Supply Chain Integration of LSPs : Real-life insights into how and why logistics companies integrate with their customers

Abstract: Problem: In today’s competitive business world, companies are faced with challenges due to increasing competition, changes in customer demands, new technologies, and globalization. Due to these changes, competition does not take place between single companies anymore but rather whole SCs. To cope with such challenges, more and more companies focus on SCI. Business managers and academics emphasize the potential of integration. However, existing literature shows a gap concerning the integration of LSPs. In this thesis, LSPs are divided into three different types; carriers, intermediaries, and 3PL providers. Due to differences in their business focus and the deriving logics, their way of integrating with customers will likely differ. Hence, based on these differences and the gap in literature concerning the integration of LSPs, this thesis focuses on an investigation of two carriers, two intermediaries, and two 3PL providers. Purpose: The purpose of this Master thesis is to explore how and why LSPs integrate with their main customers. Therefore, motivators and obstacles, advantages and disadvantages, as well as the extent of integration and possible integration approaches are investigated. Method: This qualitative study makes use of a case study strategy which includes six companies. Data is gathered from semi-structured interviews and documentary secondary data. The findings are analyzed using a two-stage process. First, a comparison of the findings for each of the three types of LSP is conducted. Second, a cross-analysis among carriers, intermediaries, and 3PL providers is performed in order to identify similarities and differences. Conclusions: The findings of this thesis reveal integration of technologies and systems, flows, and relationship evaluation as approaches for LSPs. Further, LSPs integrate externally, upstream and downstream in terms of intermediaries and 3PL providers and downstream in regards to carriers, and on different levels ranging from relatively shallow in case of carriers to deep in terms of 3PL providers. Moreover, LSPs are motivated by factors such as competition, differentiation, and business safety, whereas aspects such as resource investments and customer power differences present potential obstacles. Furthermore, LSPs benefit from integration, e.g. due to improved problem-solving ability, expansion of business, and better responsiveness to market changes. In contrast, aspects such as increased customer expectations, the risk of sunk costs, and dependence present potential disadvantages for LSPs.