Diversification of International
Freight Forwarders: A
Bangladesh Perspective
Paper within Master Thesis within Busi-ness Administration
Author: Mahmudul Haque
Muhammad Ahmad Tutor: Leif-Magnus Jensen
Acknowledgements
At first, we would like to thank all of our teachers
during our study that provided us knowledge and
valuable insight. We would also like to express our
heartfelt gratitude to those people who provided
their valuable time and suggestions during our
the-sis writing. Without their help, it would be
impossi-ble for us to complete the task successfully. We
spe-cially want to thank our thesis supervisor
Leif-Mag-nus Jensen for being always there to support,
moti-vate and inspire us to complete our thesis.
Further-more, we would like to thank all of the participants
in our study for providing their valuable time in the
interview and filling up the questionnaire. Finally we
recall our friends Maaz, Fahad and Mujahid for being
with us providing resources during our thesis
writ-ing.
Master’s Thesis in Business Administration
Title: Diversification of International Freight Forwarders: A Bangladesh perspective. Authors: Mahmudul Haque, Muhammad Ahmad
Tutor: Leif-Magnus Jensen Date: January, 2011
Key words: International freight forwarders, Logistics intermedi-aries, Freight forwarders diversification, Bangladesh freight forwarders.
Abstract
Problem
Freight forwarders diversification trend has been studied by many scholars, but the stud-ied diversification trend shows the picture in the context of developed country like U.S.A, U.K. Literature lacks diversification trend of forwarding industry in the develop-ing countries like Bangladesh. As International freight forwarders are diversifydevelop-ing and adopting new services into their spectrum of services offered, the distinction between international freight forwarders and different types of logistics intermediaries is blur-ring. Forwarding industry is not homogeneous and hence it cannot be generalized be-cause it varies according to geographic location. What is the contemporary condition and diversification trend of international freight forwarders in Bangladesh is not known in the literature.
Purpose
The purpose of our study is to understand the similarities and dissimilarities between the international freight forwarders in Bangladesh and the developed countries. This study aims to explore diversification process in the context of Bangladesh.
Method
In our research, we have used qualitative approach and collected information from the targeted group of freight forwarders through survey questionnaire and follow- up con-versation and a comprehensive analysis has been done to address our research question.
Conclusions
The study reveals some interesting facts of Bangladesh freight forwarders. Most of the freight forwarders in Bangladesh are small in size. IFFs in Bangladesh are not proactive rather they possess passive nature for diversification. Study finds some similarities
be-tween International freight forwarders of both Bangladesh and developed countries. But there is considerable difference regarding IT related services and value added services because freight forwarders in Bangladesh lag in these two sectors. Finally we have found that freight forwarders are not homogeneous in nature rather they are context de-pendent.
Table of Contents
1 Introduction...1
1.1 Background 1 1.2 Problem 1 1.3 Purpose 2 1.4 Research Questions 22 Theoretical Framework...3
2.1 The basic functions of International Freight Forwarders 3 2.2 Drivers of Diversification 4
2.2.1 Globalization 4
2.2.2 Increased competition 4 2.2.3 Profit Margin 4
2.2.4 Increased Customer demand 4 2.2.5 Technology 5 2.3 Demographics of IFF 5 2.3.1 Size 5 2.3.2 Age 5 2.4 Diversified services 6 2.4.1 CHB AND NVOCC 6 2.4.2 Information Technology 7 2.4.3 Warehousing 7 2.4.4 Intrermodalism 8 2.4.5 Alliances 8
2.5 Diversification Trend 9 2.6 Summary 10
3 Methodology...11
3.1 Research method and methodology 11 3.2 Qualitative or Quantitative 11 3.3 Types of research 12 3.3.1 Descriptive research 12 3.3.2 Exploratory research 12 3.3.3 Correlational research 13 3.3.4 Explanatory research 13 3.4 Sampling 13 3.5 Finding Participants 14 3.6 Data collection 14 3.6.1 Primary Data 14 3.6.2 Secondary Data 14 3.7 Data Collection Method 15 3.8 Analysis of data 15 3.9 Credibility of data 17
4 Empirical findings...18
4.1 Survey 18 4.2 Follow up conversation 215 Analysis...25
6 Conclusion...27
6.1 Limitations 27 6.2 Implications28 6.3 Recommendations 287 References...29
8 Appendices...33
8.1 Appendix 1: Questionnaire 338.2 Appendix 2: LPI Ranking and Score 36 8.3 Appendix 3: List of abbreviation 36
List of Tables and Figures:
Pag
e
Table 1: The possible function of IFFs 3 Table 2: Data analysis model (Waker et al. 2008) 15 Table 3: Profile of respondent of the questionnaire 18 Table 4: The status of service provided by the freight forwarders in Bangladesh 19 Table 5: Usages of mode of transportation and their ranking according to
rev-enue
19
Figure 1: Diagram of diversification process 10
1 Introduction
1.1
Background
During the last two decades international trade volume has been amply increased. This increased interest in the cross-border trade has galvanized logistics intermediaries to counter with the broader range of services in order to satisfy the increased demands of shippers, suppliers, manufacturers and customers. The more, shippers outsource logis-tics services and rely on single provider, the higher their expectations from intermedi-aries are. Shippers are expecting effective, efficient and better quality services pro-vided to them. In result today many logistics services providers like international freight forwarders (IFFs), customhouse broker (CHBs), export management companies and non-vessel operating common carriers (NVOCCs) characterize themselves as “Third party logistics provider” (Ran, Young & Movick, 1993). IFFs, once known, as “ship-ment consolidation” specialists have expanded the range of services to address major trends and issues stemmed in the industry like increased competition, increased demand of shippers and finally to seek higher profit by offering services other than fundamental services of consolidation and forwarding.
IFFs are key intermediaries in the international supply chain process (Murphy & Daley, 1995). They help to move goods from one place to another, on the request of their cus-tomers. Importance of IFFs is shown in a study (Lambert & Stock, 1993) which de-scribes that regardless of the firm’s size, every firm in US utilizes the services of IFFs. The same results were confirmed by one more study (Murphy & Daley, 1995) which stated that 90% of US based firms used IFFs for the cross-borders movement of goods. According to one report “Forwarding industry today consists of 40,000 firms employing
8-10 million people in 150 countries” (FIATA).
There is noticeably growth in the forwarding industry of Bangladesh. According to one report prepared and published by World Bank’s international trade department, logistics performance index (LPI) of Bangladesh in 2010 accelerated to 2.74 from 2.45 back in 2007. Bangladesh is ranked 79 in LPI rank list of 2010 amongst all countries, previ-ously it was ranked 87th in 2007 (Appendix 2). Bangladesh is a developing country but
still it contributes small chunk of international trade volume. Bangladesh’s export vol-ume in 2010 are reported to be $16.20 billion (Bangladesh export promotion bureau), while its imports are $19.76 billion (CIA).
1.2 Problem
Modern or Diversified IFFs are distantly deviated from traditional IFFs in terms of ser-vices they offer. Many scholars have studied the diversification phenomena of IFFs for example, a move towards NVOCC market (Pope & Thomchick, 1985; Murphy et al., 1992), value added services (Markides & Holweg, 2006), intermodelism (Murphy & Daley, 1995), CHBs services offered by IFFs (Murphy et al, 1992), EDI and IT
adop-tion (Murphy & Daley 2000b; Ozsomer
,
Mitri & Cavusgil, 1993), capability in provid-ing broader range of services (Lai & Cheng, 2010). All these studies are regional based studies and provide information regarding diversification of IFFs in developed countries like US, UK and China.Diversified IFFs have expanded their spectrum of services, as a result previous
distinc-tion between these different forms of intermediaries seem increasingly blurred the more of these added responsibilities are taken on (Markides & Holweg, 2006, page 336).
Tra-ditional forwarders diversified in a direction that they began to offer services and func-tions performed by different logistics intermediaries like CHBs, NVOCCs, export man-agement companies and third party logistics providers. IFFs overlapped functions of other logistics intermediaries; in result what is meant by IFFs is not clear as well as what functions and services they offer (Murphy & Daley, 1995). Most of the IFF’s defi-nitions express an IFF as export shipment specialists (Cateora & Keaveney, 1987) while others think as export and import specialist (Pope & Thomchick, 1985).
Diversification of IFFs is an important phenomenon but despite this fact it has not gained attention of many scholars. Existing literature gives picture of diversified IFFs in developed countries, but literature lacks forwarding industry in developing countries like Bangladesh. It is important to understand IFFs particularly, in developing countries, in order to understand IFFs as whole. Bangladesh forwarding industry still needs re-forms because there is substantial gap between benchmark in industry and Bangladesh forwarding industry.
1.3
Purpose
The purpose of our study is to understand the similarities and dissimilarities between the international freight forwarders in Bangladesh and the developed countries. This study aims to explore diversification process in the context of Bangladesh. For the achieve-ment of this objective we will be studying and focusing on the periphery of the services of the Freight Forwarders in Bangladesh and to what extent they have drifted in the course of diversification process.
1.4 Research Questions
To achieve the said purpose, we will conduct a study to answer the following research questions.
Is there any difference exists between traditional Freight Forwarders discussed in the literature and the current freight forwarders in Bangladesh?
How/whether the Bangladeshi freight forwarders differentiate into other ser-vices?
2 Theoretical Framework
In this chapter we will discuss pertinent literature regarding diversification of IFFs. We start discussion by describing literature on Traditional Freight forwarders, Factors af-fecting diversification of IFFs, demographics of IFFs and their role in the diversification process and finally diversified services offered by IFFs. In the end we have summarized all the discussion.
2.1 The basic functions of International Freight
For-warders
Until recent past, functions performed and services offered by IFFs were not clearly mentioned in the literature. Many scholars have worked in this realm. Murphy, Daley and Dalenberg (1992), in their research in profiling of International Freight Forwarders pointed out a set of possible functions IFFs provide. Freight forwarders can offer all or some of those services described in the table below.
Quoting steam ship rates
Obtaining necessary vessel space Preparing commercial invoices Obtaining export licenses
Issuing export declaration for the shippers Preparing certificates of origin
Obtaining and preparing consular invoices Compiling ocean bills of lading
Compiling air waybills Obtaining insurance Paying freight charges Obtaining dock receipts
Presenting documents to the bank Obtaining port warehouse space Tracing and expediting shipments
Collecting and submitting money for shipments Advising shippers as to selection of terms of sale Acting as general consultant on export matters Provide transport from exporter to final destination Legal counseling
Export packing
Shipment consolidation
Make routing recommendation Break Bulk
2.2 Drivers of Diversification
Diversification is not a spontaneous phenomenon rather it is dependent on demograph-ics of company and drivers of diversification. In fact drivers motivate IFFs to diversify and the characteristics of firms hamper and/or facilitate diversification process. Based on the IFFs diversification literature we have identified five most effective drivers, these drivers initiate and expedite diversification process.
2.2.1 Globalization
During the last two decades changes in regulatory and economic concerns have intro-duced a new concept called “Globalization”. In order to expand business across the bor-ders, many companies strategically operate in many geographically dispersed locations and have partners, suppliers and customers worldwide. The role of Freight Forwarders has come into great importance due to the changing global context. Most of the firms engaged in international business utilize services from the freight forwards to meet the challenges of globalization. In order to sustain competitive advantages and to fulfill de-mand of globalization today most of the IFFs have extended their services and diversi-fied themselves which force them to operate in dispersed location across the borders and to form strong alliances with international partners (Ozsomer, Mitri & Cauvsgil, 1993).
2.2.2 Increased competition
One of the motives of diversification is competition within freight forwarding industry. (Sheffi, 1990; Markides & Holweg, 2006) found this factor as the most effective driver of diversification in UK freight forwarding industry. The sole reason is that there are many forwarding companies in the industry, which has created an intensive atmosphere of competition and rivalry among the players. So, most of the companies diversify themselves in order to distinguish themselves from others and attract and sustain more customers.
2.2.3 Profit Margin
After the deregulation in transportation industry it was observed that profit margin re-duced dramatically specially in the core business activities of logistics intermediaries and IFF’s. (Berglund, Laarrhoven, Sharman & Wandel, 1999; Markides & Holweg, 2006) argue that companies are trying to offer new services other than basic or tradi-tional services, just to increase profit. Reduction in the profit margin in the core services pushed IFFs to diversify and to seek profit in the services other than traditional services.
2.2.4 Increased Customer demand
Since last two decades we have seen changes in the buying behavior of customers and this “increased customer demand” directly or indirectly affects services offered by lo-gistics providers and intermediaries (Sheffi,1990), further more (Markides & Holweg, 2006) found many shippers demand now customized services which directly affects
IFFs spectrum of services offered. Hence IFFs try to fulfill the increasing demand of their customers by diversifying themselves.
2.2.5 Technology
The technological advancement which boost up the information flow using tracking and tracing, EDI, internet and web based application facilitate the shippers and the providers in a great extent. Many IFFs have adopted advanced technology which enables them to coordinate their activities with the different actors involved in their operations. Today many scholars think technology up gradation as being one of the most effective drivers of diversification in forwarding industry (Sheffi, 1990; Murphy & Daley, 2000a; Markides & Holweg, 2006).
2.3 Demographics of IFF
US and UK based two regional studies (Pope & Thomchick, 1985; Markides & Hol-weg, 2006) asserted that diversification is dependent on the demographics of the IFFs companies. Although both studies slightly differ from the result in a way that, UK based smaller firms diversify more than US based smaller firms. However, in both cases larger firms were found to be more eager to diversify than smaller firms. Different scholars ap-ply different criteria to measure the size of a firm like revenue generation, number of employees and revenue per employee. For this thesis we will measure size of the firms by number of employees as measured in the study (pope & thomchik, 1985). The reason we are not taking Revenue into consideration is that “companies are sometimes hesitant
to provide revenue profile when doing survey research” (Markides & Holweg, 2006, p
37)
2.3.1 Size
In US, generally a firm is known as small firm if it employs less than 50 employees and a large firm employs at least 100 employees (Wolf, 1991). Studies in the USA (Pope & Thomchik, 1985; Markides & Holweg, 2006) showed that in USA and UK, IFFs are small to medium in size. Almost 75 % of the respondents in both studies were small firms and nearly 14% were found to be large firms, they concluded the trend within IFFs industry that larger firms are positively correlated with diversification. This is fur-ther supported by one more study (Murphy & Daley, 2000a) which concluded that larger and older firms adopt technology earlier than younger and smaller firms.
2.3.2 Age
It has been observed that older firms tend to adopt technology and hence older firms are more capable to diversify than younger firms (Pope & Thomchik, 1985; Markides & Holweg, 2006), other reasons for older firms to diversify are like, experience and exper-tise in core business. Both studies confirm Age is positively correlated with diversifica-tion.
2.4 Diversified services
Traditional IFFs are quite different from today’s diversified IFFs, because IFFs have di-versified themselves by offering new services, adopting new technologies and by their strategic movement in the industry. Most of the IFFs have diversified themselves by of-fering new services because service is the primary reason that many shippers use IFFs (Murphy & Daley, 1995).
2.4.1 CHB AND NVOCC
IFFs have been entitled as specialist of export shipments in the past (Cateora & Keav-eney, 1987). Their core business included managing, supporting, issuing and handling all the documents which are necessary to move goods from one country to another (Murphy, Daley & Dalenberg, 1992). Researchers observed that IFFs are extending their services to CHB & NVOCC services along with their core services. (Murphy, Da-ley & Dalenberg 1995; Markides & Holweg, 2006).
CHB (Custom House Broker) is a licensed agent who works on behalf of importers to clear the goods for a fee. A company can do this itself but CHB can provide comprehen-sive service as they are accustomed with concerned law, common practice and function-ality of the clearing process and thereby expedite the clearing process efficiently. Though they charge fee but utilizing the service of CHB can be cost effective in the long run (Thomas A. Cook, Rennie Alston & Kelly Raia, 2004, Page 164).
There was a time when CHBs were known as the import shipment specialist (Johnson & Wood, 1993) and distinction was clear between CHB’s and IFF’s functions, moreover they have been dealt separately by shippers, customers and scholars. But later on as IFFs diversified these distinctions became blurred. (Markides & Holweg, 2006) found that many IFFs firms were found to follow the trend to diversify by offering CHB ser-vices to their clients. This trend is further confirmed by on more study (Murphy & Dal-ley, 1994) asserted that IFFs are used more than customhouse brokers. Many scholars have argued that IFFs are trying to provide “one stop” services because they have added or they are adding CHB services in their spectrum of services offered (Pope & Thom-chik, 1985; Muller, 1990; Murphy et al 1992). Forwarders diversified in this direction because it was one of the possible ways to survive. Because if traditional IFFs want to survive they will have to focus on niche market, providing value added services and CHB services (Chandler, 1994).
A non-vessel operating common career (NVOCC) buy space from the shipping line and sells space to numerous shippers. They collect and consolidate numerous small ship-ments and make arrangement for large shipment by ocean carrier. They also issue bill of lading to every shipper and thereby become liable if anything happen to the goods dur-ing the voyage (Winston, A., Winston, and J. 2010).
The clear distinction exists between traditional forwarders and traditional NVOCC (Sherwood & Robert, 1992). Right after the deregulation in transport industry IFFs
started to diversify and started to provide new services which were supposed to be per-formed by the NVOCC only. Pope and Thomchick (1985) were the first one to study why IFFs have diversified and they are operating as NVOCC. The study concluded 65% IFFs in US are also operating as NVOCC. They further said “a move towards NVOCC
market gives forwarders a means of defending and enhancing their competitive posi-tions”. Another study differentiated both, forwarders who operated as NVOCC and
for-warders who did not operate as NVOCC. Because most of the NVOCC forfor-warders in US are larger in size and generate higher revenue than those operating as non-NVOCC forwarders (Pope &Thomchick, 1985; Murphy et al, 1992).
2.4.2 Information Technology
Electronic commerce caused a deep change in relationship between intermediary service providers and their clients (Schramm, a). Shippers are now demanding trace & track, EDI services and web based application which could only be dreamed of, prior to tech-nological innovations. Today many IFFs are upgrading their information management systems (Sowinski, 2000). Some authors (Ozsomer et al, 1993) think that corporate sur-vival for IFFs regardless of firm’s size is predicted on having effective and efficient in-formation management system. Many studies have proved that larger and older firms have adopted technology in time. Those who are not responding to this technological demand at proper time they may be forced to leave industry (Ozsomer et al, 1993). In-ternational logistics chain has been influenced by technology, if traditional IFFs don’t respond to this change they can be bypassed or disinter mediated.
Many IFFs have diversified and they are now providing facilities of tracing, online booking, inquiries, information flow and other web based applications which are possi-ble just because of internet. Within freight forwarders industry internet has been recog-nized as integral part for effective and efficient information management system (Wer-ner, 1999). Many IFFs who were unable to implement EDI on value added network they diversified and offered EDI by synchronizing and incorporating it with internet because internet is comparatively economical (Werner, 1999).Another attraction for IFFs to in-corporate internet is that internet can support EDI, because most of the IFFs who diver-sified they believe internet is compliment to rather than a substitute for EDI (Murphy& Daley 2000b). Murphy (1996) concluded that EDI systems were no longer luxury but necessary for IFFs then. They further argue IFFs who diversified and incorporated EDI think that quick access, better customer service, reduced paper work, better communica-tion and increased productivity are some of the reasons for incorporating internet.
2.4.3 Warehousing
Although warehousing is one of the traditional logistics services but it was not supposed to be the function of traditional freight forwarders to provide warehousing services. Tra-ditional freight forwarders used to book port-warehouse space in the past, this function was among one of the basic functions of traditional freight forwarders (Murphy et al, 1992). IFFs diversified themselves and offered warehousing services to their clients, as
shippers demanded more than traditional services. One recent study (Markides & Hol-weg, 2006) indicates that almost 45% IFFs in the UK are offering warehousing and it further states many of the IFFs offer it in-house i.e. they don’t outsource it. It shows shippers are delegating the whole logistics process to a third party and they are concen-trating on their core business. One more regional based study found that there is increas-ing trend among IFFs in Hong Kong that they are offerincreas-ing warehousincreas-ing and distribution (Lai, & Cheng, 2004). Most of the IFFs in Hong Kong who are not offering warehous-ing currently, expect to add warehouswarehous-ing in their product line in near future.
2.4.4 Intrermodalism
Water transportation is known as predominant mode in international trade (Murphy, Dalenberg & Daley, 1991). Most of IFFs still earn substantial part of their revenue from sea freight. As the concept of Just in time delivery emerged, shippers increasingly de-manded air freight services (Lillie, & Sparks, 1993) from forwarders instead of higher cost associated with this mode. Moreover many IFFs expanded their revenue bases (Murphy et al, 2000b), in order to increase profit, to fulfill shippers demand, to compete counterparts and to survive in the industry, hence they diversified and offered sea, air, rail and road freights shipments. A recent UK based study (Markides & Holweg, 2006) asserted that many IFFs are dealing with more than one mode but sea freight is still dominant, Which is further confirmed by one more study that (Lai, & Cheng, 2004) in Hong Kong sea freight generates highest percentage of revenue for IFFs while rail freight is ranked and located in the end because it generates small chunk of profit. An-other study (Pope & Thomchick, 1985) found that intermodelism has benefited large corporations in comparison to small and medium sized firms. Murphy et al. (1991) ar-gue that intermodelism has positive effects on forwarders and hence it is further re-quired in order to fulfill shippers demand. IFFs have started to deal in all modes of goods movement, unlike traditional IFFs, so they can move goods from one location to another.
2.4.5 Alliances
One of the strategies to diversify is to make strong alliances across the world. In a study (Markides & Holweg, 2006) all the IFFs who diversified pointed out that strategic part-nership and extended geographical coverage are two key steps in their diversification process. Schramm (a, page 4) expressed the importance of strong alliances as “Foreign
forwarders are considered as information hubs due to some superior knowledge in in-ternational logistical process and a social network with cross border contacts to col-leagues in foreign countries”. The “social network” becomes expertise of IFFs, because
of geographical expansion and acquired services of international partners. This expertise is hard to imitate and hence it is also known as barrier to entry in forwarding industry (Murphy & Daley, 2000a). Some smaller firms specialize in the regional coverage and enjoy their existence in the industry. Because some scholars argue that if small firms want to prolong their existence in the industry they must concentrate on niche like spe-cial handling products, regions, networks and carriers.
2.4.6 Value added services
IFFs are not relying on traditional services only rather they are trying to address in-creased demands of shippers and expanding their portfolio of services; hence “new forms” of IFFs are emerging (Ozsomer et al, 1993). IFFs are offering range of services like packing, labeling, warehousing, insurance, logistics, project management, manage-ment information system and export marketing consulting. All these services are known as “value added services” in the field of logistics (Ozsomer et al, 1993). Most of the IFFs today are offering all or some of these value added services to their clients (Markides & Holweg, 2006; Pope & Thomchick, 1985; Murphy & Daley 2000b; Lai, &Cheng, 2004). Previous studies show the result that packing, labeling warehousing and information management system are most demanded value added services by ship-pers and hence IFFs prefer to fulfill these most wanted value added service over the rest of value added services.
2.5
Diversification Trend
Diversified IFFs are deviated from traditional IFFs in many ways. Murphy et al (2000b) think that increased number of services offered by IFFs suggests that distinction be-tween IFFs and other logistics intermediaries are blurring. Many scholars have studied diversification of IFFs and they have one common view that, IFFs diversify to a specific direction. Scholars have used different terms for that particular direction like one-stop (Pope, & Thomchick, 1985), third party logistics provider (Ran, Young, & Movick, 1993) and logistics provider (Markides & Holweg, 2006).
The term “one stop” was first used by (Pope & Thomchick, 1985) later this term was used by many scholars (Murphy et al, 1992; Muller, 1990; Ozsomer et al, 1993; Sheffi, 1990; Semeijin & Vellenga, 1995). These scholars argue that shippers are now concen-trating on their core business activities and they outsource logistics services to third par-ties. Moreover these shippers have good relations with providers; this good relation is mutually beneficial for both, so, Shippers are delegating substantial part of logistics re-lated operations, to be performed, to third party which is called “one-stop” shopping. Markides and Holweg (2006) used more sophisticated term “logistics providers”. Au-thors associated this term with diversification in the perspective of providers instead of shippers. They believe IFFs are broadening their spectrum of services and trying to ad-dress all logistics related problems to facilitate shippers and to build good relation with their clients.
Ran et al. (1993) found that different types of logistics intermediaries, like IFFs, charac-terize themselves as TPL because of broader range of services offered by them. A recent Hong Kong based study (Lai, & Cheng, 2004) concluded that IFFS diversify to third party logistics providers. Because diversified IFFs overlap some of the TPL’s functions.
2.6 Summary
Literature discussed above depicts diversification process of IFFs. We have discussed the role of a firm’s demographic in the diversification process. Moreover different driv-ers that trigger and expedite divdriv-ersification process have been discussed. Cumulative ef-fect of demographic and drivers results in the diversification because diversification process is dependent on both. The diagram below shows diversification process of IFFs.
3 Methodology
In this chapter, we shall describe the methods we have used and the approach we have adapted to answer our research question.
3.1 Research method and methodology
It is an important factor in research to utilize the right method by which exploration is done in a systematic controlled way to know what is not known, verify the existing knowledge and to identify if any lacking or limitations exists. The words “method” and “methodology” is often used interchangeably though there is a considerable distinction between them. “Method” mainly deals with the particular activities through which we produce data where as “Methodology” concerns with the overall understanding and strategy of the research approach through which the answer of the research question will be sought (Greener. 2008). According to (Kumar, 2008), the dimension of ‘Research Methodology’ is wider then ‘Research Method’ and the ‘methods’ mainly constitute a part of the ‘methodology’. So, methodology is an umbrella concept whereas methods are part of it. The adapted research method systematically and logically takes the re-searchers into the conclusions.
3.2 Qualitative or Quantitative
The research methods are classified into qualitative and quantitative approach based on the mode of data collection. Quantitative methods deals with the numerical data and the findings come in the format of structured standardized data through the use of graphical and statistical tools (Thornhill, Lewis and Saunders 2009). This kind of research is more structured, rigid and based on a large sample size. On the other hand, qualitative method is useful with the small size of sample where the data is unstructured and required to be classified and categorized through conceptualization (Thornhill, Lewis and Saunders 2009).
As we are going to address the said research questions, we have found qualitative method is more appropriate since our sample size is small and secondly, practically it is impossible to access and study each unit of the population being studied due to short time, thirdly we will get deeper understanding and insight of the problem using survey, interviews and finally to understand this complex issue we will interpret the empirical data obtained from the practitioners in the field. Hence to fulfill the purpose of this the-sis we will use qualitative method.
3.3 Types of research
Kumar (2005) categorized research from the following three perspectives: Application of the research, objectives in undertaking in the research and inquiry mode employed. This classification is shown in the following diagram.
Figure 2 Types of research, Kumar. R (2005)
According to the author of this classification, research can be divided into two broad categories like pure research and applied research based on the application. This kind of research is abstract in nature mainly deals with testing of hypothesis and theories. Ku-mar (2005) describes this kind of research is intended to add new knowledge in the ex-isting knowledge base of research method. On the other hand, in applied research, the techniques, methods, procedures are used to gather information within a specific situa-tion in a way so that obtained informasitua-tion can be used.
In the view point of objectives, research is divided in the following category: descrip-tive, exploratory, co relational and explanatory.
3.3.1 Descriptive research
A research is called descriptive where the intention of the study is to describe some phe-nomenon, situation systematically. Parasuraman (1991) describes that in descriptive re-search, data is collected from the composition of the targeted group. The nature of our intended study is kind of descriptive where we tried to explore a phenomenon of freight forwarders in Bangladesh.
3.3.2 Exploratory research
Exploratory research is used where the research problem is not adequately defined and understood (Ghauri and Gronhaug, 2009). According to them, exploratory research is
more flexible where a piece of information can shift the direction of the research. Prior information can be used and tested. As like other types of research, exploratory research also requires skills but they do differ where observation, getting information and con-structing explanation are considered as key requirement.
3.3.3 Correlational research
They main purpose of a correlational research is to establish ‘relationship, association, interdependence’ between the different phenomenon of a situation (Kumar, 2005). “What is the relationship between drunkenness and traffic accident?” is an example of a correlational research.
3.3.4 Explanatory research
Explanatory research tries to answer “Why” and “How” of a specific phenomenon. “Why does relationship exist between drunkenness and traffic accident?” is an example of explanatory research.
3.4 Sampling
Sampling techniques appropriate for quantitative method may not serve purpose of qualitative method, because both approaches differ in terms of purpose of research. Random or probability sampling is suitable for quantitative method where the intention is to generalize the results obtained from the sample. Hence sample selected should be representative of population. However this is not the case in qualitative method because qualitative method is used to learn from the experience of human beings (Polkinghorne, 2005). Patton (1990) thinks “information rich” individuals should be recruited in the sample for in-depth study because we can learn a great deal about issues of central im-portance to the purpose of the research (Patton, 1990).
Saunders, Lewis and Thornhill (2007) argue that purposive sampling technique is more useful than any other, where researchers can use their own judgment to populate and se-lect samples. For the questionnaire we have adopted purposive sampling technique. We think this technique is the “best fit” for this research because we have clearly defined criteria (based on our judgment) for the selection of sample, moreover we think this de-fined criteria are helpful in order to learn and understand the issues related to diversifi-cation of IFFs in Bangladesh. Defined criteria are as follow.
All the respondents should be freight forwarders. Respondents should be registered.
Respondents should have served in forwarding industry for at least three years. Respondents should be operating in Bangladesh.
We sent survey questionnaire to practitioners, who fulfilled the said criteria, and got the general picture of forwarding industry in Bangladesh. But it was not possible for all the
respondents to participate further in this research study for interview, due to the nature of their business. So we tried to find out some volunteer participants for in-depth inter-views. Polkinghorne (2005) supports this idea of researchers to find out volunteer par-ticipants who are ready to explain their experiences because researchers can learn and understand complex issues in greater extent. Saunders et al (2009) named this sampling technique as “self-selection” because participants themselves show willingness to be in-terviewed. We contacted all the respondents of questionnaire and asked them for further participation. Later on the respondents who expressed their willingness were inter-viewed.
3.5 Finding Participants
In order to serve the purpose of the study and to address the said questions we had to find out participants. We developed criteria for the selection of participant. AZfreight web portal (http://www.azfreight.com/azworld/aw11205.cfm) was found to be a good place where we could find and contact potential participants who fulfill the said criteria. We sent a questionnaire in mail using link of free online survey http://freeonlineveys.com/rendersurvey.asp?sid=qdn5pd73hk5r8b2855720. We got 9 responses of sur-vey questionnaire. In the questionnaire we asked all the potential participants if they wanted to participate further in the study for in-depth interviews. Just two of nine partic-ipants of questionnaire agreed for further participation. Both volunteers for interview were further contacted and interviewed through telephone.
3.6 Data collection
There are two types of data, primary and secondary, used in the research based on the source. Data can be collected using variety of methods and sources. Forming the right instruments before collecting data for the proposed study is of great importance.
3.6.1 Primary Data
Primary data are those data which are collected first time and original in nature (Kothari, 2004). According to, Gates and Jarboe (1987) primary data is the one which is collected by the researchers themselves to address particular issue. Primary data is known as more reliable than secondary data because it is directly meant to deal with the specific problem under study. Primary data collection is one way to get “precise infor-mation” researchers look for, in order to achieve objectives of the research (Cooper & Schindler, 1998).
3.6.2 Secondary Data
In contrast to primary data secondary data is generated by other people, organizations and researchers. Secondary data come from experience and observations of other people (Guffey, 2008). Guffey (2008) describes advantages of secondary data in terms of time saving, economical and better understanding of the previously built theories. Kumar (2005) emphasis on the reading of literature extensively as it provides valuable contri-bution in every step in the operations of the research. Sources of secondary data are
many like journals, books, newspapers, magazines and research conducted by other groups of organizations.
From the above discussion it is evident that both types of data are not comparable and substitute to each other. Because both types of data have different advantages associated with them which are equally beneficial and helpful to address the said research ques-tions. In order to fulfill the purpose of the study we utilized both types of data.
3.7 Data Collection Method
Though there are a lot of data collection methods in qualitative study, Yin (1994) con-sidered interview as the predominant source in this research. Whereas Sekaran (2003) thinks interviews, observations and questionnaires are widely used for data collection in the qualitative research method. In research, interaction occurs between the data and theory so the chosen method must be coherent so that it can produce results that are realistic and do not drift from the focus and yet it serves the meanings of study.
We sent the survey questionnaire to all the freight forwarders in Bangladesh listed on A-Z freight directory. The questionnaire contained questions regarding diversification of freight forwarders in Bangladesh which provided the basic information regarding current scenario and diversification trend of forwarding industry in Bangladesh. In order to get deeper understanding volunteer practitioners were further interviewed telephoni-cally.
3.8 Analysis of data
One of the important steps in the qualitative research is data analysis. Unlike quantita-tive research where researchers follow mathematical formulae to analyze data, in quali-tative data researchers do not have these precise formulae regarding collection and inter-pretation of data. Yin (2009) suggests, using analytical strategy which assures that data is evaluated consciously, misinterpretations are mitigated and profound results are ob-tained. On the basis of existing literature we identified diversified services, factors of di-versification and the demographic role in the didi-versification process. Later on all these three attributes were explored in the context of freight forwarding industry in Bangladesh. Walker, Cooke and McAllister (2008) have developed a model that guides researchers step by step throughout the data analysis process. For the analysis of data gathered from interviews and surveys we have adopted and followed this model sug-gested by Walker et al (2008). Model is described as follow.
Level Step Processes
Description 1 Read and reread the transcripts of each interview while referring to field notes taken during that in-terview. Identify relevant discourse from each par-ticipant’s transcribed interview.
2 Summarize identified relevant discourse from each transcript to produce the core information of each interview. Present summary to participants at a second interview to confirm that the essence of their experience has been captured.
Analysis between
partici-pants to generate themes 3 Generate common themes via microanalysis1. Broad extraction of core information via a criti-cal theory lens to include paraphrased bites of RN buddy experience as well as their relationship with students, facilitators, and so on
2. From broad extraction, generation of themes specific to RNbuddy;
3. Summary of themes generated
4 Points of tension identified from common themes Findings—Critical and
cultural analysis
5 Label standard and divergent meanings using an adaptation of McAllister’s (2001) guidelines for reflection
6 Explore the explicit and implicit meanings looking for connections to broader cultural, historical, and political influences
Table 2: Source Walker et al. (2008)
In our analysis, we have gone through the three stage model of Waker et al (2008). We have collected data sending questionnaire to a randomly selected group of freight for-warders in Bangladesh. Besides collecting data, we conducted interviews with two re-spondents.
In the interview process, we talked with the interviewee generally and proceed step by step ahead. We instigate the respondents asking question based on our questionnaire. We took note of the every detail our interviewee provides us in course of the interview. Then we summarize the data we got from the interviewee and asked them whether the results are consistent with what they replied. Based on the interview and filled up ques-tionnaire from the different respondent, analysis has been done to extract the core infor-mation and a summary of the theme generated. And finally we tried to explore the
ex-plicit and imex-plicit fact regarding the movement direction of the freight forwarders in Bangladesh.
3.9 Credibility of data
Since this study is qualitative hence we are not going to apply statistical tests for the trustworthiness of results. However we still want this study to be as much trustworthy as it is possible. In order to win this confidence of readers of this thesis we have clearly provided and described the research process.
Denzin and Lincoln (1994) argue that credibility or trustworthiness of qualitative re-search is subject of internal validity. Internal validity means the “difference” between what researchers wanted to measure and what they have actually measured. Credibility of a study is higher when there is no difference. We have tried to achieve internal valid-ity because we have interviewed different IFFs in Bangladesh; moreover we tried to cover all the important factors that directly or indirectly influence diversification process of IFFs. It shows that the purpose and goals have been clearly defined.
Denzin and Lincoln (1994) define transferability (generalization) of the study which corresponds to external validity. It means what researchers wanted to measure and what the reality is. We have tried to décor this thesis with external validity. In order to achieve this purpose we have been critically evaluated the data gathered at any step and by any source.
4 Empirical findings
4.1 Survey
In order to get a general picture, regarding demographics of the respondent’s company three simple questions were asked in surveys questionnaire which are, (a) Company Name (b) Number of Employees (c) the year of establishment. The result of all three questions is shown in the table below. From the respondent profile it is clear that Bangladeshi forwarding companies are very small since the maximum number of em-ployees is 80 and minimum number of emem-ployees is 7. The exceptional case here is “Ti-tan Transportation and Ti“Ti-tan shipping Ltd.” who is the only respondent employing more than 50 employees and it is the only respondents who belong to international company. The oldest respondent company in the survey is “Arch Logistics Services LTD” which started operations in Bangladesh in 1989. Whereas youngest of all the respondents is “Gemini Freight” which started operations in 2007. The table below shows the profile of each respondent of the survey.
Number
Company Name
Number of
employee
Since
1 Titan Transportation and Titan Shipping Ltd.
80 2000
2 Gemini Freight 12 2007
3 Freightlines (BD) 27 1996 4 Arch Logistics Services Ltd 21 1989
5 All Freight 12 1998
6 Aero world express limited 35 1994 7 Sonika packers and shippers 7 2005 8 Freight Management Ltd 25 1996 9 Access Freight System Limited 15 1997
Responses from the participants regarding the services they offer in
house outsource or not offer
Type of service Offer In house Outsource Not offer
Labelling 1 1 0 8 Bar coding 0 0 0 9 Cross docking 0 0 0 9 Warehousing 9 3 6 0 Distribution 9 0 9 0 Packaging 9 5 4 0 Palletizing 3 0 3 6 Insurance 6 0 6 3
Track and Trace 9 0 9 0
Electronic Data Interchange 0 0 0 9
Web based application 6 6 0 3
CHB 4 5
NVOCC 3 6
Other 5 2 3 4
Table 4: The status of services provided by the Freight Forwarders in Bangladesh.
Responses regarding mode of transportation
Mode Responses Rank according to revenue generation (1=High, 4=Low)
Air 9 2
Ocean 9 1
Rail 1 4
Table 5: Use of mode of transportation and their ranking according to revenue.
Table 4 shows the results of services provided by IFFs in Bangladesh based on the re-sponses of questionnaire we have summarized the results in table 4 whereas table 5 shows the results multi-mode transportation and their respective ranking according to the revenue generation. Below is the brief description of these tables.
Three of the respondents are providing NVOCCs services to their customers along with forwarding services, while four of respondents are offering CHBs services to their cus-tomers along with basic forwarding services. While two respondents are offering range of services and they think they fall in to the category of “logistics services provider”. Air and ocean freight are the two modes of transportation that all the respondents are dealing with. Rail freight is being offered by just one respondent while road freight by 4 respondents. In one more question respondents were asked to rank the mode of trans-portation from highest revenue generation to lowest revenue generation respectively, all the respondents ranked modes in an order like ocean, air, road and rail. It shows all the respondents generate highest percentage of their revenue from the ocean freight.
Regarding IT related services all the respondents are offering track and tracing services but no one of nine respondents is offering EDI or other IT related services. There are just six respondents who are offering web based applications. In the value added ser-vices warehousing, distribution and packaging are being offered by all the respondents. Labeling is exceptional here because only one respondent is offering labeling
Just six respondents are currently offering insurance and all of them are outsourcing it. No one of the respondents is offering house. All the six respondents who provide in-surance services they outsource it. Besides inin-surance warehousing and in-land trans-portation are among some of the outsourced services. All the respondents think cus-tomer demand and increased competition these two factors are most influential factors of diversification in Bangladesh.
In the survey two open questions were asked in one question respondents were asked to tell about the services added during last five years. Most of the respondent told that warehousing, Tracking and tracing and packaging are some services that have been added into their spectrum of services during last five years. While most of the respon-dents show their interest and willingness to add services like IT related.
All of the respondents have strong national and international alliances. In one question all the respondents were asked if they really think that they are capable of providing one-stop shop to their customers. Seven respondents told that they are capable to
pro-vide such services. And there are two respondents who think that they cannot offer one-stop services.
4.2 Follow up conversation
In the course of our study, we went through two telephonic conversations with the re-spondent of our survey. The first one was the proprietor of “Sonika Packers and Ship-pers”, Muhammad Altaf Hossain Sarkar, who works as a clearing and forwarding agent in Bangladesh. The second one was Muhammed Anayet who works for “Titan Trans-portation and Shipping Ltd”. Both of the respondent provided valuable insight about the freight forwarding industry in Bangladesh.
It is revealed from the conversation with “Sonika Packers and Shippers” that more than one thousand freight forwarders are now active in the market and most of them are small in size and the numbers of employees are few in most of the cases. The number of employee of our interviewed “Sonika Packers and Shippers” is 7 and they are capable of providing services both in air and ocean shipment. Though the ocean shipment is dominant in their business, they earn substantial revenue from air operation. Mr. Sarkar pointed out that the intensity of customer demand has increased and most of the cus-tomers want to avoid the hassle of transportation and warehousing related activities while they do import or export. Increased competition and the changed customer per-spective forced the freight forwarder to adapt the new services along with their typical services. Firms like “Sonika Packers and Shippers” who has limited resources mostly outsource these services for their customer.
Form the conversation, we came to know that “Sonika Packers and Shippers” mainly deals with the goods of various non-commercial organization though they are capable of provide services to commercial customers. During the conversation, we talked to him about the different drivers of diversification of freight forwarding industry and tried to get to know how these drivers are affecting the Bangladesh freight forwarders. He opines that the customer’s orientations play a substantial role on how the freight for-warders will diversify. The type of customer he serves requires packing as a part of their forwarding deal which forces him to adapt this service along with forwarding service. We asked him specifically about the tracking and tracing services which is one of the most sought after services of the customer now a day. In response, he informed us that the airlines and shipping lines provide tracking and tracking services and they can easily trace and monitor the shipment using the service of airlines and shipping lines portal. They don’t use technology like EDI through which better integration with the customers system is possible.
According to him, they are capable of provide door to door, door to port service accord-ing to the customer needs. When our conversation comes regardaccord-ing warehousaccord-ing, we come to know that they provide warehousing facilities in multiple phases of the ship-ment. The demand for warehousing services depends on the nature of the shipship-ment.
Where the customer wants door to door service and the location of port is distant from the customer place, in this case, inland transportation and warehousing both become in-evitable apart from only using the port warehouse. Booking the port warehouse falls in the basic function of freight forwarder but they also provide warehouse facility along with transportation and in both cases they outsource the service.
Then we talked about the CHB services. Mr. Sarkar informed us that they manage these services by themselves. When it comes to the services of NVOCC, he told us that they do not do NVOCC business. As like most of the freight forwarders, they outsource these services from the NVOCC or Shipping lines. We come to know from the discus-sion that they don’t provide value adding logistics services like labeling, bar coding, cross docking etc. but when it comes to insurance and the customer desire it, they out-source it in that time.
Finally we asked him to say something generally about the freight forwarders in Bangladesh. He replied that it could not be said that the freight forwarders in Bangladesh are in the golden era of their time. Competition is getting tougher day by day. Though a lot of freight forwarders have emerged in the market, it will be challeng-ing for them to sustain in the long run.
The second respondent to whom we talked is Mr. Muhammad Enayet who works as a supervisor for Titan Transportation and Titan Shipping Ltd. This company commenced its business in 2000 just as a freight forwarder but in the course of time they expanded their periphery of business in multiple segments and established agents, joint venture and international partners. Mr. Enayet reveals that this company belong to Benison Group which is capable of provide services in multiple segments. Beside their freight forwarding services, they initiated NVOCC and Shipping services and become capable of provide a wide range of services like cargo and vessel handling, container consolida-tion, inland haulage, transshipment etc.
During our conversation, we talked step by step about the different services they offer. He emphasizes the role of warehousing in the changed business world especially to meet the increasing customer demand. He expressed his opinion in this way that the warehouses now a day’s play role in a diverse way just apart from its traditional use of storage. When it comes regarding shipment consolidation, inland haulage, transship-ment, the role of warehouse become inevitable and it can create value in a multi facet way to the customer.
He opines that internationalization, globalization, dispersed production facilities across the globe transformed the nature of business of logistics intermediaries and emphasis the need to form good network to expand the presence everywhere. Through partner, joint venture and alliance, Titan has extended its arms across the globe and become ca-pable of provide multi modal shipment and transshipment services. This form of part-nership enables them to access to some unique form of expertise from the external par-ties which cannot be imitate. These also made them capable of provide “Door to Door” services.
Smooth flow of information is a necessity in the logistics channel and it is IT which can facilitates this service. Mr. Enayet informed us that the customers can interact with them through their web portal. Online booking, tracing and tracking, shipment monitoring is the services they provide through using the information technology. A much more can be done in this field. Better information integration with the customers and the partners certainly gives them competitive advantage and to manage their function efficiently, flawlessly and strategically. They are not providing EDI yet but they know importance of EDI and hence he said in future we will develop EDI system.
When our conversation comes regarding the CHB & NVOCC related things, we come to know that aside of being freight forwarder, they are also registered as an NVOCC op-erator and provide shipping services. Besides providing NVOCC, they also handle with customs affairs. These capabilities of providing services in a multi facet way enabled them to manage the freight forwarding services in a more suitable way. As an NVOCC operator they provide container consolidation, warehouse services, on the other way they also deal with customs formalities which enable them to coordinate the freight for-warding activities in more efficient way and thereby broaden the scope of provide full range of logistics services. According to them, now they are capable of provide “One Stop” and ‘Door to Door’ service and customer can access to all sort of service from a single point and get rid of the hassle of shipment movement.
Ocean is the dominant mode of transportation of Titan Transportation and Titan Ship-ping Ltd., though they are capable of provide service in other types of modes. It is come to known to us from the interview that Sea transportation is the mostly used mode of transportation in the export and import of Bangladesh as most of the import and export are done through “Chittagong Port”. The business in Bangladesh is concentrated in the capital city of Dhaka. From Dhaka to the port city Chittagong, both rail and road portation is used to transport good. We also come to know that containers can be trans-ported from Dhaka to Chittagong port by rail as there is a railway container terminal in Dhaka. Titan uses both types of moods in inland to carry goods. In international arena, they are also capable of provide multi modal services for example they provide trans-shipment facilities in Singapore. The increased customer demand, competition and strategic importance act as a force to use multi modal transportation.
He emphasizes that they are very much concerned to provide more value to their cus-tomers. They provide services in a coordinated way to maximize the customer satisfac-tion. We asked him whether they provide services like cross docking, bar coding, pack-ing, labeling or provide sort of consultation service to their customer. We come to know that they don’t provide those services but they suggest their customer in choosing the appropriate cost effective route.
Describing the diversification process he told us that his company’s radical step of di-versification was motivated by reduced profit margin in basic forwarding services, hence they expanded their business in the realm of NVOCCs and Shipping. The demand from customer side also changed in the globalized world. Most of the firms are now a day’s sourcing, outsourcing and off shoring from different country. The periphery of in-ternational business expanded and it triggers the need for using the up to date informa-tion technology in a way so that better integrainforma-tion is possible coordinating the customer business processes. In order to serve their customer to the utmost level, the need for smooth flow of information has become inevitable. Considering these factors in mind, they have introduced
At the end we asked what, according to him, hampers or facilitates the development of the freight forwarding industry in Bangladesh. He pointed out some interesting facts. In the past, there were no specific legislative regulations under which the Freight Forward-ing business will govern. But recently, the freight forwarders have been brought under a legal frame work though a lot of things yet to be settled. The road and rail communica-tion system has not been upgraded considering the changing need of increased demand. Political unrest, strikes often hinders the operations. Though the government has taken initiative to modernize the port to increase its capacity, still it cannot serve to the opti-mum level of customer demand. Despite of having a lot of setbacks, the freight for-warders are continuing contributing in the development of export and import in Bangladesh.
5 Analysis
Demographics play important role in the diversification process of IFFs. Diversification of IFFs is dependent on demographics of firms (Pope & Thomchick, 1985; Markides & Holweg, 2006). From the survey questionnaire and interviews it is clear that Bangladeshi IFFs are very small in size whereas IFFs in developed countries are small to medium sized firms. This apparent difference in size is rendered in form of response towards diversification, because IFFs in Bangladesh are passive in nature when it comes to initiate diversification process. IFFs in developed countries are more proactive than IFFs in Bangladesh which substantiates the study (Murphy & Daley, 2000a) because ac-cording to them larger firms adopt technology and diversify earlier than smaller firms. In-depth interview form Sonika packers and shippers reveals another important fact that this firm is very small and yet it is surviving by focusing on niche market like noncom-mercial organizations. This empirical finding is partially consistent with the findings of Schwartz (1998). Another attribute of demographic that can affect diversification process is the “age” of firms. Most of our respondents are not older rather they are quite young. Since age of firms is positively correlated with the diversification process (Markides & Holweg, 2006) hence it also provides one justification of passive nature, towards diversification process, amongst IFFs in Bangladesh.
In the context of Bangladesh forwarding industry, drivers of diversification are some-what similar to the study (Markides & Holweg, 2006) which concluded increased cus-tomer demand as the second most influential driver of diversification in UK. From our survey and in-depth interviews it is clear that increased customer demand is most influ-ential drivers in the context of Bangladesh. First interview revealed that there are around one thousand IFFs in Bangladesh and because of this saturation there is in-creased competition in the market. Hence “inin-creased competition” is ranked second most influential driver of diversification in the context of Bangladesh. Increased compe-tition created a need for more professional and better–equipped logistics services Sheffi (1990).
There are some similarities between IFFs of developing and developed countries in terms of CHB and NVOCC services. Four of nine respondents are offering CHB ser-vices in Bangladesh while three of nine respondents are offering NVOCC serser-vices. The same trend has been observed in the UK and US based studies (Pope & Thomchick, 1985; Markides & holweg, 2006) .One of our interviewee, “Titan transportation and Ti-tan Shipping Ltd” is registered as NVOCC, this firm is largest amongst all the respon-dents, which substantiates study of Murphy et al (1992) that NVOCC forwarders are larger than non-NVOCC forwarders. All of the respondents are providing warehousing, distribution and packaging services which is quite surprising trend and it is not consis-tent with the trend of IFFs in developed countries. Although this result is somewhat similar with the IFFs in Hong Kong because according to (Lai, & Cheng, 2004) most of the IFFs are providing warehousing services and those who are not providing they
in-tend to offer it in the near future. Six out of nine respondents outsource warehousing while three of the respondents are offering in-house. Rest of the value added services are not being provided by most of the IFFs in Bangladesh.
All the respondents are dealing in ocean and air modes of transport but just one respon-dent is dealing in the rail freight. Ocean freight generates highest revenue in Bangladesh which is substantiated with the studies (Murphy et al, 1991; Markides& Holweg, 2006). In-depth interviews reveal that due to poor infrastructure rail is not used frequently. Today most of the customers demand tracking and tracing services and IFFs in Bangladesh are providing these services but our empirical findings reveals that all of the respondents are outsourcing these services because IFFs in Bangladesh lag to offer IT related services to their customers. None of the respondents is providing EDI and Man-agement information systems.
Most of the respondents have expressed that they intend to incorporate IT related ser-vices into their spectrum of serser-vices in the near future. This is major difference we have found between IFFs of both developed countries and Bangladesh. Another major differ-ence found is regarding value added services because most of the value added services are not being offered by Bangladesh’s IFFs. Since all the freight forwarders are operat-ing as IFFs all the respondents told that they had strong alliances and they know impor-tance of alliances. Seven out of nine respondents think there is move towards “one stop” concept in the Bangladesh which is consistent with the study (Pope& Thomchick, 1985).
6 Conclusion
Forwarding industry in Bangladesh is not like as it is in developed countries because in US and UK forwarding industry consists on small to medium size firms but very small firms are there in Bangladesh. Since diversification is positively correlated with firm size, so the IFFs in Bangladesh do not actively respond rather they are passive whenever diversification is inevitable. Hence there is a major difference between Bangladeshi IFFs and IFFs of developed countries like US and UK.
Authors of this thesis have found some similarities between IFFs of both developing and developed countries. Most of the IFFs in Bangladesh are offering CHBs, NVOCCs, warehousing and multi-mode transportation (intermodelism) services just like IFFs in developed countries are offering. But in Bangladesh most of the IFFs are outsourcing warehousing which is not exactly the same in US and UK. Bangladeshi IFFs think inter-national Alliances as their valuable asset, and hence they try to build good relation with them.
Bangladeshi IFFs are lagging in the IT and value added services sectors. Some of the value added services are being offered by most of the IFFs in Bangladesh but still there are many other services left to be offered yet. Respondents in interviews and survey have expressed their wish to diversify themselves by adding IT related services and Value added services in their spectrum of services. IT and Value added services are two potential areas where Bangladeshi IFFs will be focusing and investing resources in the future. Most influential drivers of diversification in the Bangladesh market are customer demands and increased competition.
It is clear that IFFs in developing countries are not like the IFFs in developed countries and even the diversification trend is different. Hence we cannot generalize IFFs in gen-eral and diversification process of IFFs in particular
6.1 Limitations
However we have tried to be unbiased during data collection and analysis even then this thesis is not without its limitations. Due to short span of time and geographical distance we could not manage to recruit participants for interview and questionnaire. We believe our sample size is not sufficient and it might not be true representative of population un-der study. Hence results un-derived from small sample size cannot be generalized confi-dently. This thesis addresses most of the issues in the perspective of providers; ship-per’s perspective has been neglected in this study. Empirical findings reveal that “cus-tomer’s demand” is the most influential factor of diversification in Bangladesh hence shipper’s involvement in the study could provide valuable insights in order to under-stand diversification trend in the Bangladesh. Finally there is lack of research in
devel-oping countries and particularly in the context of Bangladesh. Secondary data, if avail-able, would have provided us the basic and deeper knowledge.
6.2 Implications
We hope that practitioners can learn about the diversification trend and they can have better understanding of the forwarding industry of Bangladesh. Two most potential ar-eas of future growth are IT related services and value added services so IFFs in Bangladesh can adopt business strategy that is consistent with this prediction. The study can serve as secondary data for any future research on IFFs in the context of developing countries and Bangladesh in particular. IFFs are context dependent; meaning that their role and strategy both depend on the geographic locations hence IFFs cannot be general-ized, this fact can galvanize researchers to conduct research in this regard.
6.3 Recommendations
There is a need to conduct research because the current literature does not provide suffi-cient knowledge about IFFs in developing countries. Based on the existing literature, in the context of developed countries we cannot understand IFFs of developing countries. Moreover we suggest researchers to adopt longitudinal research which can help them to understand IFFs. Researchers in future should conduct research that covers both per-spective of shippers and providers.
