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It is virtually impossible for a carrier to provide a transport service that will coincide with the need of shippers and freight forwarders, because the transport service needs of freight forwarders and shippers is a derived demand. Ocean carriers must therefore understand the derived need of their clients in order to provide transport services that meet the demand of their clients. The selection of carriers by freight forwarders is guided by the underlying theory of value creation for shippers through supply chain management. According to Johansson (1993) any company, regardless of its operations, is guided by four parameters (cost, time, service and quality) in value creation. However, the competitiveness of liner operators can be

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categorised into the three parameters of cost, transit time reliability, and service quality from the perspective of freight forwarders.

A freight forwarder is an agent who derives income from commission received, and the difference between the freight rate obtained from carriers, and the actual freight rate offered to the shippers may naturally tend to be cost oriented. However, service satisfaction that freight forwarders pursue in order to add value for their clients may cause them not to be as cost centered. Therefore, the selection of a carrier by freight forwarders is not a straight forward decision. The selection of a carrier based on the cost factor will reduce the overall product costs of the shippers as transport costs contribute to a significant portion of the overall price of a product. Non-cost factors may have an effect on other logistics attributes such as customers pipeline inventory costs, production cycles and warehouse costs.

Cost and non-cost factors can influence the selection of a carrier depending on the freight forwarder's needs. For example, if a freight forwarder is shipping non-urgent cargo with low value, then cost can become a key determinant. However, if a forwarder is shipping urgent cargo with high value, then non-cost factors (transit time reliability and service quality) can become more important than the cost factor. With increasing globalisation and e- commerce, an emphasis is now on the door-to-door delivery of cargo to consumers on-time in the international market. Thus, much more attention is given to total transit time reduction. Freight forwarders are constantly making decisions within these three parameters when selecting a carrier.

Cost is a critical issue with regards to the transportation of goods. During the early stages of industrial development speed was not considered necessary, and as a result, early researchers noted transport costs as the key determinant factor in carrier selection, and shippers and freight forwarders paid attention to the reduction in overall costs of products (Cohen & Lieberman 1949). Cook (1967) and Liberatore and Miller (1995) pointed out that cost was the key factor considered by freight service buyers when selecting a carrier for international transport, in that transport service buyers are willing to choose a carrier with a lower freight cost. Authors such as

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Ganbat and Kim (2015) have noted that maritime freight forwarders operating between Korea and Mongolia are willing to accept carriers offering a reduced cost with less speed than a carrier with high cost and fast speed. That is, the freight forwarders were making a cost trade-off between the services provided by carriers.

Time has always been an issue in international transport. Unreliable transit time impacts logistics variables and results in a loss of sales by cargo owners, and it increases the pipeline costs for cargo owners, significantly affecting on-time arrival of goods to international markets. Unreliable transit times cause manufacturers to increase warehouse stock, which in certain scenarios leads to an obsolete product. Shippers run out of stock due to unreliable transit times, while less dependability causes higher inventory levels or a loss of productivity (Bardi 1973). Reliable transit times are more important to shippers than cost, because lower costs with unreliable transit times eventually leads to higher costs due to the knock on effect from the unreliable transit time (Maloni, Gligor & Lagoudis 2016).

Kent and Parker (1999) indicated that there are two (import and export) dimensions for shippers that determine which factor is more important in carrier selection. The authors noted that transit time reliability is more important to import shippers. Sales are quite sensitive to reliable transit times because reliable transit times enable cargo owners to plan their logistics processes in advance.

Service quality has attracted special attention in the literature, with the main focus of service quality being linked to customer satisfaction (Durvasula, Lysonski & Mehta 2000; Hu & Jen 2010). Assuming that cost and transit times for all carriers are the same within a specific route, then service quality can become a determining factor for carrier selection by freight forwarders. A basic requirement for ocean carriers in winning customer loyalty in competitive liner shipping market is customer satisfaction (Lam & Zhang 2014). Freight forwarders consider following elements important when determine a service quality provided by ocean carriers; (i) knowledgeability of carrier staff (MacGillavry & Wilson 2014), (ii) ability of carrier to respond to

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queries on time (Yang & Sung 2016), (iii) willingness to negotiate service charges with customers (Kannan, Bose & Kannan 2012), (iv) the ability of the carrier to provide on-time information (Rajesh et al. 2011) and (v) the carrier staff attitude to care for problem-solving (Tax, Brown & Chandrashekaran 1998). Liner shipping companies can differentiate themselves from their competitors through offering quality shipping service. “In fact, service quality has been recognised as a major marketing strategy for the liner shipping companies” (Frankel 1993, p.58). It is imperative for carriers to understand the service needs of their customers. This will make liner shipping companies to provide the require shipping services to their clients in order to win customer loyalty.