Managing third-party logistics under uncertainty : A decision scheme and managerial implications

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

10 Scopus Citations
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  • Lawrence C. Leung
  • Wai Hung Wong
  • Yer Van Hui
  • Yulai Wan

Related Research Unit(s)


Original languageEnglish
Pages (from-to)630-644
Journal / PublicationInternational Journal of Production Economics
Issue number2
Online published7 Jun 2013
Publication statusPublished - Oct 2013


Airfreight forwarders design shipment plans to ensure that client shipments are delivered on time and at a low cost. Reliability of a shipment - the probability of delivering a shipment on time - is a critical consideration in shipment planning. We propose a three-phase decision scheme for forwarders to develop, evaluate, and revise their shipment plans, such that plans can meet reliability targets at a reasonably low cost. In phase one, a tentative shipment plan is determined using a Tabu algorithm. In phase two, the plan's reliability is examined by a simulation model. In phase three, we design specific actions to revise an unsatisfactory plan. To explore managerial implications of uncertainty in third-party logistics, we solved many cases of shipment plan using real-life air cargo routes and data. It is observed that consolidation - while saves cost - can have undesirable impact on shipment reliability as it allows uncertain elements of one shipment to affect another. Integration, although not as cost-efficient, enhances shipment reliability. Compared to results obtained from simulating industry practice, the proposed scheme is able to perform consistently better. Many issues of practical concern are discussed. © 2013 Elsevier B.V. All rights reserved.

Research Area(s)

  • Airfreight forwarder, Consolidation, Integration, Logistics, Shipment planning, Simulation

Citation Format(s)

Managing third-party logistics under uncertainty: A decision scheme and managerial implications. / Leung, Lawrence C.; Wong, Wai Hung; Hui, Yer Van et al.
In: International Journal of Production Economics, Vol. 145, No. 2, 10.2013, p. 630-644.

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review