Critical Factors Affecting the Choice of Logistics Service Provider: An Empirical Study in Vietnam

The trend of globalization leads an increased need for international freight transportation and accelerates the development of the international logistics industry. The objective of this paper is to identify the critical factors that affect the choice of logistics service provider (LSP). The data sample was collected through a questionnaire, responded by 218 companies that outsource logistics services. The analysis uses descriptive statistics; exploratory factor analysis (EFA) and regression analysis were conducted with SPSS. The role of capabilities, customer service, and company reputation were evaluated and tested. Our findings show that capabilities and customer service have a considerable impact on the choice of LSP. The findings also indicate that company reputation do not have significant impact on the choice of LSP. They also showed that the capabilities is the variable that has the most significant effect on the choice of LSP. An implication of this study is that the competition should not only focus on pricing, but should be extended to improving enterprises capabilities, i.e., upgrading human resources, modernizing the modes of transportation, expanding business geographically and developing new technologies. Our study provides LSP managers with insights into how to meet customer expectations in the competitive logistics service sector.