The effect of green shipping practices on multinational companies’ loyalty in Malaysia

AuthorErwind Jozef, Kavigtha Mohan Kumar, Mohammad Iranmanesh, Behzad Foroughi
Publication Date11 Nov 2019
The effect of green shipping
practices on multinational
companiesloyalty in Malaysia
Erwind Jozef and Kavigtha Mohan Kumar
Graduate School of Business,
Universiti Sains Malaysia (USM), George Town, Malaysia
Mohammad Iranmanesh
School of Business and Law, Edith Cowan University, Perth, Australia, and
Behzad Foroughi
Graduate School of Business,
Universiti Sains Malaysia (USM), George Town, Malaysia
Purpose The globalization of market and production activities with unequal distribution of market
demand and resources has accelerated the demand for shipping services. Public concerns about
environmental issues and the impacts of shipping service providersgreen shipping practices (GSPs) on the
reputation and performance of multinational companies (MNCs) motivated the authors to test the impact of
shipping companiesGSPs on MNCsloyalty by considering timeliness and perceived value as moderators.
The paper aims to discuss this issue.
Design/methodology/approach The data were collected from 141 MNCs and analyzed using the partial
least squares technique.
Findings The results show that company policy and procedure, shipping documentation, shipping
equipmentand shipping materials havesignificant effects on MNCsloyalty.Furthermore, timelinesspositively
moderates the impacts of shipping materials and shipping design on compliance, while perceived value
positively moderates the effects of shipping equipment and shipping design for complianceon MNCsloyalty.
Practical implications The results provide insight for shipping service providers on GSPs that may lead
to MNCsloyalty by considering the roles of lead time and freight rate.
Originality/value The results extend the literatureby testing empirically the impacts of GSP of shipping
companieson MNCsloyaltyand also by investigatingthe moderatingimpacts of perceivedvalue and timeliness.
Keywords Sustainability, Survey, Asia, Buyersupplier relationships, Global logistics, Maritime logistics
Paper type Research paper
1. Introduction
As a non-core business function, logistics is the most common area that is presently
outsourced (König and Spinler, 2016; Sohn et al., 2017), and theshipping industry as a key
component of the global logistics system plays an essential role in facilitating international
trade and commerce in the global economic system (König and Spinler, 2016; Tseng and
Liao, 2015). According to IMO (2016), around 90 percent of the worlds trade in terms of
volume is carried by sea, indicating the pivotal role of this industry in global supply chains
(Panayides, 2006), particularly for multinational companies (MNCs). However, emissions
from the international shipping sector contribute significantly to global air pollution
(Tanaka and Okada, 2019), and environmentally sustainable operations in the shipping
industry have emerged as important topics for policy makers and firms involved in
shipping supply chains (Chang et al., 2013).
Serious environmental degradation has incurred, originating from transport logistics
activities such as terminal operations, inland transport operations and container shipping.
Environmental issues in shipping logistics will be more prevalent as shipping users become
aware of the increase in global warming and put pressure on the shipping service providers
The International Journal of
Logistics Management
Vol. 30 No. 4, 2019
pp. 974-993
© Emerald PublishingLimited
DOI 10.1108/IJLM-01-2019-0005
Received 5 January 2019
Revised 11 July 2019
20 August 2019
Accepted 21 August 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
for more environmentally sustainable shipping services (Yang, 2018). In the shipping
industry, the role of environmental regulators is undertaken by government and shipping
service users. These two parties are the key players in ensuring that shipping operations are
environmentally friendly (Linder, 2018). As environmental protection standards in the
shipping industry are lagging behind other sectors (Lister et al., 2015), shipping users can
play a significant role in increasing the enforcement of shipping environmental regulations.
Chang and Danao (2017) also found that although customer requests have a positive effect
on the adoption of green shipping practices (GSPs) among shipping firms, enforcement of
regulations has no effect. As such, users can be conscious service buyers by choosing to
enter service contracts with shipping service providers with proper environmental practices,
as their decision to use the service of a particular shipping service provider plays a key role
in shipping companieslong-term performance. Furthermore, in todays global context,
MNCs that use shipping are pressured by government, non-government organizations and
customers to act in a sustainable manner ( Jia et al., 2018; Kawai et al., 2018; Riikkinen et al.,
2017). In the pursuit of sustainability, one key challenge they face is its extension to other
supply chain partners such as shipping companies. Customers and other stakeholders do
not differentiate between all the different actors in a supply chain (Seuring and Gold, 2013),
and therefore, MNCs take the responsibility for their service providers in the eyes of
stakeholders (Hartmann and Moeller, 2014; Koplin et al., 2007; Seuring and Müller, 2008).
Image and reputation are important for shipping users, as environmental issues within their
shipping service providers can damage their sustainability performance. The loyalty issue
between users and service providers will arise if the latter are found to be causing any
environmental damage. As such, this investigation of the relationships between shipping
companiesGSPs and MNCsloyalty is important.
The norm of logistics research, regardless of whether it involves road, sea or air
transport, is that the focus for loyalty is judged on the basis of cost savings or productivity,
while environmental aspects are neglected (Lun et al., 2011). It is thus timely to include
environmental aspects in shipping operations. The limited studies on the environmental
aspects of the shipping industry have focused on investigating the environmental and
financial impacts of adopting shipping technologies, such as burning cleaner fuel and
running cleaner engines (Viana et al., 2009) and also on developing GSP constructs to
evaluate the implementation of GSP in shipping companies (Lai et al., 2011, 2013).
Considering the importance of MNCsloyalty in the long-term financial performance of
shipping companies, there is a lack of research on the impacts of shipping companiesGSPs
on MNCsloyalty. Knowing which GSPs has an effect on MNCsdecision to make continued
use of shipping companiesservices will guide shipping companies to invest and engage in
GSPs that have an effect on their long-term profitability.
Most companies are competing in terms of the global supply chain, so to meet these
challenges, shipping service providers operate cost-effectively to ensure that lower freight
rates and timely service can be offered to shipping users. In logistics studies, the selection of
and loyalty toward logistics service providers are found to be based primarily on logistics
service costs and on-time delivery ( Jharkharia and Shankar, 2007; Gil Saura et al., 2008). As
GSPs may lead to higher costs and cause delays in delivery, this study investigated the
moderating effects of timeliness and perceived value on the relationship between shipping
companiesGSPs and MNCsloyalty.
This paper makes two main contributions to the literature. First, the impacts of six GSPs
suggested by Lai et al.(2013)namely, policy and procedure, shipping documentation,
shipping equipment, cooperation,shipping materials and shippingdesign for compliance on
MNCsloyalty were tested toanswer the question of which GSPs have more effect on MNCs
decisionto continue using the serviceof a particular shipping company.Second, by testing the
moderatingeffect of timeliness and perceivedvalue, the study includesthe interaction effect of
Effect of GSPs

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