On the Drivers of Demand for Innovative Freight Transportation Services

Contemporary innovations in freight transportation and logistics are instrumental in achieving more integrated, efficient, and sustainable services in the global market. While much attention is going to how contemporary innovations, including technology-enabled and management innovations, change the supply of services, little work is done on depicting their changing relationship with freight transportation demand. We present findings from a comprehensive study among Global Fortune 500 companies aimed at understanding what drives the demand for modern transportation services. We investigate the importance of three key service attributes that are growing in importance, i.e., operational control of transport mode, service flexibility, and ancillary value-added services. We measure the influence of contextual factors on the choice of service, including supply chain strategy, demand volatility, internal flexibility, and industry type. This leads to recommendations for shippers on how they can adjust their supply chains in the future to benefit from new freight services. Our findings also stress the need for the logistics industry to adopt modern service choice approaches.