Freight Transportation Derivatives Contracts: State of the Art and Future Developments

Tsai, Mei-Ting; Regan, Amelia; Saphores, Jean-Daniel

doi:10.2307/25702539

Cited by 9 publications

(2 citation statements)

References 9 publications

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“…No dominant, centralized marketplaces exist for buyers and suppliers to interact (Tsai et al. 2009). Hence, to establish prices and contracts, buyers typically conduct annual procurement auctions and invite suppliers to compete for future business (Caplice and Sheffi 2003).…”

Section: Background Theory and Hypothesesmentioning

confidence: 99%

Now You See It, Now You Don't: Explicit Contract Benefits In Extralegal Exchanges

Scott

Craighead²,

Parker

2020

Production and Operations Management

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To enhance performance, buying firms often use supplier governance mechanisms, such as explicit contracts, to coordinate efforts. Yet, it is unclear how these governance mechanisms would perform in extralegal exchanges, whereby suppliers may renege on the contract with little or no legal recourse. Furthermore, there is a paucity of studies examining these extralegal exchanges in the presence of an external market willing to pay higher prices, thus tempting suppliers to renege on existing agreements. Accordingly, we seek insight into the effectiveness of implicit and explicit contracts juxtaposed with the evolving payoff for a supplier's reneging. We do so with a dataset from a buying firm and its suppliers in the for‐hire trucking industry. Our results reveal that implicit contracts do, indeed, enhance performance (i.e., suppliers reject business offerings less often), eventhough the buying firm has no viable legal recourse for rejected business offerings. Likewise, we find that explicit contracts (i.e., providing more specificity to the supplier) further enhance performance; yet, as the external market conditions change in the supplier's favor, more explicit contracts’ effectiveness drastically weakens. Indeed, when external market prices reach their highest, our results suggest that explicit contracts’ benefits virtually disappear. Overall, our results provide a rare look into implicit and explicit contracts’ outcomes in an extralegal exchange when suppliers’ reneging becomes more/less threatening, thereby offering insight for researchers and managers.

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Section: Background Theory and Hypothesesmentioning

confidence: 99%

Now You See It, Now You Don't: Explicit Contract Benefits In Extralegal Exchanges

Scott

Craighead²,

Parker

2020

Production and Operations Management

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“…We contribute by showing how a shipper can compare contract types before formulating a request for quotation. Tsai, Regan, and Saphores (2008) showed that shipper‐forwarder relationships can be coordinated using a freight transportation derivative contract, where uncertainty is hedged using real options. Brusset and Temme (2005) argued that transportation outsourcing should include a mix of long‐term contract and spot price.…”

Section: Literature Reviewmentioning

confidence: 99%

A Comparison of Contract Types for Procuring Trucking Services: A Case Study of A Large Swedish Retailer

Lundin

Hedberg²

2012

Transportation Journal

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We found that a large Swedish grocery retailer was missing a structured approach for deciding on contract type when procuring trucking services in shipper-forwarder relationships. In this context, we identified four contract types: dedicated services, periodical services, truckload services, and less-than-truckload services. From previous literature, we found that trucking costs, utilization, and coordination costs impacted prices when tendering for trucking services. Thus, the purpose of this article is to compare the four contract types for trucking services based on trucking service costs, which includes a tradeoff between utilization and coordination costs. Using an applied research project, we worked together with the grocery retailer to compare contract types. Our results show that it is possible to compare contract type using trucking costs, utilization, and coordination costs associated with each contract type.

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Container slot robust booking and pricing strategy of the option-spot dual channel considering partial demand uncertainty

Wei,

Yu,

2024

Transport Economics and Management

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Freight Transportation Derivatives Contracts: State of the Art and Future Developments

Cited by 9 publications

References 9 publications

Now You See It, Now You Don't: Explicit Contract Benefits In Extralegal Exchanges

Now You See It, Now You Don't: Explicit Contract Benefits In Extralegal Exchanges

A Comparison of Contract Types for Procuring Trucking Services: A Case Study of A Large Swedish Retailer

Container slot robust booking and pricing strategy of the option-spot dual channel considering partial demand uncertainty

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