export activities. As can be seen, a forwarder may be considered as a representative
in the name of the shipper in delivery, or take on the exporter’s function of the
shipment, with all these service.
In the forwarding role, the brokerage on carriage and charges for documentation
bring the earning for a forwarder. The forwarder who is located at or near a port, inland
clearance depot or other customs point, takes the larger advantage in custom procedure
than the direct importer/exporter. Furthermore, the settlement of computerized customs
provision is the next evolution in documentation process that provides the paperless
interchange system. As a mediator, the forwarder is responsible for updating the latest
status concerning a transiting shipment and estimating the time of arrival to ensure the
high quality service. According to (Barrar
& Davies, 1985), the forwarder commercially demands on insinuating between the
custom and consignor in data exchange. Having been a customer broker, the forwarder
must offer the paperless system that supports the direct communication between the
trader and customs with the useful information and soft copy of documentation. More
or less, both forwarders and consignors seemly agree that the importance of forwarding
has gone down since the shipper and the carrier adapted more with the traditional
forwarding functions. A Freight forwarder may manage all its own facilities, or
outsource by hiring, renting, sourcing, booking through other freight supplier, and
earning commission or service charges. The forwarder business requires the long-term
connection and a wide network, this was stated in Logistic Corner (2009). A wide
network is significant for both local and international partners
to meet their customer’s high demands. And no doubt, a large amount of cash flow
is necessary for making payment of freight charges, port charges and documentation
fee. Lastly, all the terms of trading must be agreed by both partners.

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2.2 Definition and roles of consolidator and less than container
load (LCL) service:
2.2.1 Definition of consolidator and less than container load (LCL)
shipment:
Consolidator was defined as an organization that gathering many small
shipments from various shippers into the same container for delivery to the same
destination. These small shipments shipped by consolidator was called Less than
container load (LCL) shipments. Passas & Jones (2007) stated that the consolidators
buy the full of container (FCL) ocean freight from carrier, sell the less than
container load (LCL) ocean freight to shippers and responsible for receiving cargo
at their warehouse at origin ports, loading cargo into consolidate container,
preparing the related documents, clearing the consolidate container customs, un-
stuffing container at destination ports and delivering cargo to consignees, etc.
2.2.2 Roles of consolidator and less than container load (LCL) import
shipment:
Role of LCL import service for buyers and consignees:
The LCL import transportation offers many benefits to buyers/consignees. For
the small and medium businesses in the start-up time. To fit in with the business
scale, the small and medium importers just buy the small order which not fully
utilizing the space of a smallest 20' container with approximately 33 cubic meter of
goods. Therefore, it would be ineffective if these businesses would pay for the
entire container and then transport the small amount of their goods. For the big
organization or manufacturing factories who frequently import with for production
or commercial purposes, LCL import transportation is the good solution to pursue
the Just in time strategy which they can minimize the inventory cost and make sure
that their materials or commercial goods always keep up with the trend of market.

By saving a lot of money from using of LCL import ocean freight, importers
can reduce the production cost. As a result, their market share will be increase, they
can create the competitive advantage on pricing products and the demand for

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importing and exporting goods has increased, thus contributing to the continued
development of LCL transportation services.
Importers using the LCL / LCL mode of transportation have the advantage of
simply having a deal with a forwarding company that can ship goods from many
different locations around the world instead of having to look for each one as each
carrier only provides LCL container for certain routes as their strengths. In addition,
a consolidator can also provide service of picking up cargo from warehouse at
origin and delivering to door at destination that this one is not provided by the
shipping lines.
It is possible to summarize the interests of the importers/consignees as follows:
importers are subject to lower rates and enjoy good service quality. The importer
increases the return on investment. The assets that should be invested in the logistics
sector are now exploited for the main business of the business so the higher efficiency.
Importers can increase their flexibility and respond quickly to market changes as
logistics service providers are prepared to cope with seasonal needs, sudden demand,
and This helps the importers stay on the market and still save money.
Table 2.1 Dimension of container according to ISO standard.
Container type Container 20’ Container 40’ Container 45’
Dimension
Length 5,758 m 12,132 m 13,556 m
Width 2,352 m 2,352 m 2,352 m
Height 2,385 m 2,385 m 2,698 m
Volume 33,1 cbm 67,5 cbm 86,1 cbm
(Wikipedia)
Role of LCL import service for carrier (shipping line):
Shipping lines do not have to pay much attention to individual shipments so
that they can save huge amounts of time, money and human resource. In addition,
shipping lines can improve their cargo handling capacity in the FCL mode by
consolidating LCL shipments of consolidator and using FCL transportation is

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provided by shipping line. Shipping lines can also save costs for equipment,
warehousing and labor in tracking individual LCL shipments. Shipping lines are
also avoiding the risk of late payment of LCL shipments from a wide variety of
individual retail customers because the risk is now being borne by the consolidators.
Role of LCL import service for consolidator:
Despite facing many risks, consolidation still be profitable business because of
the difference in the freight collected from the LCL shipping service and FCL ocean
freight charged by shipping carrier. The demand of market on using LCL import
shipping service is creasing will be the opportunity for consolidators not only the
chance to ear profit but also help consolidator diversity their routing import service.
In addition, as a 3PL (third-party logistics service provider), consolidation
companies are also on behalf of owners of manage and perform logistics services
such as: on behalf of the shippers or consignees to carry out the export/import
procedures, provide documents of delivery and transport inland or clear the customs
and bring the goods to the point regulations, etc.
Role of LCL import service for society:
LCL transport mode helps the society save the cost of oversea shipping, thereby
reducing the cost of import materials and export finished goods, improving the
competitiveness of products in the global market. However, a consolidator needs to
meet the following requirements: Firstly, a consolidator needs to have adequate
facilities such as a warehouse, container loading and unloading equipment at both
origin and détination ports. Secondly, the consolidator needs to have a good partners or
agents in the origin area to release booking confirmation, receive cargo, arrange and
load cargo into consolidation container and issue the related documentations, etc.
Thirdly, it must have the necessary expertise and financial capacity as well as the
insurance responsibility to ensure their reliability on business. In the fourth quarter,
consolidator’s staff need to have experience and knowledge in packaging and storing
cargo in containers to maximize the capacity of containers in use. Finally, the
consolidator should have a long-term business relationship with the shipping lines to

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ensure the ability to purchase FCL shipping services from the shipping lines quickly
at a consistent price.
2.3 Standard Operating Procedure (SOP) of Consolidator for LCL
Import Shipment:
This bellow standard operating procedure of consolidator in Viet Nam for
LCL import Shipment based on internal documentation of Shipco Transport Viet
Nam which was one of biggest consolidators in Viet Nam (2010):
Step 1: The Consignees who have responsibility on booking LCL import
ocean freight at destination port which mentioned in the commercial contract will
contact Sales executive or Customer service staff of Consolidators to get the
quotation, schedule, transit time, cut off time for routs which they need.
Step 2: After checking and comparing the offers and related criteria from
consolidators, consignees make decision to choose and book with one of them.
Step 3: Consignee sends information of Shipper's the person in charge of this
shipment to chosen consolidator and request the schedule for their shipment.
Step 4: Consolidator's customer service staff sends the shipment details and
shipper contact to their agent at origin to contact and release booking confirmation.
Step 5: When shipper sent cargo into warehouse at origin, agent will send
photos, cargo receipt and draft bill of lading to Viet Nam for updating to consignee.
Step 6: Customer service also advise delay notice or support to amend
documentation if any.
Step 7: Documentation coordinator will send arrival notice, debit note, photos
or un-stuffing container, cargo situation information to consignees.
Step 8: After payments are completed, consignees use the delivery order which
released by consolidator to get cargo from warehouse to complete the procedure.

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2.4 The overview of less than container load (LCL) service in Ho Chi Minh
City.
Saigon new port - Cat Lai is currently the largest and most modern international
container port in Vietnam in District 2, Ho Chi Minh City, The location is near
industrial parks and manufacturing zones in the north of Ho Chi Minh city and
industrial zones of Binh Duong and Dong Nai province. Cat Lai port has a total area of
120 hectares with a length of 1.424 meters (8 berths). It’s equipped with 20 modern
Panamax quay cranes with TOP-X's modern container terminal management system
(RBS) from Australia and synchronous hardware system that enables real-time
container management, optimizes port usage, reduces delivery time. According to the
statistic in 2017 of Saigon new port logistics joint stock company mentioned that 80%
- 85% of LCL import volume was exploited at Cai Lai, the rest are scattered at other
ports such as ICD Phuoc Long, ICD Transimex, ICD Tanamexco. The quality of
LCL import to Cat Lai warehouse approximately 300 -500 million TEU per year.
The number of consolidator in Ho Chi Minh city is greatly increasing because
LCL import shipping demand is considerably developing. The importers want to
control on booking ocean freight to reduce production cost and conduct their strategy of
no inventory so they are using more LCL import transportation instead of FCL
shipping. There are more than 100 consolidators in Ho Chi Minh participate in the
competition of approaching the LCL import shipments to Vietnam. However, most of
consolidators in Ho Chi Minh city are only at small and medium level of business size.
They just provide the limited routings of LCL import service to Vietnam because
they don’t have good agent system in over the world, don’t have enough cargo to open
the consolidation direct routings as well as the financial ability to establish the strong
human and equipment resource for meeting the huge of workload. Most consolidators
just offer some LCL import routings they have their own based volume and the volume
supported from their agent. The popular LCL import routings offered by many
consolidators from the main import market such as Busan, Shanghai, Shenzhen,
Keelung, Taichung, Bangkok, Hongkong, etc. There are a limited

14
multinational company approached Vietnam market and established a professional
business, offered the various of LCL import routings such as USA, Europe, Asia to
Vietnam namely Shipco Transport, Eculine shipping, Vanguard shipping, etc.
However, the difficulty for the multinational companies who have the strong at
finance and good at experience on LCL handling is the lack of knowledge Vietnam
business culture.
When the market of LCL import service more and more competitive,
importers not only focus on comparing the ocean freight to select a service supplier
but also they consider on service quality, assurance, professional service, reputation,
etc. Therefore, the consolidator who want to create the competitive advantages must
to find out the criteria affecting to customer’s purchase behavior which to be
continue mentioned in the next parts.
2.5 Purchasing, Purchasing process and Behavioral Intention:
Purchasing
Webster (1991, p.156) defined the organization's purchase as "a decisive
process in which organizations formally shape the demand for purchasing products
or services then format, evaluate and select among different brands and suppliers ".
In fact, in many cases the purchasing department is not a direct user of the products,
goods and services purchased but it involves many different departments. Buyers
often consult with each other's departments, such as using department, colleagues,
and senior executives. Therefore, an organization's purchasing decision is not
simply an individual's job, it is the result of a process of interaction between
professional purchasing staff, users of goods or services and other individuals and
departments involved.
Purchasing process
From a marketing perspective, the buying behavior of an organization is the
apparent or latent impact of making step-by-step decision. The organization's
decision-making process includes the following stages: (1) determining the need for
the product or service, (2) finding and identifying potential suppliers, (3) comparing

15
price, promotion and distribution of potential suppliers, (4) negotiation and
agreement on terms of purchase, (5) completion of purchase target, (6) evaluating
the quality of purchases for the achievement of the organization's goals.
Robinson et al. (1967) proposed eight stages of purchasing process: (1)
conceptual perception, (2) general description of the demand, (3) specification of
the product, (4) finding suppliers, (5) requesting offers, (6) selecting suppliers, (7)
Ordering procedures (8) evaluating results.
Behavioral Intentions
It is said that managers are able to create a decision environment in which
desirable behavior and outcomes are encouraged if they learn knowledge of
behavior deeply because the desire of client is stretchy and tied to customer service.
(Tokar 2010, p.92). In the same way, Bendoly, Donohue, & Schultz (2006) come to
the conclusion that the intention category is relevant to presumption about decision
maker’s aim. The goals of a decision maker are dramatically effected by other
issues namely trust, justice and connection with co-workers and supply chain
partners. As Tokar (2010) observed, maturing knowledge about human behavior,
making discernment or verdict, and applying the knowledge of intention are not
paid much attention in logistics research and SCM journals. Consequently, there is a
school of thought that service quality does meaningfully influence to customer’s
satisfaction. It is stated that the service dimensions which is desired to reduce
perceived risk, namely the Assurance and Reliability dimensions, are the most
important for patients in types of service encounters.
2.6 Factors influencing freight forwarder selection:
The SERVQUAL model, formulated by Parasuraman et al (1988), is regarded as
one of the most popular model to measure the service quality. It helps to identify the
perceived service quality along the following five aspects:
(1) Tangibility which involves the appearance of physical facilities, including
the equipment, personnel, and communication materials.

16
(2) Reliability which involves the ability to perform the promised service
dependably and accurately.
(3) Responsiveness which involves the willingness to help customers and to
provide prompt response.
(4) Assurance which involves the knowledge and courtesy of employees, the
positive declaration intended to give confidence. Thus assurance includes
competence, courtesy, trustworthiness and security.
(5) Empathy which involves the provision of caring, and individualized
attention to customers. Empathy includes access, communication and understanding
the customer.
On the farther side of the mentioned 5 core factors, Banomyong et al (2005)
proposed six of major features that exert influence on the decision to select one
logistics service provider as following: (1) reliability, (2) assurance, (3)
responsiveness, (4) tangibles, (5) empathy, and (6) service costs. Definition and the
element belong of six factors used in this thesis will be presented as below:
Reliability
The reliability is signaled by the adequate service supply and binding
commitments to importers/exporters (Parasuraman et al., 1988). Accuracy in
document preparations, consistent service performance along lower transit times
should be the shippers’ expectations for the service quality offered by logistics
enterprises and obviously, it does affect decisions on logistics services suppliers
(Banomyong et al, 2005). Baily et al (2005) mentioned that service is performed by
both before and after sales. It will be included accuracy, reliability, professional
handling, implementation of commitments, technical availability, and facilities.
Reliability is an issue of trust or confident expectation, because a service supplier
has to handle high value cargo much greater than the freight cost amount. Thus, the
reliability will affect the purchase intention before a purchase decision is made, this
factor includes formalization, flexibility, understanding, integrity, liking and trust.

17
The reliable logistics may be created with at least of risks, not only confidence in
the service for reputation on physical movement but also in financial terms.
Yael et al (2009) mentioned the reputation of agent system is an important
element which supports the forwarder to get importers/exporters’ trust. The agent
participates in the standard operating process as the oversea representation on
releasing booking confirmation, receiving cargo, arranging, packing and loading
cargo into container as well as submitting related documents. If one agent in the
network stops their business, it creates a number of problems, with cargo held in a
port without any one to operate it. A importer will be confident to select a
consolidation service supplier if they receive the satisfied comments from seller at
origin with the good service quality which is provided by consolidator’s agent.
Therefore, “Reliability” factor is not only the reputation and trust of consolidator
but also includes the reputation and profession of their agent system.
Rates
Regarded as an overriding concern, pricing is seen as an initial factor relating
to logistics enterprises perceived by customers. This is also essential to influence
consumer’s satisfaction and decisions to use the service provided and select
logistics services suppliers (Banomyong et al, 2005). The more competitive and
reasonable logistics services pricing is assessed as, the greater it affects the selection
decisions. Furthermore, according to Banomyong et al (2005), logical payment
methods and high discount rates will result in more effects on such decisions.
Baily et al. (2005, p.371) explained that it was important to get customer’s
impression in the first quotation which was offered in the starting approach stage. A
consolidator who offers the uncompetitive ocean freight in the first time will be hard to
convince customer while customer don’t know about their service. Consolidator need
to survey and update the market rates to adjust their quotation reasonably. Most
importers want to reduce their production cost, shipping cost, inventory cost to get
more profit and launch their finished products with competitive price. Therefore,
“Rate” is evaluated as the key element to select a transportation supplier.

18
Pisoot (2010) mentioned the “Rate” factor is not only the LCL ocean freight
but also included the local charges at both origin and destination and currency
exchange rate. Local charges and currency exchange rate must be acceptable which
was standardized by market.
Resource
According to Baily et al (2005) the key criteria that create the company
success on developing effective strategies was managers’ perception at all levels,
company structure, internal communication, business experience and the available
resource. He emphasized resource is a factor which affects customer’s selection to
match their customized requests. Because space should be always available at the
time of booking request, the frequency of schedule need to be reasonable and meet
the delivery planning requirement.
Matear and Gray (1993) did mentioned prompt service, staff and equipment
are also necessary elements belong to supplier’s availability. Customer is satisfied
with chosen service when they work with easily contact supplier to get quotation,
local charges, schedule by phone, skype, email, website and supplier’s staff and
equipment are always ready for tracking and tracing the shipment information.
Besides, Parasuraman et al., (1988) and Banomyong et al. (2005) proposed that
the trend of e-commerce and use of electronic documents in logistics services are
growing increasingly popular. Swift progress of information technology has enabled
logistics enterprises to conveniently gather process and exchange information in the
transportation of goods and documents. Yet, in the context of Vietnam where
ecommerce and electronic documents have yet to be perceived as comprehensively
developed and widely accepted by public authorities, the positions of logistics
enterprises prove a criterion affecting decisions to select appropriate suppliers due to
convenience in trading with electronic documents, as compared to paper ones.
Assurance
Customer’s trust built on staff qualification is evaluated as a criterion to select
service provider. Seemly, a logistics enterprise demonstrates the assurance by time of

19
delivery, keeping at a minimum damage in transit and constancy system.
Furthermore, according to Parasuraman et al., 1988; Banomyong et al., 2005,
customer trust is also begun with basis of knowledge, experience of the staff dealing
with consignor.
Pisoot. (2010) stated in their paper that the more risk is managed, the better the
company and shareholders will be protected from harm. As a result of these duties,
the following organization's primary income-producing base including tangible and
intangible are defended reasonably:
• Land, buildings, plant and equipment;
• The technology employed and associated intellectual property rights;
• The employees;
• Financial resources;
• Corporate image and reputation;
• Customers and suppliers
Leenders et al. (2002, p.244) made a point of the perceived risk is related with
routine, which means the first purchase carries much of risk than the next times.
Similarly, according to Baily et al. (2005), purchasing carries risk. It was explained
by Matear and Gray (1993) that people rarely alert with the usual risk until it breaks
their routines. In fact, many people are not more careful of the current risk and the
remedies are not pointed out as an important aspect for risk assessment. As a result,
many current plans are viewed with alarm by relieving the existing risks.
Assurance and uncertainty avoidance influent significantly to reduce indirect
cost or hidden cost, which can support service quality. In addition, Min (1993)
demonstrated the important of quality assurance and perceived risk to customer’s
behavior. Also, they are helpful to clarify if the potential providers are qualified and
reliable. Seemly, the higher the risk perception is, the lower the hidden cost will be.
In general, the international purchasers must bear with many kinds of risk, namely
the mistake or exclusion caused by labor conflict, the fluctuation of exchange rate

20
and currency. The insurance policy sea freight service contains the compensation
for cargo loss and damage.
Responsiveness
A study determined that responsiveness required the readiness, willingness and
of the service supplier. (Parasuraman et al., 1988). Customer always demand the
quick reaction from the person they contact. Moreover, the enthusiasm and
responsiveness of the representatives are the core factors to determine the loyalty of
customer and make the negotiation become more comfortable. To support this idea,
Banomyong et al (2005), having the up-to-date quotation from supplier is the
essence for importer/exporter to estimate costs and profits.
Nowadays, purchasing concepts is buying not only a thing but also the service,
the brand, the reputation of a supplier. Also, the vendors cannot be the seller simply.
They are required more feature, especially the ability to identify and deal with
trouble flexibly. As stated in the paper of Yael et al. (2009), the main point to
compare a supplier with a vendor is their attitude to find out solution when
something goes wrong in trading process. Both buyer and seller must corporate in
suffering a loss or damage to make the best profit. Thus, the researchers focused on
the supplier’s capability only. Whereas, Bhatnagar & Viswanathan (2000, p.13)
showed the vitally important of time based and facilitate competition which were
mentioned as two positive business strategies.
In the same way, Matear and Gray (1993) said that the development of
technology brings much convenience to the connection and responsiveness. The
vast majority of current carriers serve an online system for tracking and tracing a
shipment with high speed and correct information. This is useful for both customer
and supplier, the supplier may reduce cost and save time for handling calls and the
clients are impossible to follow their consignment online for 24 hours per day.
Empathy
This expresses attention and care for each individual customer, and it is the
human factor itself that is vital to the success (Parasuraman et al., 1998). Having their

21
interests and needs looked after, information kept safe and a long-lasting
cooperation with logistics enterprises established are aspects all importers/exporters
care about and they would directly affect the selection of logistics providers
(Banomyong et al., 2005). Importers/exporters want to have their problems quickly
handled by logistics enterprises. If service providers offer a sound customer
relationship system, importers/exporters should highly appreciate their services,
which could also become a top standard for selecting the providers because the
customer relationship system not simply supports the management of customer base
but improves the relationship between the staff and customers and well manage
customers’ information to provide them with better services.
2.7 An overview of related researches that analysis factors affecting to
select a supplier of LCL service.
This part reviews the previous related researches which were conducted to
examine the core factors influencing to intention or decision to select an
international freight forwarder or consolidator. Through this review, author want
adapt the novelties and significations, select the new suitable elements to apply in to
Vietnam market, evaluate the limitation to find out the gap for this research.
Pisoot (2010)
This research was conducted in Thailand to figure out the core criteria affecting
intention to select supplier of less than container load export service. Based on the
previous literature of papers such as Min (1994), Matear and Gray (1993), Whyte
(1993) and the model SERVQUAL of Parasuraman et al (1988). Pisoot proposed 5
variables included reliability, rate, resource, risk fee, responsiveness to examine these
factors’ relationship with the selection intention. The result showed that responsiveness
and reliability were verified as two criteria considerably support the intention to select
the supplier of LCL export service in Thailand.
The similarity of Pisoot’s paper and this study is the same purpose in finding the
criteria influencing intention to select a supplier of LCL service. However, the research
that was conducted in Thailand focus on exportation aspect and the customer

22
interviewed was direct shipper or export manufacturing who had demand to ship the
LCL export while the author research on LCL import shipments and the respondents
were direct consignee or import manufacturing companies in Vietnam. Limitations
of Pisoot’s research is the number of respondent was 35 people, this was a quite
small sample size and the respondents were only from the freight forwarding
companies and the result of two factors responsiveness and reliability just explained
%50.21 the relationship between dependent variables and independent variable.
Yael et al (2009):
The research was conducted at Ramat-Gan, Israel in 2009 to examine main
factors influencing the decision to choose an international forwarding company. The
conceptual model was developed by describing the relationship between the
characteristics of the business environment and the factors that affect the decision to
choose a freight forwarding company. The author has identified 18 factors in the
selection of a company. These factors were analyzed and then organized in related
groups including: reliability, reputation, information management, service and price.
Reliability Group: Includes service reliability, accuracy of information and
transit time factors.
The reputation group of the company: the company size, reputation, quality
certification, business experience and the elements of logistics extra services.
Group on information management: including online quotes, reporting tools,
classification and storage of information available
Service and price groups: Flexible response, ability to work, service diversity,
and competitive pricing.
In these four groups, the result presented that reliability group is the most
important. In this group the transit time factor is the highest, the ability of the
companies to meet delivery deadlines and provide accurate schedules for customers.
The next important factor is competitive pricing. Choosing a transportation partner
is fundamentally an economic decision, based on consideration of cost and benefits.
In addition, the factors of service quality are also considered as one of the important

23
factors influencing the decision to choose a service of a company: flexible response,
professional working ability, the diversity of services available.
The limitation of this study was all above observed variables are organization
elements, no one mentioned private issues. If we apply this research model into
Vietnam market, we should to add one more individual factor as “empathy” to
consider on resolving the individual requests, demand and create the closed
relationship with customers.
Le Tan Buu et al (2014):
The research was conducted in Vietnam to figure out the core factors affecting to
selection an international freight forwarder. The author adapted from the researches by
Valarie et al. (1985), Parasuraman et al. (1988), Bienstock et al. (1997), Wilding
& Juriado (2004), and Banomyong et al. (2005) to propose the model with 6 variables
as reliability, assurance, responsiveness, tangible, empathy, rate. The research was
conducted within the four leading export-import industries: footwear; garment;
electronics, electronic components, computers; and chemicals. The findings pointed out
that the core criteria that affect the decision to choose logistics service providers, there
are six components: Reliability, Assurance, tangible, Empathy, Responsiveness and
Price. Through exploratory factor analysis and binary logistic model, the study
identified eight core criteria affecting the choice of the logistics service provider in Ho
Chi Minh City include: prompt response to customer requests; updating service
charges; prestige brand of logistics service providers; making accurate records; interest
in and interests of customers; location of logistics enterprises; providing e-commerce
services and e-document; and reasonable price.
The novelty of this research is the new proposed factor “service cost” which was
not mentioned in research of Parasuraman (1988), the “service cost” factor was adapted
from study of Banomyong et al (2005) which was conducted in Thailand to verified the
core criteria to select a freight forwarder and was also fit in with Vietnam market’s
nature. However, the limitation of this thesis was the services which offered by a
freight forwarder is very various included trucking, customs clearance, packing,

24
submitting e-documents, LCL shipping, FCL shipping, airfreight shipping, etc.
Most freight forwarders in Vietnam can’t provide the totally service as a logistics
company, they just focus on one or some aspects which they have the competitive
advantages. Therefore, the decision to select a freight forwarding company was
evaluated generally, no one of service was specifically analyzed to examine the
customer’s purchase behavior.
Matear and Gray (1993):
Matear and Gray conducted this study in the Irish market to examine the
differences between the shippers and the freight forwarder in the use of logistics service
selection criteria. This research proposed 5 factors which affect to decision to select
logistics service as reliability, responsiveness, rate, resource and assurance. The result
showed that shippers or consignees are companies that own goods, can buy direct
services from airlines or shipping lines or from a freight forwarder. The three most
important factors that are shown to the shippers or consignees are: responding to
customer complaints quickly, avoiding the loss or damage to cargo and delivery time
on time. Meanwhile, for freight forwarding companies, intermediaries that lease the
services of airlines or shipping lines, factors that are at the forefront are the availability
the service, the accuracy and the frequency of schedule a week when choosing a
logistics service of shipping line or master of consolidator.
The limitations of this research is the author just focused on finding the
differences between the shippers and the forwarding company in the use of logistics
service selection criteria in Irish market. Author was not aiming for the goal of
proposing the suggestions to improve the core factors which were significantly
affect to customer’s decision. Besides, this research did also ignore the factor
“empathy” which was greatly important if we want to research the same subject in
Vietnam market.
Banomyong et al (2005)
The research of Banomyong et al (2005) was conducted at Bangkok to explore
the core factors influencing shipper’s decision in choosing the logistics company. The

25
author adapted the model researches of Parasuraman et al (1988) and Bienstock et al
(1997) to propose six factor groups included reliability, responsiveness, assurance,
empathy, tangibility, cost which affect to selection a freight forwarder. The author used
23 elements as bellow table to evaluate six factor groups. The result mentioned
responsiveness and reliability were the factors positively supported the decision to
select a freight forwarder in Thailand. The novelty of the research was the author
proposed 2 new elements which were suitable to be applied in Asia market. The first
element was customer relationship management system (CRM) was the new
management system supporting freight forwarding company on planning, approaching
and managing customer’s requests, comments and volume. The second new element
was used to examine the Tangibility factor was “Location” because the information
technology infrastructure in southeast Asia area was still not developed and the
electronic document was still not widely used. Therefore, the convenient location
would be the important element affects to the customer’s purchase decision.
Table 2.2 The measurement scales of Banomyong et al (2005) research.
Banomyong et al (2005)
The model used in this research was suitable adapted into Vietnam because of
similarity of market’s nature. However, this research was conducted with the small
sample of 176 respondents and the subject of the research was the freight forwarding
company who totally provide full off logistics services included packing cargo,
trucking, customs clearance, LCL shipping, FCL shipping, air freight shipping, etc.
while there were not many company can offer the full services of logistics chain in
southeast Asia area.

26
Table 2.3 The overview of factors influencing selection international freight
forwarders and consolidators in related researches.
The factors The researches Result
Pisoot (2010) Supported
Yael et al (2009) Supported
Reliability
Banomyong et al (2005) Supported
Matear and Gray (1993) Supported
Le Tan Buu et al (2014) Supported
Parasuraman et al (1988) Supported
Pisoot (2010) Un-supported
Rate
Banomyong et al (2005) Un-supported
Min et al (1994) Supported
Pisoot (2010) Supported
Responsiveness
Banomyong et al (2005) Supported
Parasuraman (1988) Supported
Assurance

Min (1994) Supported

27
Resource
Empathy Le Tan Buu et al (2014) Supported
Parasuraman et al (1988) Supported
(synthetic source)
In summary, reviewing the previous related studies not only help the author find
out the gaps which need to be focus on researching but also supported this thesis on
selecting the suitable factors that were adapted into the proposed model. The
proposed research model and scale of variables will be selected and presented in the
next part.
2.8 Proposed Research Model and The Scale of Variables:
2.8.1 Proposed research model:
The proposed research model will be adapted the model researches of
Banomyong et al (2005) research which mentioned 6 factors: “Reliability, Rates,
Tangibility, Assurance, Responsibility, Empathy” influencing intention to select the
international freight forwarder in Thailand and strong factors from Pisoot et al
(2010) research and Le Tan Buu et al (2014) for the specific reasons below:
In the past, most of import less than container load commercial contracts which
were signed with transportation responsibility belong to Shippers because Consignees
weren't confident in controlling booking ocean freight for the shipments which were
picked up from another country. They believed that shipper understood about the
transport service suppliers at origin with the good quotation and quality. Besides,
booking LCL import transport service at origin will have many advantages than

28
booking at destination because information for customs clearance, departure time,
delay notice, etc will be sent to shipper from service supplier more quickly and the
quotation offered at origin commonly more competitive than destination because
consolidators can control their volume of container at this time to give the
promotion for securing shipments. Therefore, importers or forwarders in Viet Nam
prefer to place booking at origin than destination. In recent years, when global
consolidators have approached Viet Nam market with the strong agency system in
over the world, they have offered to importers and freight forwarding companies the
better LCL import ocean freight fixed for long time and they have trained the sales
executives who can approach, take care the person in charge of booking ocean
freight for individual needs and support them for specific requests at destination
such as commission or promotion on quotation, offering the special local charge at
destination, opening consolidate container quickly, etc. Thus, importers and freight
forwarding companies were more confident in controlling booking at Viet Nam and
the “Empathy” factor is one of best important criteria for them to choose a LCL
import service supplier.
Bellow chart is the proposed research model and the scales for each factor:
Figure 2.1 Proposed research model
This study compares factors which impact on the intention to select LCL
import service in order to encourage the development of business acumen via the

census survey of the existing customers who are mostly service operators in the
same industry. Reliability, Rates, Resources, Assurance, Empathy as well as

29
Responsiveness are important factors to develop the company's competitiveness. In
this study, the intention in selecting to use LCL import service is the dependent
variable, while other service attributes are grouped into six major independent
variables.
2.8.2 The measurement scale for selected factors:
Reliability
• The reputation of company (Whyte, 1993; Banomyong et al ,2005)
• Relationship with reliable management or sales persons (Yael et al, 2009)
• Quality commitment (Min, 1994; Parasuraman, 1988)
• Ability to handle shipments with special requirements (Matear & Gray, 1993).
• Reliable and professional agent system (Banomyong et al 2005)
Rates (Freight, Cost & charges)
• Payment terms & Freight terms (Min, 1994; Yael et al, 2009)
• Low freight rate (Matear & Gray, 1993)
• Reasonable local charge at both sides (Matear & Gray, 1993)
• Acceptable currency exchange rate (Matear & Gray, 1993)
Resource
• Departure time from origin (Matear & Gray, 1993)
• High frequency of sailings (Matear & Gray, 1993)
• Availability of freight space and ease of contact (Matear & Gray, 1993)
• Flexibility to offer service to other destinations (Yael et al, 2009)
• Technical assistance (Min, 1994)
Assurance
• Perceives Risks, Labor disputes, (Min, 1994)
• Avoidance of loss or damages (Matear & Gray, 1993)
• Feeling of Risk is to balance with Feeling of Trust (Yael et al, 2009)
• Freedom from loss /damage (Yael et al, 2009)
Responsiveness

• On-time delivery or punctuality (Matear & Gray, 1993)

30
• Short transit time (Matear & Gray, 1993); Speed of delivery (Whyte, 1993)
• Fast response to problems (Matear & Gray, 1993)
• Special offers or discount on destination charge (Matear & Gray, 1993)
• Updating documents ontime (Banomyong et al 2005);.
• Ability to understand problems and willing to help (Banomyong et al 2005);
• Quick response for claim procedure as responsiveness in problem sharing
(Matear & Gray, 1993)
Empathy
• Confidentiality of information (Parasuraman, 1988)
• Care of customers’ interests and needs (Parasuraman, 1988)
• Maintenance of good customer relationship (Parasuraman, 1988).
2.8.3 Research Hypotheses :
Adapting the research model and measurement scales of previous related
studies, author proposes the research hypotheses were presented in Table 2.4 as
bellow.
For the Hypothesis 1, Reliability is considered as an important factor
positively affect to customer’s intention to select a import consolidator. Importers
and international freight forwarders trust to receive good service quality from the
consolidator who has good reputation, professional agency system, high quality
service commitment, etc. Banomyong et al (2005) did proved that Reliability is the
best factor influencing the decision to select an international freight forwarder in
Thailand, Le Tan Buu et al (2014) found that Reliability was one of supporting
factors on choosing the logistics service supplier in Vietnam market. Therefore, It’s
will be suitable to examine the positively relationship between Reliability and
Customer’s intention to select an import consolidator in Vietnam.
For the Hypothesis 2, The author proposed the positive relationship between Rate
and Customer’s selection intention that the importers and international freight

forwarders will support the import consolidators who offer the competitive LCL import
ocean freight, standard local charge at both origin ports and destination ports,

31
support for credit payment term, etc. This relationship was also proved in the thesis
of Matear and Gray (1993), Le Tan Buu et al (2014). It will be fit in with a
competitive market as Vietnam to examine the hypothesis “ Rate is positively
related to customer intention to select a supplier of LCL import service”.
Minimum the risks on shipping LCL import shipments will be the important
priority on choosing the shipping service supplier. The consolidators who
standardize the shipping process to reduce the damage to cargo, buy the shipping
insurance will create their own competitive advantage. It was examined in the thesis
of Yael et al (2009) and Le Tan Buu et al (2014) as an important factor affecting the
customer’s decision to select a logistics supplier. The author adapted this
relationship to evaluate as the Hypothesis 3 “Assurance is positively related to
customer intention to select supplier of LCL import service”.
Responsiveness is considered as one of core criteria influencing customer’s
intention to select a import consolidator. Banomyong et al (2005), Pisoot (2010)
proved that the international freight forwarder provide the convenience on contact,
on time updating information, fast problems resolve,… will easy to get the satisfy
from customers. Therefore, the author proposed the hypothesis 4 “Assurance is
positively related to customer intention to select supplier of LCL import service.”
(Matear & Gray, 1993) and Banomyong et al (2005) did proved that the
elements belong to Resource factor such as high frequency of sailings, availability
of freight space and ease of contact, technical assistance,…positively support
customer’s decision to select an international freight forwarder. Adapting from
these thesis results Hypothesis 5 “Resource is positively related to customer
intention to select supplier of LCL import service” was proposed to examine the
relationship between Resource factor and Customer’s intention.
Finally, Empathy is considered as an important factor for evaluate the
relationship with customer’s intention in Vietnam. As the eastern business

culture, It’s important to focus on individual relationship establish. The supplier
who care about the requests, benefits of customer will get the priority from the

32
customer on using their service. This issue did examined in the thesis of
Banomyong et al (2005) and Le Tan Buu et al ( 2014). Base on this discussion,
the following Hypothesis 5 was proposed : “ Empathy is positively related to
customer intention to select supplier of LCL import service.”
Table 2.4 Research Hypotheses.
Hypotheses 1 Reliability is positively related to customer intention to select
supplier of LCL import service.
Hypotheses 2 Rate is positively related to customer intention to select supplier of
LCL import service.
Hypotheses 3 Assurance is positively related to customer intention to select
supplier of LCL import service
Hypotheses 4 Responsiveness is positively related to customer intention to select
Hypotheses 5 Resource is positively related to customer intention to select
Hypotheses 6 Empathy is positively related to customer intention to select

33
CHAPTER 3
RESEARCH METHODOLOGY
This chapter presents research methodology of this study. Firstly, it started
with research process to introduce about steps on conducting the thesis. Secondly,
the qualitative research, survey tools, sample size mentioned to explain the
methodology was used for data collection. Finally, the quantitative analysis was
presented for testing the hypotheses developed in chapter 2 and finding the most
factors affecting to selection intention a supplier of LCL import service.
3.1 Research Process.
Figure 3.1 The research process
This study was conducted through several steps, as follows:
Step 1: Developing the draft research model and measurement scales was
selective inheritance from research previously published models of Matear and Gray
(1993), Pisoot (2010), Yael et al (2009), Banomyong et al (2005), Parasuraman et al
(1988), Le Tan Buu et al (2014). The factors chosen were strong factors from
reference research before and fit in with Vietnam transport situation.

34
Step 2: Using the qualitative research methodology to evaluate and adjust the
measurement scales of factors to completed the questionnaire before conducting the
quantitative research: face-to-face interviews with 10 respondents (five from
logistics services companies, three from import enterprises, two from consolidation
companies) who are experienced in international transportation or have worked for
long time on consolidation service. Interviews are conducted at the experts' office to
collect their ideas about the accuracy, the clarity and the understandability of the
questionnaire. During the interview, the author decides to find out if the chosen
measurement scale is suitable for conducting the research in Ho Chi Minh city. All
the comments from the interviewees are gathered with the aim to modify the
measurement scales.
Step 3: After revising, refining the research model and developing an official
survey questionnaire, the questionnaire will be surveyed through face-to-face
interviews and e-mailed to staff of international freight forwarders, importers in Ho
Chi Minh city. There are 50 questionnaires was surveyed by face to face interviews
and 150 questionnaires was surveyed by e-mail.
Step 4: The quantitative research is implemented through a questionnaire
applying 5-point Likert scale. Of returned questionnaires, valid ones are encoded
and analyzed by means of SPSS 20.0, using Cronbach’s Alpha test to remove
unstandardized scale items.
Step 5: Using exploratory factor analysis (EFA) is to test validity of these
measurement scales and the relationships between variables are investigated.
Step 6: Correlation testing is applied to test relationship both between
independent, dependent variables and between independent variables. The result of
correlation will be used to enter to stage of regression analysis.
Step 7: Through Multiple regression analysis, author tests the relationship
between independent variables and dependent variable, presents the results and
suggests the recommendations.

35
3.2 The qualitative research:
The qualitative was conducted to collect the opinions from experts on
literature reviews, proposed research model and measurement scales for accuracy
and accordant. Base on this discussion, the clarity and the understandability of the
questionnaire was evaluate from knowledge and experience of experts to revise and
fix before conducting the survey.
Qualitative research was conducted through group discussions with 10 people
including experts and professionals who have the experience and knowledge on
consolidation business. Specifically, eight of them are in management positions in
consolidators (Everich, Panda, Melody, Quanterm, TMC, Shipco, Globelink,
KMG). Two people are managers in the freight forwarder having a good amount of
LCL import weekly (Ontime, Time Cargo). Experts gave comments on the factors
influencing the intention to select a LCL import service supplier to adjust and
supplement the observation variables to get appropriate models and measurement
scales. After group discussing, experts agreed the model research model includes 6
factors Reliability, Responsiveness, Rate, Resource, Assurance, Empathy and the
measurement scales include 28 suitable elements to evaluate 6 factors in the
relationship with selection intention the LCL import supplier.
3.3 The tools and method of survey:
A questionnaire survey was used in this study. Convenience sampling method
is applied in this survey. The respondents were asked to answer the closed-end
questions in questionnaire form which is regarded as the research tool. The
questionnaires are delivered to respondents through two ways of handling directly
to respondent or indirectly by email which suggests using online Google Drive to
survey. A cover letter is also attached explaining the purpose of the study. The three
main parts were designed to measure the customer’s intention to select a LCL
import supplier and two different language versions were designed separately in
English and Vietnamese for respondents' preference.

Part 1: Respondents' demographical data

36
Part 2: Five Point 1-5 Likert scales to rate the five independent variables
which influence the selection intention to use X's service.
Part 3: Five Point 1-5 Likert scales to rate the customer’s intention to select
LCL import service supplier.
3.4 Target respondents and the sampling.
The respondents are members in logistics companies or import enterprises in
Ho Chi Minh city. They are working as import customer service, import manager,
inbound sea freight manager, pricing manager or director of company,… who has
the responsibility for making decision to select a supplier of LCL import shipping
service. 320 questionnaires were issued to respondents and received 300 valued
questionnaires.
In term of sample size, Haire et al. (2009) stated that the minimum sample for
appropriate use for statistical analysis is equal to greater than five times of number
of variables but not less than 100. N > 100 and N >=5k (k: number of variables).
This thesis model proposed 6 factors with 28 variables so at least the necessary
sample size should be : 5*28=140 observations. This study used the sample size of
300 was fit in with requirement.
3.5 Measurement scales:
This measurement scales for this study is built and mainly based on
measurement scales of Pisoot (2010), Banomyong et al (2005), Yael et al (2009)
and Le Tan Buu (2014). Items are measured by 5-point Likert scale (1=strong
disagree, 2=disagree, 3=neutral, 4=agree, 5=strong agree). The factors were coded
as table 3.1 to evaluate the effect to the selection intention by SPSS 20.0
Table 3.1 Measurement scales factors affect selection intention LCL import
supplier.
Factor Coding Contents
Reliability TC1 Reputation on consolidation service
TC2 Know Consolidator’s sales executive or manager.

37
TC3 A member of global transportation association with
professional agent system.
TC4 Delivery shipments on time
Rate GC1 LCL import ocean freight is competitive
GC2 Local charges at origin and destination are standard
as market tariff.
GC3 Currency exchange rate is accurate and acceptable.
GC4 Supports customer on credit term.
GC5 Easy payment methods applied.
Resource NL1 Phone, email, skyoe, fax,...are always available to
contact.
NL2 Always get the freight space and booking
confirmation.
NL3 Sailing schedules, cut off time, departure & arrival
dates match demand.
NL4 Staff & equipment are always ready for shipment
track & trace.
NL5 Location is convenient.
Assurance DB1 Delivery without loss or damage.
DB2 Buy transportation insurance and support customer
claim on transportation cost.
DB3 Having standard operating procedure for handling
high value, easily teared – stolen cargo.
DB4 Un-stuffing cargo at destination warehouse will be
monitored, Sending photos and warehousing record
to customer if cargo is in bad situation.
Responsiveness PH1 Reply quotation and shipment status with fast
response.

38
PH2 Reports the correct measurement and correct billing
amount.
PH3 Send B/L, Arrival Notice, Delivery Order on time.
PH4 Update delay notice, rolling shipments on time.
PH5 Give quick support on revise charge, and document
amendment.
PH6 Reply customers' complaints quickly and reasonably.
Empathy DC1 Protects confidential business information for
customers.
DC2 Takes care customers’ benefits, interests and needs.
DC3 Listen to customers' comments to improve service
quality.
DC4 Keep maintenance of good customer relationship.
Selection YD1 You will consider X's service as the first choice to
Intention use LCL service.
YD2 You will re-purchase LCL service with XYZ
logistics soon.
YD3 You are likely to maintain the percentage of using
LCL import service with Company X.
YD4 You will encourage others to purchase LCL service
from Company X.
(synthetic source)
3.6 The quantitative analysis:
The quantitative research is implemented through a questionnaire applying 5-
point Likert scale. Respondents are three leading types of freight forwarding
companies, retail importers, consolidators are selected as subject of survey).
Convenience sampling method is applied. Of returned questionnaires, valid ones are
encoded and analyzed by means of SPSS 20.0.

39
Measurement scales for constructs are tested by Cronbach’s Alpha and
Explanatory Factor Analysis (EFA) to remove the unstandardized items, it was
required that the value of Cronbach’s Alpha should be above or at least equal 0.6 to
guarantee the reliability of each item in measurement scale.
Correlation testing is applied in the next step of quantitative research to test
relationship both between independent, dependent variables and between
independent variables. The result of correlation will be used to enter to stage of
regression analysis.
Final stage in data analysis process is multiple linear regression which is
applied to how much variance of 6 independent variables including reliability, rate,
assurance, resource, responsiveness, s that affects the dependent variable as
selection intention and binary logistic regression model is used for testing
hypotheses and overall fitness of the model, which is statistically significant when
the sig. (p-value) of Chi-square test is less than a significance level (often at 5%).
The higher the fitness, the less the coefficient -2 log likelihood (-2LL) and the more
accurate the estimation rates reveal.

40
CHAPTER 4
DATA ANALYSIS
In this chapter, results of study would be shown and analyzed with sample size
N=300. Firstly, respondents’ demographics were summarized. Secondly, results of
scale validation were mentioned. In this section, the data of this study was evaluated
through two steps. Step 1 used Cronbach’s Alpha and Exploratory Factor Analysis
(EFA) to examine reliability and validity of the scale measurement. In step 2, the
researcher employed multiple regressions to test the six hypotheses. Finally, results
of hypotheses testing were discussed.
4.1 Demographical Data of the Respondents:
This section present the respondent’s profile which are: position of
respondents, type business of respondents, consolidators were chosen by
respondents, main commodity imported to Vietnam, frequency of using LCL import
service and import markets. Details are presented as below:
4.1.1 Position of respondents:
Table 4.1 reported that the most is 149 respondents (49.7%) who are working
at department manager level, 75 respondents are company management level (25%)
and 76 respondents are executive level (25.3%). This data showed that most of this
survey’s respondents who has the responsible for selecting the LCL import service
supplier are in department manager level. Therefore, Import managers, Sales
managers, Pricing managers… will be the main customers that consolidators need to
focus on approaching for getting decisions on selecting on their LCL import service.
Besides, the managers who decide to select a consolidator always refer the direction
of company management level and suggestions of executives. Therefore, it’s
necessary to create the good relationship with not only department managers but
also company managers and handling executives.

41
Table 4.1 Position of respondents
Position of Frequency Percent Valid Cumulative
respondent (%) Percent (%) Percent (%)
Company
75 25.0 25.0 25.0
management
Department
149 49.7 49.7 74.7
manager
Executive 76 25.3 25.3 100.0
Total 300 100.0 100.0
4.1.2 Business type of respondents:
Table 4.2 reported that most respondents are 236 forwarding companies
(78.7%), 56 respondents are importers (18.7%) and 8 respondents are consolidators
(2.7%). This data can be commented that most importers or manufacturing factories
do not directly booking LCL import ocean freight with consolidators, they request
to international freight forwarders for fully shipping service included trucking, rail,
customs clearance, LCL import ocean freight, etc. Therefore, the main customer
who had demand to directly book LCL import shipments with consolidators is the
international freight forwarders. The small and medium of size consolidators is also
potential client when they have the LCL import shipments booked by forwarders
but don’t have the direct consolidation service, they must use the service offered by
another consolidator.

42
Table 4.2 Business type of respondents
Business type Frequency Percent Valid Percent Cumulati
(%) (%) ve
Percent
(%)
Importer 56 18.7 18.7 18.7
Forwarder 236 78.7 78.7 97.3
Consolidator 8 2.7 2.7 100.0
Total 300 100.0 100.0
4.1.3 Consolidators were chosen by respondents.
Base on cumulative percent of table 4.3, Shipco, Eculine, King freight,
Everich, Khai Minh, Thamico, Globle Link are the most consolidators selected by
300 respondents with 75 of cumulative percent because they have many competitive
advantage on reputation, experience, global agency network, business strategy, etc
which will be clarified in this study and the others must improve these criteria to
secure more volume on LCL import from market. These above consolidators are
multinational companies who have the good reputation on consolidation,
professional agency system and strong finance. Therefore, the trend of LCL import
supplier selection is the big multinational companies.
Table 4.3 Consolidators were chosen by respondents
Consolidator Frequency Percent Valid Cumulative
(%) Percent (%) Percent (%)
Shipco 70 23.3 23.3 23.3
Eculine 32 10.7 10.7 34.0
King freight 21 7.0 7.0 41.0
Everich 17 5.7 5.7 46.7

43
Khai Minh 19 6.3 6.3 53.0
Thamico 29 9.7 9.7 62.7
ANC 10 3.3 3.3 66.0
Globe Link 27 9.0 9.0 75.0
CP World 14 4.7 4.7 79.7
Star Concord 8 2.7 2.7 82.3
Oriental 6 2.0 2.0 84.3
Panda 6 2.0 2.0 86.3
MP Consol 16 5.3 5.3 91.7
Melody 12 4.0 4.0 95.7
Other 13 4.3 4.3 100.0
Total 300 100.0 100.0
4.1.4 Commodities were imported by LCL import service.
Table 4.4 reported that respondents are importing the main commodities such
as machines (23.7%), garment (19.3%), furniture (12.3%) and footwear (11.3%).
These figures reflect the fact that Vietnam is a country importing raw materials and
assembly machinery. In fact, the forwarders in Vietnam usually focus on
approaching the garment, footwear or assembly machinery factories who highly
need to import raw material for frequently.
Table 4.4 Commodities were imported to Vietnam by LCL import
service.
Import commodity Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Garment 58 19.3 19.3 19.3
Footwear 34 11.3 11.3 30.7
Machines 71 23.7 23.7 54.3

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