INTERNATIONAL FREIGHT TRANSPORTATION:A STUDY ON MNC-BASED CHINA-SWEDEN TRADE FLOWS

Abstract: The purpose of this thesis is to offer a general picture of MNCs` freight transportation activities in China-Sweden trade, and to explore the reasons by comparison with related theories. The study has been based on interviews with eleven Swedish companies and two Chinese companies, who have transported their commodities between China and Sweden. Interviews have been used to collect the data that later on has been compared to the information collected by a literature study. The main conclusions are as follows: 1. Although the trade flows between China and Sweden have been keeping increasing in recent years and China has shown stronger ability to export to Sweden, some challenges have emerged from the perspectives of MNC. The first challenge has come from the competition from some other developing countries, which may replace the function of China as production base within some Swedish rooted firms, like Ericsson and Sony Ericsson, since the cost in China has kept increasing. The second competition has come from the East European suppliers, since they have had the cost advantage due to the shorter distance transportation. The third one has been due to the updating production ability of Chinese factories, and therefore the exports from Sweden can be replaced by local supply. However, opportunities have co-existed. The intra-firm trade, like Sandvik and Tetra Pak, may increase, because of the quick development of their Chinese affiliates. And the Swedish products with high quality, like Volvo Construction Equipment, may have good sales in Chinese market in the future, due to the strong demand in China. Additionally, policy changes may be positive or negative to the trade increase, and as a result, the trade trend has been hard to predict, just like the situation H&M has faced. 2. Trade theories have partly worked in this research, but the great heterogeneity of firms together and the changing policies have made the estimation of freight demand to be very difficult. Anyway, to understand the final markets needs and the roles of different foreign affiliates of MNCs could be the key. 3. On the trade type, finished goods have dominated the trade market. Intra-firm trade has not been common among these MNCs, but arm-lengths trade has often been used. The reasons may lie in two aspects. On one side, Swedish rooted MNCs` affiliates in China have usually been defined the role as “local production and local sales”; on the other side, market orientation has seemed to be the main driven force. 4. On transport mode, shipping by sea has been the most frequent choice made by the interviewed firms, then by air. Commodities with high value have usually chosen air transportation; while others have mainly been moved by sea. Besides the value of commodities traded, the physical attributes of commodities, like size, weight and etc., should also been taken into consideration when deciding transport mode. Characteristics of firms have not made a great influence on the mode choice, but the requirements from final customer and the physical attributes of goods have really did. 5. And generally speaking, reliability, price and lead time have to be the key transportation attributes which MNCs interviewed in this research have most concerned on. It can be inferred that on-time pickup and delivery will still be basic and important requirement of firms for carriers, and that a solid and long time relationship between shippers and carriers will still be expected to establish.