infonet-economy

For the network based market segment of LTL transportation services, it seems to be of critical importance that 'size matters' in terms of scale, density and geographical scope in order to gain sustain-able competitive advantage. Small and medium sized LSPs in particular suffer from this development, since they usually lack the resources (i.e. capital, technical know how or management expertise), the geographical reach as well as the necessary quantities of customer shipments to build up, maintain and continuously feed such a full fledged LTL transportation service network (for simplification as from now we will use the shorter term LTL networks). Therefore, this market appears to be the 'natural' domain of major integrated logistics corporations, which apparently bear these necessary resources, as they expand their networks by organic growth or by systematic acquisition of other more or less compatible LSPs. As a direct consequence, on the one hand the market segment of LTL transportation services faces a development of consolidation towards major integrated corporations. On the other hand, in order to remain independent and to overcome this 'size contingent' strategic disadvantage, in Germany many amongst the small and medium sized LSPs have initiated or actively join dedicated LTL alliances. Thus, two different modes of governance have evolved during the last 30 years in order to build up, develop, and manage such full fledged LTL networks: The cooperative mode of LTL transportation alliances (or 'cooperations') and the corporate mode of large integrated transportation companies (or 'corporations'). Both modes bear specific possibilities and constraints for the management of LTL networks and the proponents of each of both worlds accentuate their respective mode of governance as the superior one. In this paper we will shed some light on this discussion by examining the main characteristics and peculiarities of these two modes of governance as well as their resulting impacts in terms of possibilities and constraints for the management of LTL networks. Thereby, we will show how the decisions on the management challenges of LTL transportation service networks are potentially influenced by each mode of governance and derive implications for the successful management of transportation alliances and integrated transportation companies, alike.