Customized Transportation, Equity Participation, and Cooperation Performance within Logistics Supply Chains

Customized transportation has received growing concerns by researchers and practitioners in recent years. Despite the fact that one consignor often holds partial ownership of its carrier within a supply chain, the existing interpretations behind them remain relatively unexplored. Based on the game models, we find that a simple take-or-pay contract is not likely to solve the low-efficient customized production problem, and equity participation mechanism plus simple contract may improve the cooperation performance of customized transportation. In the case of the owner-managed carrier, only when purchasing at par can it be ensured to obtain the socially optimal customization investment, but when purchasing at premium or discount, the optimal partial ownership selected by consignor cannot motivate the carrier to make the most efficient customization investment. With the optimal solutions, we also provide a theoretic foundation for calculating the optimal partial ownership and for interpreting why the interfirm share-holding ratios of the member-firms within the familial-type logistic supply chains are much larger than the ratios within the public-type logistic supply chains. Finally, our results show that the familial-type logistic supply chains may choose more efficient customized production level than public-type logistic supply chains.