typologies of freight forwarding service failures...

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Beykoz Akademi Dergisi,2015;3(2),25-54.Gönderimtarihi:08.10.2015Kabultarihi:16.11.2015Doi:10.14514/BYK.m.21478082.2015.3/2.25-54

TYPOLOGIES OF FREIGHT FORWARDING SERVICE FAILURES AND RECOVERY STRATEGIES

NAZLI GÜLFEM GİDENER ÖZAYDIN(1), EZGİ GÜÇLÜOĞULLARI(2), DURMUŞ ALİ DEVECİ(3)

ABSTRACT

In broad terms, freight forwarders offer their customers certain logistics and shippingservices. The customers who purchase these services are shippers, exporters andimporters.Theoverallaimofthefreightforwardersistosatisfyshippers,andthussustaincompetitiveadvantagesinthelogisticsindustry.Shipperexperience,dissatisfactionandcomplaintsfromfreightforwardingserviceshavenotpreviouslybeenstudiedtoagreaterdegreeintheliterature.Businesstobusinessservicequalityresearchhasgrownasaresultofincreasedattentiontoqualityforshippersrecently.Theoverallaimofthisstudyistoanalyzeservicefailuresencounteredandservicerecoverystrategiesemployedinfreightforwardingindustry.Theanalysisalsocoversthecausesofsuchfailures,theactionstakentorecoverservicefailures,andtheeffectsoftheseactionsontherelationshipbetweentheshippersandfreightforwarders.Inordertoreachthisaim,CriticalIncidentsTechnique(CIT),ameansofmeasuringtheperceivedservicequalityandservicefailures,isused.Atotalof100criticalincidents;50fromshippersand50fromfreightforwardersrelatedtoservicefailuresandrecoveriesinthefreightforwardingindustrywereanalyzed.

Theoverallfindingsrevealedthatthemostprevalentservicefailuresintheforwardingindustry from the viewpoint of shippers are related to documentation, informationandcommunication,operations,equipment,booking,anddeliveryservices.Theresultofthestudyalsorevealedthatapologizingfromshippers,compensatingall lossesanddamages and paying back certain amount of freight costs are most often employedrecoverymethodsagainstfreightforwardingservicefailures,andaboutinonefourthofsuchcasestheencountersare likelytoweakentherelationshipbetweenshippersandfreightforwarders.Fromthefreightforwarderemployees’pointofviewservicefailuresarecategorizedintosevenmaingroups:failuresinoperations,documentation,booking,information and communication, problem shippers, delivery and equipment. Servicerecoverystrategiesemployedbythefreightforwardersfromtheemployees’pointofview

1Dr,DokuzEylülUniversity,MaritimeFaculty,DepartmentofLogisticsManagement,[email protected],[email protected].,DokuzEylülUniversity,MaritimeFaculty,DepartmentofMaritimeBusinessAdministration

OLGU SUNUMU

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arerankedascompensatingallloses/damages,givingconvincingexplanations,changingsuppliersandcarriers,apologizing,correctingbillofladingandinvoicing.Findingsfromtheserviceemployees’pointofviewalso foundedthatonefifthof relationsaftertheservicefailuresandrecoverystrengthenedtherelationsbetweentheshipperandfreightforwarder.

Keywords: Service Failures, Recovery Strategies, Freight Forwarding Services, CriticalIncidents,BusinesstoBusinessServices.

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NAVLUN SEVKİYATI HİZMET KUSURLARI VE GERİ KAZANIM STRATEJİLERİNİN TİPOLOJİLERİ

ÖZ

Taşıma işleri komisyoncusu işletmeler,müşterilerine belirli lojistik ve deniz taşımacılığıhizmetlerisağlayanişletmelerdir.Buhizmetlerisatınalanmüşterileryükleten, ihracatçıve ithalatçılardır. Taşıma işleri komisyoncularının genel amacı yükletenleri memnunederek, lojistik sektöründe sürdürülebilir rekabetçi avantaj elde etmektir. Yükletendeneyimleri, taşıma işleri komisyoncusu ile ilgili memnuniyetsizlik ve şikayetleri daha önceliteratürdepekgenişyeralmamıştır.Butürçalışmalaraolanilgi,yükletenlerinkaliteanlayışlarınaolanilgininartmasınabağlıolarakartmaktadır.Buçalışmanınamacıtaşımaişleri komisyoncularının ve müşterilerinin yaşadıkları hizmet hatalarını ve uygulanantelafiyöntemlerinianalizetmektir.Ekolarak,yaşananhizmethatalarınınnedenleri,telafiiçinalınanönlemlervebuönlemlerinyükleteniletaşımaişlerikomisyoncusuarasındakiilişkiye etkileri de çalışmada yer almaktadır. Bu amaçlara ulaşmak adına algılananhizmetkalitesiniölçmekadınaKOT(KritikOlayTekniği)kullanılmıştır.Toplamda,elliadetyükletenlerden,elliadettaşımaişlerikomisyoncularındantoplanmışolan100adetkritikolayanalizedilmiştir.

Bulgular ışığında, yükletenlerin bakış açısına göre en sık rastlanan hatalarındokümantasyon, bilgilendirme ve iletişim, operasyon, ekipman, rezervasyon ve teslimhizmetlerinde yaşandığı belirlenmiştir. Ek olarak, yükletenlerden hata sonrasında özürdilemenin, tüm hasar ve zararı tazmin etmenin ve navlunun bir kısmını karşılamanıntaşıma işleri komisyoncuları tarafından en sık uygulanan telafi yöntemleri olduğu vebu tür olaylar sonrasında dörtte bir oranla aradaki ilişkinin zayıfladığı ortaya çıkmıştır.Taşımaişlerikomisyoncusubakışaçısınagöreisehatalar:operasyonel,dokümantasyon,rezervasyon,bilgiveiletişim,yükletenlerleilgilihatalar,ekipmanveteslimhatalarıolaraksınıflandırılmıştır. Taşıma işleri komisyoncusu bakış açısından en sık uygulanan telafiyöntemleri ise tümzararvehasarın tazminedilmesi,açıklamayapılması, tedarikçilerindeğiştirilmesi,özürdileme,konşimentovefaturalarındeğiştirilmesiolaraksıralanmıştır.Taşımaişlerikomisyoncularınınbakışaçısındaniseyaşananhizmethatasıveuygulanantelafistratejisisonrasıbeştebiroranlataşımaişlerikomisyoncusuveyükletenarasındakiilişkikuvvetlenmiştir.

Anahtar Kelimeler: Hizmet Hataları, Telafi Stratejileri, Üçüncü Taraf Lojistik Hizmetler,KritikOlaylar,İşlemelerarasıHizmetler.

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1. Introduction

Service failures and recovery strategies are frequently considered as an inevitableconsequenceofserviceprovision(Hessetal.,2003)duetothesimultaneityofproductionandconsumption,andinvolvementofcustomersintheproductionofservice.Since1990sliteratureonservicesemphasizesthe increasingneedtoanalyzeservicefailures, learnfromserviceproblemsandincreasetheunderstandingofhowservicerecoverystrategiesaffectsthecompany’soverallbusinessperformanceanditsfuturerelationshipswiththeircustomers.Analyzingtheservicefailureshelpdeterminethebasicfactorsleadingtotheevaluationofthecustomersintermsofcausingsatisfactionordissatisfaction.Theservicerecovery researchhasbeendevelopingnon-stopover thepast20yearswith theriseofserviceeconomiesandcustomer-focusedstrategiesutilizedbyagrowingnumberofcompanies(JohnstonandMichel,2008).Thewholeideabehindtheimportanceofservicefailuresandrecoverystrategiesistheirimpactontherelationshipbetweenthecompanyanditscustomers.Servicefailuresmaycausedestabilizationoflong-termrelationshipscausingcustomerstoreconsidertherelationshipmovingawayfromthebusiness-as-usualmindset (vanDoornandVerhoef,2008).Therefore, thecarefulexaminationof servicefailuresandprovidingeffectiverecoverystrategiesarehighlysignificantfordevelopingandimprovingrelationships.

Although service failures and recovery strategies were studied in various businessto consumer markets the literature on the service failures and recoveries in freightforwardingindustryislimited.Thelevelandthequalityoftheservicecustomersreceivehaveahugeimpactonthecompany’sabilitytoretaincustomersorevenattractingnewones, therefore, any failure in logistics customer service and its effects on theoverallperceptionsofthecustomershouldnotbeoverlooked(Oflaçetal.,2012).

Service failures can arise anywhere and may be encountered even in the best offreight forwarding companies. Preventing occurrence of service failures andmistakesanddeveloping thecompetence to recover inaprofessionalmanner is crucial for thesuccessof the freight forwardingcompanies.Hence, theobjectof the study is freightforwarders. The freight forwarder is a third party logistics provider, also referred tomultimodal transport operator. Forwarders generally do not own transport vehicles,they dealwith various carriers transportmodeoperators and carriers in supply chaininproviding logisticsservices. Inbroadterms, freight forwardersoffer theircustomerscertainlogisticsandshippingservices.Thecustomerswhopurchasetheseservicesareorganizationalbuyerssuchasshippers,exportersandimporters.Theoverallaimofthefreightforwardersistoofferqualitylogisticsservicesandsatisfyshippers,andthussustaincompetitiveadvantagesinthelogisticsindustry.Recently,freightforwardersaremulti-function intermediary andorganizer of logistics service, concerningnot only selecting

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carrier,butalsodealingwiththecustoms,warehousing,documentshandling,andotherrelatedissuesbeforecargowasdeliveredtofinaldestination.Themaintasksoffreightforwarder are arranging transportation, border crossing of cargoes, advising shippingsolutionandchoosingthebestshippingmethodandcarrier,bookingspacefromcarrier,supervisingloading/unloading,(de)consolidationofshipments.Theservicesprovidedbyeach forwarderarevariousdependingonthecompanysize. Insomecases, forwarderalsoactsasacarrierinpartofthecargomovement(KulaDeğirmenci,2012:182).

Thelogisticsservicequalityhasbeenexaminedthroughreliability,timelyresponsiveness,accuracyindocumentation,accuracyininformation,servicefulfillment,problemsolvingabilityandempathydimensionsaswell (Stewart,1995;Beamon,1999;Gunasekaranetal.,2001;Mentzeretal.,2001;PanayidesandSo,2005). Inaddition,Bienstocketal.,(1996)foundoutthatthemostimportantdeterminantsofphysicaldistributionarerelatedwiththetimelinessandtheavailabilityoftheservice.Moreover,logisticsspecificservicefailureshavebeenidentifiedas:wrongdelivery,lostshipments,documentationerrors,communicationproblems,customs,stuffing,unloading,containertracking,portoperations, quoting rates, booking, delay, damage, timeliness, financial, equipment(Deveci,2002).Finally,itshouldbehighlightedthat,theoccurrenceoftheservicefailuredoesnotnecessarilyreferto logisticsserviceprovider’s inadequacy;eventhebestofserviceprovidersmakesmistakesandevenflawlessserviceis impossiblethewaytheserviceproviderreactstocustomersdissatisfactioniskey(Durvasulaetal.,2000).

Themainpurposeofthisstudyistoanalyze,classifyandinterpretservicefailuresandrecovery strategies encountered in freight forwarding industry, especially the causeofthefreightforwardingservicefailures,courseofactions,andtheeffectsofservicefailuresandrecoveriesontherelationshipbetweentheshipperascustomerandthefreightforwarderasserviceproviderwereexploredbythisresearch.

The reminder of the study is organized as follows. Section two reviews the literaturerelated to service failures and recovery strategies both in business-to-consumer andbusiness-to-business markets. Section three introduces the research methodology.Sectionfourprovidestheanalysisandresultsofthestudy,andtheconclusionpresentssomeimplicationsofthefindings,limitations,anddirectionsforthefutureresearch.

2. Literature Review on Service Failures and Recovery Strategies

Serviceresearchersdescribeservicefailuresastheactivitiesthatoccurwhencustomerperceptions of initial service delivery behavior fall below the customer’s expectations(Zeithamlet.al.,1993;Chouetal.,2009:238).Servicefailureisconsideredasaconflictbetweencustomersandserviceprovidersintermsoffairnessofresolutionprocedures,

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theinterpersonalcommunicationandbehaviors,andoutcomes(Tax,etal.,1998).

ClassificationofservicefailurecategoriesbyBitneretal. (1990) iswidelyadoptedandextendedwithintheservicefailureliterature.Servicefailureshavebeencategorizedbythemaccordingtoemployeebehaviorswhenfailuresoccur,relatingtothecoreservice,requestforcustomizedserviceandunexpectedemployeeactions.Theyalsoemphasizedthe importance of recovering the service failures such as acknowledging a problem,explainingfortheproblem,makingapologiesandcompensations.Asubsequentstudyby Bitner et al. (1994) included a typology of problematic customers in their failureclassification.

Kelleyetal. (1993)determined15typesofservicefailure intheretailing industryandclassified themunder the3major groups identifiedbyBitner et al. (1990). They alsoanalyzed12typesofrecoverystrategiesintheirstudy.FurtherJohnston(1995)classifiedsourcesoffailureinbankingindustryasattributabletotheorganizationorthecustomers.Armisteadetal.(1995)offered3typesofservicefailure:serviceprovidererror,customererror, or associated organizational error. Edvardsson (1992) analyzed the sources ofservicebreakdowninairlineindustryandclassifiedthemostcommoncriticalincidentsintheviewofbusinesspassengersandserviceemployees.Helaterexploredthecausesof customer dissatisfaction in public transportation by critical incident method (CIT).LewisandMcCann(2004)focusedonservicefailureandrecoveryinthehotelindustryand assessed the types andmagnitudeof service failures encountered andevaluatedtheservicerecoverystrategiesusedbyhotels.Michel(2001)foundthattheprobabilityoffailureandthedegreetowhichrecoverycanledtosatisfactionisdependedontheindustry. Hence service failures and recovery strategies need to be need in differentindustriessuchasfreightforwardingandshippingindustry.

Most previous studies concerning service failure and recovery focus on the business-to-customer market, but several researchers extend this approach to the business-to businessmarket. Lockshin andMcDougall (1998) studied critical incidents in winedistributionservicetoevaluatethesupplier’srecoverystrategy.Theirfindingsrevealthatservicefailuresinindustrialmarketsaremainlyincoreorserviceoutcomeissues.Thisisdifferentfromservicefailureinconsumermarketswhichismorerelatedtotheprocessdimension.Chumpitaz andPaparoidamis (2004) suggest thaterrors anddelaysduringtheserviceexchangecancausecustomerdissatisfactionintheinformationtechnologysector. Durvasula et al. (2000) examine service recovery and satisfaction with oceanshippingindustry,exploringthatservicerecoverymethodsareassociatedwithcustomersatisfactionlevelsinbusiness-to-businessmarket.

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Reviewoftheservicefailureandrecoveryliteratureshowsthattherearetwodifferentmajor typesof failureswhichareoutcome failureandprocessor interactions failure(Grönroos,1988;Parasuramanetal.,1991;Keaveney,1995;Smithetal.,1999;Michel,2001; Johnston and Michel, 2008; Swanson and Hsu, 2009). The occurrence of anoutcomefailureisworseforthecompanysinceitisacorefailureandimplicatesahigherriskof losingthecustomerwhencomparedtoaprocess failure.Theoutcomefailuremotivatestheserviceprovidertoputmoreeffortintotherecoverythanprocessfailure(Chouetal.,2009;Bitneretal.,1990;Hoffmanetal.,1995;Keaveney,1995;MohrandBitner,1995;Grönroos,1988;Parasuramanetal.1985;Smithetal.,1999).Theoutcomefailureiswherethecustomerdoesnotreceivetheservicepaidfor,whereastheprocessfailurereferstoadisruptionwhilstreceivingtheaforementionedservice(Smithetal.,1999). Analysis of service failures in the literature founded that the customers tendtobemoresatisfiedwithprocessfailurethanoutcomefailures.Thebuyerinbusinessto business services ismainly concernedwith theoutcomesor resultswhichmeanswhetherpromisedservicesreceivedornotbyintheoutcome-basedservicessuchaslogisticsservices.

Theservicefailureliteraturealsoconsidersservicefailuremagnitude(BoltonandDrew,1992;Bitneretal.,1994;Zeithamletal.,1996;Bolton,1998;Smithetal.,1999;Michel,2001;Zhuetal.,2004)andfrequency(McColloughetal.,2000;Michel,2001)inadditiontoservicefailuretype(Bitneretal.,1994;Zeithamletal.,1996;Bolton,1998;Smithetal., 1999; Craighead et al., 2004; Swanson andHsu, 2009). Service failuremagnitude,severityandcriticalityallrefertotheperceptionofthecustomerontheservicefailureandhowthecustomerevaluates the failure.Theservice literaturehasunderlined thestrongnegativeimpactoffailuremagnitudeoftheservicefailureoncustomer’sfuturerelationshipwith the serviceprovider (Bell andZemke,1987;BerryandParasuraman,1991).Themoreseveretheproblemisperceived;thegreaterwillbethelossincustomer’spointofview(Weunetal.,2004).Severeservicefailureshavebeenidentifiedtodecreasethe likelihoodthatacustomerwilldesiretocontinuetherelationshipwiththeserviceprovider(Keaveney,1995;Craigheadetal.,2004).

Service recovery strategy refers to the actions taken in response to a service failure(Grönross, 1988).Recently, the servicemanagement literaturehas focusedondiverseaspects of service recovery (Craighead et al., 2004). Service literature indicates threetypesof recoverymethods includingsymbolic recovery,utilitarian recoveryandmixedrecovery(JohnstonandMichel,2008;SwansonandHsu,2009;BradleyandSparks,2012;McDougall,2000;Zhuetal.,2004).Symbolicrecoverystandsfortherecoverythatdoesnotyieldaneconomicoutcomeforthecustomerandincludessymbolicexchangessuchasanapology.Itisstatedthatprocessservicefailuresrequireasymbolicservice(Smith

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etal.,1999).Utilitarianservicerecovery is requiredwhentherehasbeenanoutcome(core)servicefailuresincetheoutcomeservicefailurecreatesaneconomiclossforthecustomer(Smithetal.,1999).Mixedservicerecoveryrepresentstheuseoftwoormoreoftheabovementionedservicerecoveries.Theserecoveriesmaybeonesymbolicandoneutilitarianortwosymbolicandoneutilitarianetc.Themainpointisthatbothrecoverytypesareutilizedwithinonerecoveryeffortsimultaneouslyandthechoicedependsonthetypeoftheservicefailureathand(Chouetal.,2009).Serviceliteraturealsoindicatesthatbothservicefailuresandservicerecoveriesstronglyinfluencecustomerrelationships(vanDoornandVerhoef,2008)andserviceprovidersattempttodecreasethenegativeemotionsthrougheffectiverecovery(ÖzgenandDumanKurt,2012).

Although the relevant literature has widened the theoretical connections of servicefailure and recovery strategies in different service industries it fails to address, usingempirical evidence, the issues of failure types and recovery strategies in logistics andfreightforwardingindustryinbusiness-to-businessmarket.

Service recovery is important in the logistics industry due to the industry’s trendtowardproactiveapproachtoservicefailure(Brinsmead,2007). Itmustbenotedthatbothbusiness to consumer andbusiness tobusiness contexts are similar in customerexpectations and perceptions relatedwith the failure that in a sense that it’s still anindividualmakingthedecisionsonthecustomersendwhetheritisforthemselvesorforthecompanytheyworkfor (Chouet al.,2009).However, itmustbenotedthatwithinthebusinesstobusinessservicesperspectiveservicefailureshaveahigherimpactsincethey usually createmajor economic consequences (vanDoorn andVerhoef, 2008). Inaddition,thedifferencesbetweenbusinesstoconsumerandbusinesstobusinessserviceenvironmentsinfailurerecoveryperspectiveare:businesstobusinessfailurecouldhavegreaterchanceofdamagesinceitcanaffectboththecompanyandthecustomersofthebuyingcompany,the involvementofmultiplecustomersonthebuyercompany’sside,theperceptionoffailureandtherecoveryisgreatlyaffectedbytherelationshipbetweenthebuyercompanyandthesuppliercompanyandfinallytheoperationalfeaturesandlegallimitsinbusinesstobusinesstransactionsaffectcustomersatisfactionandthuslongtermcontractsbetweenparties(FloresandPrimo,2008).

Thelogisticsservicequalityhasbeenexaminedthroughreliability,timelyresponsiveness,accuracyindocumentation,accuracyininformation,servicefulfillment,problemsolvingabilityandempathydimensionsaswell(Stewart,1995;Beamon,1999;Gunasekaranetal.,2001,Mentzeretal.,2001;PanayidesandSo,2005).Thestrengthofthetiebetweenthelogisticsserviceprovideranditscustomerhasanimpactontheeconomicoutcomesofthecompany.This isduetotheserviceisbeingprovidedinacoordinatedmannerandeventually leadingtohigher levelsof logisticsservicequality.Theservicequality

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andexchangeprocessesaredirectly affectedby the informationexchange, accuracy,flexibilityandsolidaritydue to the strengthof the relationshipbetween the logisticsserviceproviderand its customer (PanayidesandSo, 2005). It is clear that freightforwarders as third party logistics service providers should enhance the perceivedqualityofshippersinordertoachievehighercustomersatisfactionratesandensureanincreaseintheirmarketshare(Qureshietal.,2007).

Performances of service providers, service failures and recovery strategies in freightforwardingandlogisticsindustryareverycrucial.Becauseshippersoutsourcetheirlogisticsactivitiesanddependonserviceproviderssuchasfreightforwarders,thirdpartylogisticscompaniesandcarrierstomanageabundleofservices.Ifthefreightforwardersfailstoperformthecomplexlogisticsactivitiessuchasbooking,documentation,informationandcommunicationaccuratelyorfailstodeliverthegoodsontimeandsafely,theshippermaybeaffectednegativelyintermsoflostsalesandbureaucraticprocessestocorrectit.Mostshippershaveencounteredmistakesanderrorsduringthecourseoftheirlogisticsservicebuyingexperiences.Freight forwardersoffering logisticsservicesspendagreatdealoftimeandefforttosolveshipperproblems.Hence,whenaserviceproblemoccurs,itisnecessaryforfreightforwarderstosolveandhandletheclaimsthroughtheeffectiverecoverystrategies.

3. Research Methodology and Model

Businessandmarketingresearchhaveappliedthecritical incidenttechnique(CIT) inawidevarietyofcircumstances(Kelleyetal.,1993:430)andfoundedthatbothinbusinesstoconsumerandbusinesstobusinessservicesCITwasausefulmethodindiscoveringserviceproblemsandrecoverystrategies(Bitneretal.,1990;Bitneretal.,1994;Hoffmanetal.,1995;LockshinandMcDougall,1998).Thiswastakenasanopportunitytoexaminetheservicefailuresandrecoverystrategiesinfreightforwardingserviceasabusinesstobusinessservice.Therefore,thisstudyemployedtheCITinanalyzingservicefailuresandrecoverymethodsinfreightforwardingindustry.

CITisasetofproceduresenablingtocollectandclassifycertainobservationsonhumanbehaviorssoastohelpfindsolutionstovariousproblemsencounteredincertainactions(Bitneret.al.,1990).ItwasdevelopedandoriginatedintheUSAduring1940’sbyFlanagan(1954)bypointingouthowithadbeenusedinrecruitingcandidatepilotsfortheAmericanAirforce.Inservice-relatedresearch,manyofthoseonservicequalityandservicefailuresseemtohaveusedCIT.ThefindingsofvariousresearcheshaveencouragedtheuseofCITforspecificpurposesinvolvingthemeasurementofqualityandtrackingtheservicefailuresandrecoverystrategiesinagreatdealofservicetypesinmanycountries(Stauss

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andWeinlich,1997;Edvardsson,1990,1992,1998;Lundberg,2011).

Ameansofmeasuringservicequalityanddiscoveringservicefailures,CITisthoughttodefineserviceencounters,providedetailedinformationaboutservicefailures,andhelpinvestigateandbetterunderstandtosituationswherequalityweaknessesexist.Criticalincidents may refer to “specific unfavorable incidents” and are special, problematic,unpleasanttothecustomerswhohasnotgotwhattheyexpected(Edvardsson,1998).Inthisstudyservicefailuresencounteredinforwardingserviceswerereferredascriticalincidents.Shippersascustomersoffreightforwardersexpresstheirowndissatisfactionconcerning a particular freight forwarding service which means that CIT is based onperceptions.CITisbasedonsuchexpressions,andexperiencestakenasdata,andtheirclassification. This means that CIT is not only concerned with collecting informationaboutthemostproblematicaspectsofservices,butitisalsoconcernedwithdevelopinga systemof interpreting and classifying this information. Inotherwords, through thistechnique, a preliminary idea is gained and going further, the content is acquired,whichwouldhelp interpretation,andeventuallymoredetailedacquisition is reached.Emphasizingtheimportanceofinterpretationmeansthattheresearcherhasadoptedakindofphenomenalapproach.Thephenomenalapproachimpliesthattheactoracquiresthe social phenomena through his/her own perspectives (Edvardsson, 1992). Manypeopleenjoytalkingabouttheirexperiencesagainandagainabouttheservicestheyareprovidedwith.CITsimplyputsthisprocessintoaformaldimensionthroughwhichtheexperiencesarerecorded,analyzed,andeventuallycertaindataarecollectedandmadeuseofonthewaytoimproveservicequality.

Whilebeingusedinclassifyingthecustomersatisfyinganddissatisfyingincidents,CITarealsousedincollectingandclassifyingunfavorablecriticalincidentsonlysuchasservicefailures.Edvardsson(1992;1998)studiedonlyontheunfavorablecriticalincidents(servicefailures)encounteredinairwayandpublictransportservices.Likewise,Hoffmanetal.,(1995)collectedandclassifiedtheservicefailuresandrecoverystrategiesencounteredin restaurant services. LockshinandMcDougall (1998)analyzed theproblemsbringingaboutcustomerdissatisfactionbyCITinwinedistributionservices:

The CITmethodology involves 6 steps (Flanagan, 1954; Keller, 1993; Hoffman, et al.,1995);

1. determine the general aims of the activity (determined in the introductionsection)

2. formulateplansandspecificationsforthecollectionsofcriticalincidents3. collectthedataoncriticalincidents4. analyzethedatainordertoidentifypatterns

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5. classifytheincidentsinthevariouscategories6. interpretthedataanddrawtheconclusions

In this research, thecritical incident isdefinedonlyas thespecificunfavorablecriticalincident,servicefailureorproblemthathas,inthelastoneyear,broughtaboutcustomerdissatisfactionwithintheinteractionbetweencustomersandfreightforwardingserviceprovidingemployees.Whiledetectingtheservicefailures,theexperiencesofboththeshippers as customers and freight forwardersweremade use of. Theywere asked torememberanincidentindetailandrespondtotherelevantquestionsaccordingly.Bothrespondentswereaskedtorememberacriticalincidentandexplainit.Later,theywereaskedaboutthereasonsunderlyingtheoccurrenceofthisfailureandtheywereaskedtoratethemagnitudeandfrequencyofthefailurefromonetoten.Respondentswerealsoaskedabouttherecoveryattemptandhowtheyratedtheeffectivenessoftherecoveryagainonatenpointscale.Finally,thequestionnaireconcludedwithgettingrespondentsopiniononhowtherelationshipwasinfluencedbythefailure.

This research wherein freight forwarding service failures are detected, the researchmodelusedbyEdvardsson(1992;1998)hasbeenadopted.Thismodelputsforwardastandardizedformforresearchingtheservicefailuresandrecoveries.Inthismodel,thequestionsdirectedtotheparticipantsimplyinvolve

thecauseofthecriticalincident,thecourseofactionstowardsthecriticalincident,andtheresultanteffectsofthisreactionontheinteractionbetweenthecustomerandtheserviceprovidingcompany.

CauseoftheFailure

-TypeoftheFailure

ResultoftheFailure

-ImpactontheBusinessRelationshipBetweenFreightForwarderandShipper

CourseoftheFailure

-ActivityofFreightForwarder

- ActivityofShippers

Figure 1: Research Model

Thecause,courseandresultmodelofEdvardsson(1992)wasutilizedinthisstudy.Thecauseof the failure indicates the typeof the failure, thecoursephase focuseson theactivityoffreightforwardersandshippers,andfinally,theresultsunderlinetheimpactofthefailureonthebusinessrelationshipbetweenparties.

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a. Sampling and Data Collection

InCITthedataconstitutethestoriesoftherespondentsorparticipants.Theparticipantsarethecustomersandtheserviceemployees,onlyactorswhocanreleasetheirexperiencesconcerning the service failures and problems encountered in the service process. AnumberofdifferenttechniquesfordatacollectionhavebeenemployedinCITstudiessuchas (student) interviewers,author interviewersandother research instrumentssuchasself-expressivemethods,mailorinternetbasedsurveys,groupmeetings(Gremler,2004;Öztürk,2000).Inthisstudy,theindepthinterviewmethodwasusedindatacollectionbyusingstructuredinterviewform.Eachinterviewtookapproximately30minutes.Theshippersascustomersoffreightforwarderswereindividuallyaskedtorecallanddescribeservicefailurestheyencounteredhighlightingthecause,courseandresultofeachoftheincidents.Theywerethenrequiredtogivefurtherinformationabouttheunclearpartsofeachstory.Theexperiencesimplythatthismethodwouldworkwellparticularlyincaseofunclearcriticalincidentsasitwouldallowtocollectdetailedinformationinordertosecurethevalidityoftheresearch,theconceptof“criticalincidents”wasclarified.

Although there exist no strict rules enforced in collecting critical incident techniquesaboutthenumberofincidentstobeinvolved,it issuggestedthatthemorethebetterinfavorofreachingreliableanalyses.Preciselystating,whilearound50incidentswouldbeacceptableintermsofgainingreliableclassifications,collectingaround100incidentswouldenablemuchreliablecategories(Gremler,2004).

Reachingtherightnumber,however,wouldstillvarydependinguponthefeatureoftheanalysis.Forinstance,researchersontheorganizationalservicemarketswouldrequirefewerincidentsthanwouldthoseoncustomerservicemarkets.

Judgmentalsamplingwasusedintheselectionofthesampleforthestudy.Thecriticalincidents related to freight forwarding service failures and recovery strategies werecollectedfromtheshippersincludedinthelistofthememberstoAegeanRegionUnionof Exporters and from the freight forwarders included in the registry records of theAssociation of International Forwarding and Logistics Service Providers in 2011. As aresult,thetotalnumberofthecriticalincidentsrelatedtoservicefailuresandrecoveriesinfreightforwardingcollectedis100;50incidentsfromshippersand50incidentsfromfreight forwarders. Both theshippersand freight forwarderswereeachasked togiveinformationaboutonlyonecritical incident includingtheservicefailuresandrecoverystrategies theyencountered.Shippersand freight forwarderswereaskedtorecallandrecountindetail,inhis/herownwords,aservicefailureorerrorhehadencounteredinfreightforwardingservices.

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b. Reliability

CITisconsideredtobeinthesamegroupwithinductiveclassifyingprocedures(Öztürk,2000). Inthistechnique,groupsorcategoriesareformedbasedontheanalysisofthecasesorstoriesexplainedbytherespondentsthemselvesratherthanstatisticalaspects.Based on the contents of the cases expressed, the similar incidentswere categorizedin certain groups through a step-by-step classifying process. The researcher in CIT isexpectedtoreachtruth,consideringeverysmallpartofthecasesexpressed.Hence,inthisresearch,thekeywordsandphrasesofeachcasewereusedtoformcertaincommonthemes.Theanalysisofthedatacollectedwascarriedoutthroughtwosteps:Inthefirststep,aseriesofcategorieswhichwould includecritical incidentsweredevelopedanddefined.Inthesecondstep,inordertofindrelativefrequencyoftheincidentsineachcategory,thecriticalincidentscollectedwereclassifiedinthesecategories.

Indataanalysis,firstconsideringthecommonpointsoftheservicefailuresexpressedbytheshippersandfreightforwarderswerecategorizedandclassifiedinthesecategories.Whileclassifyingtheincidents,theywerereadagainandagaintofindoutthecommonpoints.Followingthisclassification, thegroupsweredefined indetailsand inordertoreachreliablegrouping, the incidentswereagaincategorized.Eventually,well-clarifiedcategorydefinitionsweregained.

The critical incidents in this study were classified by two independently researchers.Where differences occurred, they were resolved through discussion. At least 80%agreementoneachcategorywasconsideredtobesatisfactoryforthereliabilityoftheclassifyingsystem.Aftertheresearchershavereadmanyservicefailureincidents,theysawthecommonpointsmoreclearly,andthentheexactstructureofthecommonpointswasexplored,whichwouldformthebasefornamingtheincidentsineachcategory.Theclassificationtaskwasrepeatedandrevisedagainandagainuntilmakingsurethatalltheincidentsinonecategoryaremorealikewithoneanotherthantheywerewiththeothersinanothercategory.

4. Analysis and Results

Thefindingsoftheresearcharetwo-fold:Analyzingthefreightforwardingservicefailuresfromtheshipperperspectivesandanalyzingtheservicefailuresfromtheviewpointsofthefreightforwarders’serviceemployees.Thefindingswerehandledincompliancewiththe researchmodelmentioned in the researchmethodology section. In the followingsectionfirstsippers’experiencesandperceptionswereanalyzed,thenfreightforwarderemployees’experiencesrelatedtoservicefailuresandrecoverystrategieswereanalyzed.

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a. Results-Shippers

Theanalysisandresultsofsortingandclassificationprocessforthedatacollectedfromshippersarereportedbelow.Firstthefailureclassificationschemebasedonthecauseofthefailureisgiven,followedbythepresentationofthetypesofactionstakenbyboththeshippersandfreightforwarders.Third,theeffectsoftheservicefailuresandrecoveryactionsontherelationshipbetweentheshippersandfreightforwardersarepresented.

i) Cause

The classification of failures in freight forwarding services according to the shippers’experiences andperceptions is given in Table 1. The failure sorting and classificationresultedin6uniquemaintypesoffailures.

The most prevalent and common type of service failures in the view of shippersresearched are related to documentation (28%) and, information and communication(26%).Thesub-categoriesofdocumentationfailuresrankedonthefollowingscale:billofladingerror(5),invoicingerror(5),anderrorsincustomsdeclarations(4).Whenitcomestoinformationandcommunicationfailures,servicefailuresareoftentheresultoferrorsininformingshippers(9).Lackofemployees’professionalknowledgerankedsecondinthiscategoryofservicefailure.Shippersgenerallyusefreightforwardersfortheiradvice,expertise and knowledge related to the international trade and logistics. Failure toprovideprofessionalknowledgebytheforwarderemployeemaycauseservicefailures.

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Table 1: Failures in Freight Forwarding Services: Shippers’ Point of View

Failure TypeCount

(N)

Frequency

(%)

Magnitude of Failure*

Group 1: Documentation failures

1B.Billofladingerror 5 10 6.61C.Invoicingerror 5 10 7.81D.Customsdeclarationerror 4 8 8Group1Total 14 28 7.46Group 2: Information and communication failures

2A.Customerinformationerrors 9 18 8.42B.Lackofemployees’’professionalknowledge 3 6 92C.Communicationfailures 1 2 9Group2Total 13 26 8.8Group 3: Operational failures

3A.Cargohandlingerror 4 8 9.63B.Unreliabilityoftransittime 2 4 8.53C.Pickuperror 1 2 8Group3Total 7 14 8.7Group 4: Equipment failures

4A.Damagedanduncleancontainers 4 8 9.74B.Unavailableequipment 3 6 5Group4Total 7 14 7.35Group 5: Booking failures

5A.Bookingerror 6 12 8.3Group5Total 6 12 8.3Group 6: Delivery failures

6A.Latedelivery 2 4 8,56B.Deliverywithoutbilloflading 1 2 10Group6Total 3 6 9.25Total 50 100

*1:Minor10:Major

Thestudyshowsthat14servicefailuresresultfromoperationsincludingerrorsincargohandling,unreliabilityoftransittimepromisedandpickuperror.Thenumberofequipmentrelatedservicefailureswas7inthestudy.Theseareprimarilyamatterofdamagedanduncleancontainersandunavailableequipmentfortheshippers.Thefailuresencountered

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withlowfrequencyaretheonesrelatedwiththedelivery(6%).Thesubgroupofdeliveryfailuresislatedelivery(2)anddeliverywithoutbilloflading(1).

Intermsoffailuremagnitude,deliveryrelatedfailuresperceivedhighestintherate(9.25),which is followedby informationandcommunicationfailuresandoperational failures.Fromtheperspectiveofshippers,documentationfailureswereratedtheleastimportantonescomparedtomagnitudesofotherservicefailures(7.46).

ii) Course

As regards the courseofactions, the commitmentofboth freight forwardersand theshippers to“set thework”onservice failuresandtheiractualactivitieswere focused.ShipperbehavioursagainsttheservicefailurescausedbyfreightforwardersaredisplayedinTable2.Ascouldbeseeninthistableshipperbehaviourswerecategorizedasactiveand passive respectively. Table 2 reveals that 84% of shippers were active after theyencountered forwading service failures. It is clear that the highest percentage in theshipperbehaviorsiswithverbalwarning(22%).Thisisfollowedbythewrittencomplaintswith20%,andobjectionstopayingtheexpenditureswith16%.Only ina fewcases,8servicefailures,didtheshipperremainpassivetoservicefailures.

Table 2: The Actions of the Shippers

Actions of shippersNumber

(N)

Percentage

(%)

Active

Verbalwarnings 11 22Writtencomplaints 10 20Objectiontopayingexpenditures 8 16Informingtheconsignee 5 10Informingthefreightforwarder 4 8Others 4 8Total 42 84

PassiveNoresponsefromtheshipper 8 16Total 8 16Overall Total 50 100

The actions taken by freight forwarders and service recovery strategies employed bythemarealsoclassifiedasactiveandpassive.Table3showsthatthefreightforwarderstaffswereactivein34servicefailures(68%)andpassivein16servicefailures(32%)with

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noactions.

Theshipperssaidthatthefreightforwardersapologizedin16criticalincidents,metallloses/damagesin5servicefailuresandpaidbackthecertainamountofcostsincurredbyshippersin5servicefailureincidents.

Fromtheviewpointsof theshippers; themosteffectivemeansof service recoverybyfreight forwarders seems to bemeeting all the losses/damages of shippers, which isfollowedby themethodofpayingback toacertainextent.The leasteffectiveservicerecoverymethodisseenbytheshippersasapologizing.

Table 3: The Actions of the Freight Forwarders

Actions of freight forwarderNumber

(N)

Percentage

(%)

Recovery rating

Active

Apologizing 16 32 4.8Meetingalllosses/damages 5 10 7Payingbackcertainamount 5 10 6.4Discountingfreightandexpenditures 4 8 6Others 4 8 5.5Total 34 68 5.9

PassiveOfferingnohelpandsolutions 16 32Total 16 32Overall Total 50 100

1=Verypoor 10=Verygood

iii) Results

Table4showsthatin28%ofthecasestheservicefailuresstudiedresultedinunchangedshipper relations. In 66% of the cases the service failures resulted in a weakened orbrokenand6%ofthecasesinastrengthenedrelationshipasperceivedbytheshippers.Thusthefreightforwarderswereinmanycasesnotabletodealwiththeservicefailuresinasatisfactorymannerfromtheshipper’sviewpoint.

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Table 4: The Effect of the Service Failures on the Shippers’ Relations with the Freight

Forwarders

The effect of service failures on the shippers’ relations with the forwarder

Number

(N)

Percentage

(%)Relationsbroken 15 30Relationsweakened 18 36Relationsunchanged 14 28Relationsstrengthened 3 6Total 50 100

b. Results – Freight Forwarders’ Employeei) Cause

Staffsofthefreightforwarderswerealsoaskedtodescribe,onthebasisoftheirexperienceandunderstanding,whattheshipperexperiencesasnegativecriticalincidentsinrelationtofreightforwarderservices.

Table5revealsthatthenumberofmaingroupofservicefailuresfromthefreightforwarderemployees’pointofviewis7.Thesefailuresarerankedonthebasesofdescendingscales:operationalfailures(12),documentationfailures(11),bookingfailures(9%),informationandcommunicationfailures(6),problemshippers(5),deliveryfailures(4)andequipmentfailures(3).

Thefirst3maingroupsofservicefailureaccount64%ofthefreightforwardingservicefailures. The staffof freight forwarders surveyedbelieved that 24%of service failuresarose in connectionwith the forwarding operations. The degree of prevalence in thesubgroupsoftheoperationalfailuresshowsthatthemostprevalentoneisrelatedwithfailuretofindplaceonships(%12),whichisfollowedwiththesamelevelofprevalencebycargohandlingerrorsandpickuperrors(6%).11servicefailuresinconnectionwiththedocumentationweresub-categorizedasbillofladingerror(6),invoicingerror(4),anderrorincustomsdeclaration(1).10%oftheservicefailures(5)arecausedbytheshippersduetotheincompleteorwronginformationgiventofreightforwarders.Thisshowsthatinadditiontothestaffofthefreightforwardersinsomecasesshippershimself/herselfmight cause the failures in freight forwarding services.When it comes to thedeliveryfailures,servicefailuresareoftendelayindeliveryordamageddelivery.

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Table 5: Failures in Freight Forwarding Services: The Freight Forwarder Employee Viewpoints

Failure TypeCount

(N)

Frequency

(%)

Magnitude of Failure*

Group 1: Operational failures

1A.Unavailableplaceontheships 6 12 7.6

1B.Cargohandlingerror 3 6 9

1C.Pickuperror 3 6 8.6

Group1Total 12 24 8.4

Group 2: Documentation failures

2A.Billofladingerror 6 12 8

2B.Invoicingerror 4 8 7.7

2C.Errorsincustomsdeclarations 1 2 9


Group 3: Booking failures

3A.Bookingerrors 9 18 8.3


Group 4: Information and communication failures

4A.Customerinformationfailure 2 4 8

4B.Wrongquotation 2 4 8.5

4C.Communicationfailure 1 2 9

4C.Lackofemployees’professionalknowledge 1 2 10


Group 5: Problem shippers

5A.Incomplete/wronginformationfromshippers 4 8 7.5

5B.Reservationchangebyshipper 1 2 10


Group 6: Delivery failures

6A.Delayindelivery 3 6 8

6B.Damageddelivery 1 2 10

Group6Total 4 8 9

Group 7: Equipment failures

7A.Damagedanduncleancontainers 2 4 8.5

7B.Equipmentshortages 1 2 10


Grand Total 50 100

*1:Minor10:Major

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Asforthemagnitudeofservicefailures,thetablerevealsthatthemostimportantfailuresarerelatedwiththeequipment,whichisfollowedbydeliveryfailures.Thesefailuresareconsideredascoreservicefailuresbothbytheshippersandforwarderstaffaffectingtheoutputoftheservice,hencetheyareassumedasthemostseriousmistakethatcausecustomerdissatisfaction.

ii) Course

Table6revealsthatagreatpercentageoftheshippersactionsagainstthefreightforwardingservicefailuresinvolvesactivebehaviours(88%),andthehighestrateinthiscategoryisrelatedwithaggressivebehaviours(24%),whichisfollowedbydemandachangeinthecarrierusedbythefreightforwarder(18%).

Table7revealsthatfromtheviewpointoffreightforwarders,themostfrequentlyusedservice recovery method is compensating all the losses and damages (18%), whichis respectively followedbyexplaining the situation (16%),demandinga change in thesuppliersandcarriers(14%),andapologizing(14%).

Table 6: The Actions of the Shippers: The Freight Forwarder Employee’s Viewpoint

Actions of shippers Number

(N)

Percentage

(%)

Active

Displayingaggressivebehavior 12 24Demandingachangeinthecarrierusedbyforwarder 9 18Exhibitingsympathyandunderstanding 5 10Reflectingtheexpendituresincurredtotheforwarder 4 8Informingtheforwardersoasthespeeduptherecovery 4 8Informingtheconsignee 4 8Warningtheforwarderwritten 2 4Verballycomplaining 2 4Sharingtheexpenditures/costs 1 2Usinglegalmeansfortherecoveryoffailure 1 2Total 44 88

PassiveDisplayingnoactions/noresponse 6 12Total 6 12Overall Total 50 100

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Asfortheeffectivenessof therecoverystrategyadoptedonservicefailures, thetablerevealsthatthemosteffectivemeansofrecoveryisprovidingnewcontainers,whichisfollowedbycorrectingbillof ladingand invoices,booking,andmeetingall lossesanddamages.

Table 7: The Actions of the Freight Forwarders: The Freight Forwarder Employee Viewpoints

Actions of Freight ForwarderNumber

(N)

Percentage

(%)Recovery rating*

Active

Meetingalllosses/damages 9 18 7.56Givingconvincingexplanations 8 16 5.87Changingservicesuppliersandcar-riers

7 14 6.57

Apologizing 7 14 6.57Correctingbillofladingandinvoices 5 10 8Correctingbooking 4 8 8Partialreturning 4 8 6.5Providingnewcontainers 2 4 8.5Otheractions 1 2 6Total 47 94 6.56

PassiveBeingindifferent/NoActions 3 6Total 3 6Overall Total 50 100

1=Verypoor 10=Verygood

iii) Results

Table8revealsthatinmostofthecriticalincidentsinvolvedintheresearch,theservicefailuresdidnotcauseanynoticeablechangesintherelationshipbetweentheshippersand the freight forwarders (38%). Inaboutone fourthof the cases (24%), the servicefailuresseemtohaveweakenedtherelationships,andsurprisinglyinonefifthofthecasesinvolved,servicefailuresandrecoverymethodsstrengthenedtherelationsbetweenthetwoparties.

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Table 8: The Effects of the Critical Incidents on the Shippers’ Relations with the Freight

Forwarders: The Freight Forwarder Employee Viewpoints

Resultant EffectsNumber

(N)

Percentage

(%)RelationsBroken 9 18RelationsWeakened 12 24RelationsNotChanged 19 38RelationsStrengthened 10 20Total 50 100

5. Conclusions

Thisstudyaimedtoanalyzetheservicefailuresandrecoverystrategiesencounteredinfreight forwarding industry.Theoverallanalysis involveddefiningandcategorizing theprevalantservicefailures,thelikelycausesofthisunfavorableonesandrecoverystrategiesforsuchfailuresinfreightforwardingservices.Theanalysisalsoinvolvedcomparingandcontrastingtheperceptionsofshippersandthoseoffreightforwarders.Inordertorealizetheaimsof theresearchCITwasused.Thereseachmodelused inthisstudy involvedthreebasiccomponents;causesoftheservicefailure,actionstakentorecoverthefailure,andeventualeffectsoftheservicefailureandrecoveryonthebusinessrelationsbetweenthe shipperand freight forwarder.Asa result, at totalof 100 service failure incidentscollectedfromshippersandfreightforwarderswerecategorizedbymeansofCIT.

Thefindingsof thestudyproves thatCIT isaproperanduseful technique innotonlycollecting detailed information about service failures in busines-to-business servicefailuresbutalsodevelopingasystemofclassfyingandinterpretingsuchcriticalincidents.Ameansofmeasuringperceivedservicequalityandexploringtheservicefailuresandeffectiveness of the recovery strategies, CIT is thought to define and classify serviceencounters and delivery processes, provide detailed information about the servicefailures.

Theresultsofthestudyrevealthatthemostprevalantservicefailuresinfreightforwardingservices,basedontheviewsoftheshippersarerelatedwithdocumentation,informationandcommunication,operationsincludingcargohandlingandpickingupcontainer.Thefurtherspecificanalysisindicatethatdocumentationfailurecomprisesbillofladingerror,invoicing error and errors in customs declarations; information and communicationrelated failures include errors in informing customers, lack of professional knowledge

47

of serviceemployeesanderrors in communicationwith shippers.Operational failuresmainlycovercargohandlingerrorsandunreliabilityoftransittime.Equipmentrelatedfailures involve damaged and unclean containers and unavailable equipment. Fromthe viewpoints of shippers, delivery related failures are encounteredwith the lowestfrequencybutperceivedhighestmagnitude.Thehighermagnitudeofdelivery relatedservicefailureisstronglyrelatedwiththesizeoflossforthecustomers(Smith,1999)andthus it isexpectedthatthesetypesoffailuresrequireutilitarianservicerecoveryfromthefreightforwarderssincetheyarerelatedwiththeoutcomedimensionofthelogisticsandforwardingservice.Asmentionedearlierinthereviewofservicefailureandrecoverystrategyoutcomefailure isworsefortheserviceprovidercompanyandrequiresmoreeffortintorecoverythantheprocessfailures(Chouetal.,2009;Smith,1999).

Theactionstakenbyshippersagainstservicefailureswereintwobasiccategoriessuchasactiveandpassive.Thehighestpercentageintheshipperactionsiswithverbalwarningfollowedbywrittencomplaints,andobjectionstopayingtheexpenditures incurredtotheservicefailureencountered.Thefreightforwarderstaffswereactiveandemployedrecoverymethodsalmostin2/3oftheservicefailuresandpassivein1/3oftheincidentswithnoactions.Thefreightforwardersusedapologywith32%asaservicerecoveryintheservicefailuresencounteredandmetallloses/damagesin10%ofservicefailuresandpaidbackthecertainamountofcostsincurredbyshippersin5criticalincidents.Fromtheviewpointsoftheshippers;themosteffectivemeansofservicerecoverybyfreightforwardersseemstobemeetingall the losses/damagesofshippers,which is followedby themethodofpayingback toacertainextent.The leasteffectiveservice recoverymethodisseenbytheshippersasapologizing.ThisfindingsupportsthestudyofLockshinandMcDougall(1998)insuchawaythatcustomersinbusinesstobusinessservicesaremoreconcernedwiththerecoveryofthecoreserviceandpreferutilitarianstrategy.

Asfortheviewpointsandexperienceof freightforwardersemployees,servicefailuresarecategorized into7maincategories.Themostprevalentone isoperational failures,documentationfailuresandbookingfailuresandtheleastprevalentoneisrelatedwithequipment related failures. Perspective of freight forwarders’ employee added newtypeofservicefailurecategoryandthiscategoryislabelledasproblemshippers.Thesetypesoffailuresoccurduetotheincompleteorwronginformationfromtheshippers.SimilarfailurecategorywasalsoincludedinthestudyofBitneretal.,1994’sstudyinairtransportation.Sincecustomersareinvolvedintheproductionofthecustomersmaybethecauseofthefailuresometimes.Missingorwronginformationsentfromshippertofreightforwardermaycausefaultyserviceoperation,documentationordeliverybythefreightforwarderemployees.Themagnitudeofequipmentrelatedfailuresanddeliveryfailures were considered as major failures compared to other failures by the freight

48

forwarderemployees.Sincethesedimensionsof forwardingservicearerelatedtotheserviceoutcomethefailuresinthesedimensionsareconsideredasimportantfailures.

The recoverymethodsmainly used by freight forwarders are respectivelymeeting allthe loss and damage and giving convincing explanations about the failures, changingthecarrierusedbyfreightforwarder.Themosteffectivemeansofrecoveryseemstobeprovidingnewcontainersandmeetingalllossesanddamages.Thismeansthatshippersaremainlyinterestedintheoutcomedimensionoftheserviceratherthanthefailuresintheserviceprocesses.Henceutilitarianrecoveriesareconsideredtobemoreimportantthansymbolicrecoveriesinfreightforwardingservices.

Asforastheeffectsoffreightforwardingservicefailuresandrecoveriesontherelationshipbetweentheshippersandfreightforwardersareconcerned,thecriticalincidentsdefineddonotcauseanynoticeablechangesintherelationship.Theanalysisrevealsthataboutin one fourth of the incidents, the relationships seem to have strengthened. Thesefindings support in business to business service there are limited number of servicesupplierscomparedtobusinesstoconsumerservicesandtherelationshipbetweentheservicesuppliersandcustomersareveryclose,henceiftheservicefailureencounteredisrecoveredeffectivelybytheserviceprovideritispossiblethattherelationshipbetweenthecustomerandtheserviceprovidermaybestrengthened.

Comparingtheperceptionsoftheserviceprovidersandtheshippersrevealsthatthemostoftenencounteredservicefailuresareerrorsindocumentationandfailuresininformationandcommunicationfromthesippers’viewpointoperationalfailuresanddocumentationfailures from the freight forwarders viewpoint. The least often encountered servicefailuresarerelatedwiththedeliveryinbothperceptions.

Thestudyconcludedthatmajorityofthefreightforwardingservicefailuresarecausedbyfreightforwarder.Hence,freightforwardersshouldtraintheirpersonnelinordertoavoidservice failuresandemployeffectiveservicerecoverystrategy.Claimshandlingor complaint handling departments existing in the shipping lines is suggested to beestablished in the freight forwarders toanalyze service failuresandemployeffectiverecoverystrategies.

Moreover,utilizingadvancedinformationandcommunicationtechnologiesthatenableseamlessinformationexchangebetweenpartieswithminimumpersonnelerrorwillhelpfreightforwardersavoidfailuresregardinginformation,communication,documentationandbooking.

Hence it has been observed that some of the leading freight forwarders have beenheavilyinvestinginthesetechnologiesinordertopreventsuchfailures.

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Considering the complexities anddegreeof risk in in the freight forwarding servicesliabilityinsurancecoverageagainsttherisksandservicefailurescanbeaneffectivewayforfreightforwarders.

Asalogisticsservicefreightforwardingservicesisamatterofcontrollingdetailsinthewholelogisticsserviceprocessanddelivery,thequalityimprovementmeansimprovingall thepartsof the logistics servicechainandseeingwhole supplychain.Mostof theliterature in the service failure and recovery focus on thedetail, “company level” butactually they shoudbe studying service failuresand recovery in the supply chainasawhole. From the final customers’ perspective it is necessary thatwhole supply chainfunctionsproperly.Itwillbeveryusefultotakeservicefailuresandrecoverystrategiesatdifferentsatagesinthesupplychainandlogisticsserviceprocessandstudybothshippersand the freight forwarder staff involved about the same service failures. The morereseachersknowaboutservicefailuresinthewholelogisticsservicechain,thebetterthebasisforfurtherandcontinuousrecoverystrategydevelopment.

Futurestudiesonservicefailuresinfreightforwardingindustryshouldconsidercustomercomplaint documents in analyzing the service failures. Also the sample size could bewidened and compared with other countries due to differences in terms of logisticssytems,regulations,infrastructuresandcultures.Inaddition,utilizingthesametechniquesinotherbusinesstobusinessservicesisadvisedinordertogeneralizethefindings.

This study is limited by its exploratory design and qualitative methods used. Futurestudies could useothermethods such as focus group study, experimental design andsurveymethodstoimproveempiricalgeneralizability.Futurestudiescouldadoptamoreinclusiveapproachandincorporateinsightsfromothersupplychainandlogisticschainmembersrelatedtoserviceencounters,failuresandrecoverystrategies.

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typologies of freight forwarding service failures...

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