Quantifying the impact of freight transport performance on the total economic cost of cargo importers *

Freight transport is a core element of global logistics value chains. In order to comply with JIT (just-in-time) principles much effort is spent towards the improvement of logistic performance, both in terms of reducing delivery times as well as the variability in delivery times. In this paper we study the performance of different shipping lines responsible for maritime transport of tyres from a variety of ports of loading to South Africa. We measure the operational performance of all shipping lines and conduct comparisons between those shipping lines operating between the same ports in order to determine the potential for performance improvement. We then proceed to construct a model that translates operational performance into economic cost impact on the operations of the cargo importer. Different models are used for retail and manufacturing operations as the consequences of late deliveries are not identical in both cases. This allows the performance of logistics service providers to be objectively compared in economic terms, with economic cost impact differentials expressed as fraction of the value of landed goods. We also quantify the sensitivity of economic cost with respect to various economic variables, like interest rates and buffer stock sizes.