Diversification in the Dutch International Freight Forwarding Industry

Purpose – The purpose of this paper is to find out how diversified are the service offerings of the international freight forwarders based in the Netherlands as well as to discover the motivations behind pursuing this strategy. Design/methodology/approach – The paper features a quantitative and qualitative analysis of the responses given by 41 international freight forwarders based in the Netherlands. In addition to the survey questionnaire, desk research is used to provide more inputs for data analysis. According to the responses given, the IFFs were ranked on a diversification points index, and a comparison of structural and perspectival differences of the most and least diverse firms were conducted. The methodology is designed to extract information regarding the different service offerings as well as the corresponding revenue generated from these services. The paper also provides a theoretical framework of the freight forwarding market principles. Findings – The IFFs in the Netherlands have diversified service offerings and relateddiversification is the main strategy of choice. The findings support that the traditional forwarders are transforming to logistics service providers, aiming to increase their profitability by capturing more parts of the transport chains. The Dutch IFF market structure showed the characteristics of a fragmented market, showing similarities to the UK and the US IFF markets. The IFFs with wide structural asset bases were also more diversified in their service offerings. The size in terms of number of employees, offices, and warehouses were also positively correlated with a firm’s revenue. The larger IFFs with more buying power reported to be more engaged in the service diversification strategies. Research limitations/implications – The focus of the paper is on the Dutch IFFs, but the analysis can be applied to different geographical settings as well as sectors. The limitations were mainly present in the data acquisition aspect of this study that required additional methodological applications to be minimised. Practical implications – This thesis presents findings regarding the service-offering portfolio of IFFs of different sizes and present the adequate revenues yielded from the different services they offer. This can serve as a guide for businesses who are looking to diversify their service offerings but are not sure what implications this will have on their profitability. Originality/value – This thesis provides some practical insights from the Dutch IFF industry regarding the use of diversification to stay competitive against other types of logistics providers in a global market where total logistics concept is becoming dominant. The originality arises from the fact that there aren’t any previous studies done in the Dutch IFF industry that focuses on their service diversification strategies, which has been identified as an on-going trend in the sector.