Fast or slow? Logistics way choices for perishable products under competition

Abstract

AbstractThis study investigates a logistics game where two competing shippers of perishable products may choose between fast and slow logistics ways. The fast logistics way allows a shipper to retain better delivered product quality, whereas the slow one provides a cost advantage. The two shippers sell high‐ and low‐quality products, respectively. We find that the equilibria of the logistics game are determined by the initial qualities of the two products, the differences in the transportation times, and the unit logistics costs of the two logistics ways. Furthermore, a large difference in transportation times enables the high‐quality shipper to select the fast logistics way but the low‐quality shipper to choose the slow logistics. In this way, the high‐quality shipper can benefit from the large difference in delivered product qualities, whereas the low‐quality shipper alleviates the pressure of competition. By contrast, when the unit logistics cost of the fast logistics way is sufficiently high, a small difference in transportation times stimulates the high‐quality shipper to use the slow logistics way but the low‐quality shipper to adopt the fast logistics. The high‐quality shipper may seek the benefit from an increase in demand, whereas the low‐quality shipper should narrow the difference in delivered product qualities. Finally, we find that faster logistics or higher initial product quality is beneficial to the high‐quality shipper, whereas slower logistics or lower initial product quality may be optimal for the low‐quality shipper. These findings offer useful insights for managers to choose their logistics ways.