Behavioral factors influencing cargo routing decisions and port choice

Behavioral factors

Humans are not always behaving in a fully rational way and this could affect the choice of a route, a transportation mode or a port:

  • Incorrect and incomplete market information on the possible alternative routes available to supply chain managers and shippers results in ‘bounded rationality’ in the transport chain design, leading to sub-optimal decisions. Shippers sometimes impose bounded rational behavior on freight forwarders and shipping lines, such as in the case where shipper asks to call at a specific port or to use a specific land transport mode, even if this port or mode might not be the most efficient solution from a rational economic point of view.
  • Opportunistic behavior of economic actors or informal commitments to individuals or companies might lead to non-cost minimizing decisions.
  • Some customers might not consider using other ports or other transport modes because they assume that the inertia and transaction costs linked to transferring activities to other ports or modes do not outweigh the direct and indirect logistics costs connected to the current non-optimal solution.