The effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers

Bae, Hee-Sung Article The effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers Asian Journal of Shipping and Logistics (AJSL) Provided in Cooperation with: Korean Association of Shipping and Logistics, Seoul Suggested Citation: Bae, Hee-Sung (2024) : The effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers, Asian Journal of Shipping and Logistics (AJSL), ISSN 2352-4871, Elsevier, Amsterdam, Vol. 40, Iss. 2, pp. 118-125, https://doi.org/10.1016/j.ajsl.2024.02.004 This Version is available at: https://hdl.handle.net/10419/329740 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). The effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers Hee-Sung Bae Department of International Trade, College of Social Science, Kyonggi University, Suwon, Republic of Korea ARTICLE INFO JEL Classifications in this article: M16 L91 Keywords: Port logistics firms Shippers Trust Communication Flexibility Customer relationships ABSTRACT The objective of this study is to examine the effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers. In order to achieve this objective, the study collected questionnaires from 238 port logistics firms and conducted analyses. The results are as follows: First, the trust of port logistics firms has a positive effect on both flexibility and customer relationships. When there is a high level of mutual trust between port logistics firms and shippers, the firms can provide flexible services and work towards a common goal by sharing information and resources based on a strong understanding. Second, port logistics firms that engage in frequent communicate with shippers are more likely to provide flexible services. By exchanging information with shippers, port logistics firms can establish service processes that align with the specific needs of the shippers, ultimately leading to the provision of superior services. Third, the flexibility of port logistics firms enhances customer relationships with shippers. By offering flexible services, port logistics firms can build strong relationships with shippers and work together towards common goals. Fourth, trust and communication of port logistics firms further reinforce the relationship between flexibility and customer relationships. When there are trust and effective communication between the firms and shippers, the positive effect of flexibility on customer relationships is amplified. 1. Introduction There are various firms involved in the port logistics process, providing logistics services to shippers. These firms include liners, international freight forwarders, customs brokers, loading and unloading firms, container terminals, bonded warehouses, bonded transporters, and inspection firms. It is crucial for these firms to offer efficient port logistics services and establish strong relationships with shippers. The relationships with shippers are also important to the port logistics firms as service providers. Strengthening the relationships between firms in port logistics processes can be seen as a strategic and marketing approach to enhance connections with shippers. Therefore, conducting a study on strengthening the relationships between port logistics firms and shippers is necessary to secure a sustainable competitive advantage of port logistics firms in the market. Numerous studies have examined the relationships between firms for various perspectives. Some studies have focused on verifying the relationships between manufacturing firms within the supply chain management (SCM) context (Theodorakioglou, Gotzamani, & Tsiolvas, 2006; Cheung and Rowlinson, 2011; Hoejmose, Brammer, & Millinfton, 2013; Murfield and Tate, 2017; Liu, Yang, & Zhang, 2020; Teller, Kotzab, Grant, & Holweg, 2016; Akrout, 2019; Athaide, Zhang, & Klink, 2019; Graca and Barry, 2019; Faruquee, Paulraj, & Irawan, 2021; Choi and Park, 2002; Jung and Lee, 2014; Kim and Lee, 2016). Additionally, there are studies that explore the relationships between firms in the port supply chain (Bae, 2016; Chou, Chen, & Kuo, 2018; Lin, Potter, & Pettit, 2020; Liu et al., 2020; Li, Yan, Yan, & Yan, 2021; Kwon, Park, Kim, & Kim, 2023; Nsikan et al., 2023). These studies have approached the relationships between firms from various theoretical perspectives, such as resource-based theory, information processing theory, strategic choice theory, transaction cost theory, social exchange theory, and a relational view, within the framework of SCM. Prior research has confirmed the relationships between trust and relationship satisfaction (Agarwal and Narayana, 2020), interpersonal communication, trust, and perceived relationship quality (Ahlf, Horak, Klein, & Yoon, 2019), trust and performance (Ali and Khalid, 2017; Leonardo, Silvera, Martinez-Sanchez, & Romeiro, 2020), and supply chain relationship management and firm performance (Giudice et al., 2020). However, these studies did not consider that communication and trust, when treated as independent variables, have an impact on E-mail address: [email protected]. Contents lists available at ScienceDirect The Asian Journal of Shipping and Logistics journal homepage: www.elsevier.com/locate/ajsl https://doi.org/10.1016/j.ajsl.2024.02.004 Received 5 November 2023; Received in revised form 26 December 2023; Accepted 29 February 2024 The Asian Journal of Shipping and Logistics 40 (2024) 118–125 119 flexibility as a mediator and customer relationships as performance. This oversight occurred because they premarily focused on examining the relationships between communication, trust, and performance. Furthermore, they also failed to identify the factors that strengthen the link between flexibility and customer relationships. Prior research has empasized the significance of organizational culture in fostering relationships between firms and enhancing competitiveness. Organizational culture should not only be cultivated within individual organizations but also be shared between organizations (Cho, 2013). Trust and communication have been identified as curcial elements for the dissemination of organizational culture, and they are considered as relational assets as intangible assets of the firms (Cho, 2012). As service firms providing logistics services to shippers, port logistics firms need to establish an excellent service process. They offer port logistics services through contracts with service providers based on the specfic needs of shippers. Understanding these needs accurately and possessing the necessary capabilities to fulfill them are essential. Althrough most services are provided by port logistics service providers, port logistics firms themselves must possess flexible capabilities to adapt to the requirements of shipppers in the logistics process. These flexible capabilities enable them to build strong relationships with shippers, ultimately leading to sustainable competitive advantages in the market. In spite of various studies on the relationships between firms, prior research has the following limitations: First, studies on the relationships between firms have been predominantly focused on manufacturing firms. There is a wealth of research available on the relationships between manufacturing firms and distributors. However, considering the significance of international trade in the Korean economy, there is a lack of active research on the relationships between firms from the perspective of port logistics firms that provide international logistics services to traders as shippers. Second, there is a dearth of studies concerning the services provided by port logistics firms as service providers. While prior research has examined the service quality of port logistics firms, there is a lack of research on the specific types of services requested by shippers as customers. Furthermore, since port logistics firms provide shippers with non-face-to-face of the services, the level of shippers’ involvement in port logistics services is perceived to be low, despite their high demands for such services. Consequently, it is essential to investigate the capabilities of port logistics firms in providing flexible services, as these capabilities directly reflect the needs of shippers in the port logistics process. Therefore, there is a need for a study that focuses on the flexibility of port logistics firms. Third, there has been a lack of prior research focusing on the relationships between port logistics firms and shippers. Even if port logistics firms offer excellent services, if it fails to meet the needs of the shippers, the shippers will seek out service providers that can better address their requirements. Therefore, establishing strong relationships between port logistics firms and shippers is crucial for attaining sustainable competitive advantages in the market. Consequently, it is essential for port logistics firms to identify the factors that affect their relationships with shippers. This study aims to examine the effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers. Furthermore, this study also analyzes the interaction effects of trust and communication on the relationship between flexibility and customer relationships. 2. Literature review 2.1. Communication of port logistics firms Research on the relationships between port logistics firms and shippers is not currently active. However, in practice, port logistics firms that provide port logistics services to shippers aim to establish sustainable relationships in order to attain sustainable competitive advantages in the market. During the port logistics process, these firms not only offer direct services to shippers but also fulfill their needs through contracts with port logistics service providers. Hence, trust and communication are crucial relationship assets for port logistics firms in their interactions with shippers. By cultivating high levels of trust and communication with shippers, port logistics firms can encourage a greater degree of flexibility to meet their needs. This flexibility is considered an important resources for firms, despite having social complexity and causal ambiguity concerning performance. To establish inter-firm relationships, port logistics firms must identify the specific needs of shippers. Continuous communication with shippers services as the foundation for logistics service providers, enabling them to fulfill customer requirements effectively. From the perspective of shippers, securing reliable port logistics firms that provide stable services is a crucial element for the implementation of trade contracts. Therefore, the relationships between port logistics firms and shippers can be understood as strategic alliances, and effective communication services as the basis for minimizing transaction costs. Consequently, the communication between port logistics firms and shippers can be regarded as a valuable relationship asset for the former. Communication in firm relationships is considered a crucial factor that enhances the flexibility of service providers. Port logistics firms should maintain continuous communication with shippers to comprehend their needs, minimize misunderstandings in the relationships, and adapt to any changes in the shippers’ requirements within the port logistics process. By doing so, port logistics firms can establish highquality relationships with shippers and further strengthen those relationships (Cho, 2012; Paulraj et. al., 2008). The communication of port logistics firms can be seen as the establishment of direct relationships with shippers. It enables them to directly understand the needs of shippers, share realistic information, determine appropriate course of action, solve problems, and gain a mutual understanding of the situation. Paulraj, Lada, and Chen (2008) found empirical evidence that communication between buyers and suppliers positively affects performance. Communication, therefore, can be seen as a key aspect of the relationships between firms and contributes to the formation of long-term relationships. Furthermore, Cousins and Menguc (2006) identified communication as a firm resource and demonstrated its positive effects on the performance of buyers. From the perspective of firm relationships, communication between port logistics firms and shippers directly affects the flexibility of port logistics firms and the quality of their customer relationships. Port logistics firms enhance their capabilities by identifying the needs of shippers and establishing flexible internal processes to fulfill those needs. This capability-building process can be explained by the resource-based theory. Moreover, communication serves as the foundation for port logistics firms to strengthen their customer relationships with shippers by understanding their specific requirements. Based on those consideration, this study proposes the following hypothesis. H.1: Communication between port logistics firms and shippers positively affects flexibility (H. 1–1) and customer relationships (H. 1–2) of port logistics firms. 2.2. Trust of port logistics firms In order to foster value sharing between firms, it is essential for them to have a sense of empathy towards the value, and mutual trust should be established (Cho, 2013). When there is a lack of empathy for value between port logistics firms and shippers within the port supply chain, the understanding of shared goals within the port supply chain is diminished, resulting in a lack of mutual trust. This lack of trust makes it challenging to achieve the desired goals. To prevent this, port logistics firms and shippers need to cultivate empathy for value through proactive communication, which, in turn, enhances the level of trust. Prior research has defined trust as the extent to which partners believe in each other (Doney and Cannon, 1997; Mayer, Davis, & H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 120 Shoorman, 1995; Jung and Lee, 2014; Tong and Chan, 2022). From the viewpoint of SCM, trust can be seen as the degree of solidarity among participants. Trust within the port supply chain specially pertains to the relationships between port logistics firms and shippers. Port logistics firms establish these inter-firm relationships through continuous contact and interaction with shippers. Through close cooperation, shippers provide market information for port logistics firms, while port logistics firms share service-related information with shippers. The mutual exchange of information is seen as a mutually beneficial arrangement, contributing to the formation of valuable knowledge within the market. Ultimately, this knowledge serves as the foundation for building trust between port logistics firms and shippers. From the perspective of port logistics firms, the high-quality relationships formed through trust with shippers are applied to internal service processes, laying the groundwork for the provision of excellent services such as flexibility. Trust between port logistics firms and shippers cannot be established in a short period of time; instead, it is cultivated through long-term cooperation and communication, forming the basis for standardizing processes between firms. Consequently, shippers become increasingly reliant on the logistics services provided by port logistics firms due to the strong and trustworthy relationship establishing between them. Trust is considered a crucial factor in inter-firm relationships, specially viewed as a relationship-specific element. It is recognized as an intangible asset that emerges from the interplay of firms within the resource-based theory framework. Inter-firm trust is explained through the lens of mutual benefits between port logistics firms and shippers, with both parties expected to act in the utmost good faith. With a focus on mutual benefits, they engage in profit-sharing behavior during information exchange, and the shared information is subsequently integrated into the internal processes of the respective firms. This shared information becomes the foundation for developing competitive advantage as intangible assets for the firms. Prior research has consistently demonstrated a positive relationship between inter-firm trust and performance (Rajaguru and Matanda, 2009; Stuart, Verville, & Taskin, 2012; Ali and Khalid, 2017; Ahlf et al., 2019; Agarwal and Narayana, 2020; Leonardo et al., 2020). Based on these findings, this study proposes the following hypothesis. H.2: Trust between port logistics firms and shippers positively affects flexibility (H. 2–1) and customer relationships (H. 2–2). 2.3. Flexibility and customer relationships of port logistics firms Inter-firm relationships can be explained through the lens of competition and cooperation, as highlighted by Nalebuff and Brandenburger (1996). Similarly, when examining the relationships between port logistics firms and shippers, it is evident that cooperation plays a more significant role than competition, unlike typical service provider-customer relationships. In this context, the relationships between port logistics firms and shippers can be better understood through the empathy shared between the firms. Shippers provide information to port logistics firms that allows them to adapt their internal processes to meet market demands, thereby enabling the development of flexible processes that fulfill these needs. The establishment and continuation of these relationships are driven by the pursuit of sustainable competitive advantages in the market. Flexibility, in this context, refers to the ability of port logistics firms to gether external market information, incorporate it into their internal processes, and deliver superior service processes. This concept aligns with the notion of market orientation in relationship marketing (Bae and Grant, 2018). By fostering flexibility, port logistics firms can forge long-term relationships with shippers and enhance the quality of these relationship. However, achieving flexibility is not an easy task, given the inherent differences between service firms and manufacturing firms. Gr¨ onroos (2000) emphasized three characteristics of services, namely the simultaneity of production and consumption, invisibility, and external factors. Similarly, port logistics services share these same characteristics, making it challenging to achieve flexibility. In particular, flexibility is even more difficult to attain in the context of port logistics services, as they are typically provided through contracts between various port logistics service providers (such as loading/ unloading firms, bonded warehouses, bonded transporters, container terminals, customs brokers, etc.) and carriers (such as liners or international freight forwarders), acting on behalf of shippers. To overcome this challenge, port logistics firms can develop flexible service processes by cultivating long-term relationships with shippers, forstering trust and effective communication, and adapting their service processes to accommodate the needs of shippers. This, in turn, enables port logistics firms to enhance collaboration with shippers, primarily built upon the foundation of long-term relationships. Based on these considerations, this study proposes the following hypothesis: H.3: Flexibility of port logistics firms positively affects customer relationships. 2.4. Interaction effects of trust and communication on flexibility and customer relationships of port logistics firms There are two factors that contribute to the formation of long-term relationships between port logistics firms and shippers. The first factor is the establishment of sustainable trust and communication between them, while the second factor involves the ability of port logistics firms to adapt their service processes to align with the needs of shippers. Flexibility, in this context, refers to the operational approach of port logistics firms, which entails more than simply accommodating the needs of shippers; it involves engaging in cooperative processes with them. The operational flexibility of port logistics firms can be defined as their responses, intentions and behaviors in meeting the needs of shippers. Furthermore, flexibility is also explained within the framework of social exchange theory, which not only requires changes in the service processes of port logistics firms in response to the needs of shippers but also necessitates changes in the logistics processes of shippers to meet the needs of port logistics firms. Without trust and communication from a long-term perspective, inter-firm relationships are likely to be discontinued due to a lack of flexibility. Therefore, trust and communication between port logistics firms and shippers are crucial factors that strengthen the relationship between flexibility and customer relationships (Hand and Seung, 2007). The effects of trust and communication between port logistics firms and shippers on flexibility and customer relationships of port logistics firms were been explained above. Trust and communication are regarded as antecedent variables that affect flexibility and customer relationships. However, there is currently no research focusing on the variables that enhance the relationship between flexibility and customer relationships from the perspectives of port logistics firms and shippers. In inter-firm relationships, the short-term perspective tends to prioritize efficiency, while the long-term perspective can be characterized by the sharing of mutual benefits. Port logistics firms and shippers share information for mutual benefits and subsequently adapt their processes accordingly. As a result, trust and communication serve as interaction variables in addition to being antecedent variables in the relationship between flexibility and customer relationships. Based on these considerations, this study proposes the following hypothesis. H. 4: Trust (H. 4–1) and communication (H. 4–2) between port logistics firms and shippers enhance the relationships between flexibility and customer relationships of port logistics firms. 3. Research model and methodology 3.1. Research model The theoretical relationships between the variables necessary to H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 121 achieve the objectives of this study have been identified through prior research. The research model is presented below Fig. 1: 3.2. Methodology 3.2.1. The definitions of the variables This study aims to analyze the relationships between trust, communication, flexibility, and customer relationships between port logistics firms and shippers. The conceptual and operational definitions of these variables have been established through prior research. First, trust refers to the degree of belief in partners and is defined as the level of reliability between port logistics firms and shippers (Chen, Yen, Rajkumar, & Tomochko, 2011; Cho, 2012). Second, communication is defined as the frequency, quality, and quantity of information exchange between port logistics firms and shippers (Doney and Cannon, 1997; Jung and Lee, 2014). Third, flexibility is defined as the extent to which port logistics firms respond flexibly in providing services to shippers (Stank, Keller, & Daugherty, 2001/2002; Bae and Lee, 2008). Fourth, customer relationships are defined as the cooperative efforts, understanding of different perspectives, sharing information and resources, and achievement of common goals between port logistics firms and shippers (Stank et al., 2001; Bae and Lee, 2015). All items are measured using a seven-point Likert scale based on respondents’ perceptions. The operational definitions of the variables can be found in Appendix 1. 3.2.2. Analytical methods The population of this study comprises port logistics firms in the Republic of Korea. Given the diverse range of firms involved in port logistics processes, this study distributed questionnaires to firms providing port logistics services to shippers. The sampling frame consisted of firms listed in the membership roster of the Busan Port Authority, which is representative as it includes the majority of port logistics firms. A random sampling method was employed to select 1000 firms from the sampling frame. The questionnaire was sent to these firms via email for the survey (URL). The survey was conducted from January 2022 to March 2022, and 242 firms responded. Four responses were excluded due to same responses or no responses, resulting in 238 usable responses (23.8%) for analysis. Various analytical methods were utilized to test the hypotheses in this study. First, the method recommended by Armstrong and Overton (1977) was employed to examine non-response bias in the data. The questionnaires were categorized into four clusters based on the order of arrival, with the first cluster representing the most enthusiastic respondents and the last cluster representing the most cautious respondents. If there were no significant differences in the responses between these two clusters, it would indicate the absence of non-response bias. Analysis of variance was employed for this test. The result of the test indicated no non-response bias (F=0.975, p =0.326). Second, a stability analysis of the data is conducted from confirmatory factor analysis, which aims to assess whether the sample characteristics align with the population characteristics based on the fitness indices of the model. In terms of fitness indices, if the P value is not significant at the 5% level, the Root Mean Square Error of Approximation (RMSEA) is below 0.08, and the others fit indices are over 0.9, it indicates that the sample characteristics are consistent with the population characteristics. To examine discriminant validity, the average variance extracted (AVE) is compared with the square of a correlation coefficient, and if the former is higher than the latter, it indicates no issue. Third, the hypotheses are tested by two methods. One is that the path analysis among the variables is conducted through a structural equation model, which is a variable analytical approach as it provides more comprehensive insights compared to multiple regression analysis. The other is that the interaction effects of trust and communication are examined using cluster analysis, analysis of variance, and regression analysis. The selection of multiple analytical methods is based on the need to test the interaction effect throughly. The analysis follows three steps: firstly, the interaction variable is divided into two clusters (i.e., high and low) based on the average; secondly, the causality between the variables is tested within each clusters; thirdly, the interaction variable is deemded significant if the high cluster demonstrates higher values than the low cluster, as evidenced by a comparison of t values, F values, and R-square values. This is prefered due to its rigorous nature. The results are presented as follows. 4. The results of empirical tests 4.1. The general characteristics of responding firms To achieve the objectives of this study, 238 data were utilized for analysis. The following outlines the general characteristics of the responding firms. There are various types of business presented in Table 1. The latgest category is forwarders, consisting of 82 firms, while the smallest category is loading and unloading firms, comprising only 7 firms. Other Fig. 1. Research model. Table 1 The general characteristics of the responding firms. Types of business Frequency (%) Annual turnover (million U$) Frequency (%) Liners Forwarders Customer brokers Loading/unloading Bonded warehouses Inland transport Others No response 11 (4.6) 81 (34.0) 12 (5.0) 7 (2.9) 58 (24.4) 62 (26.1) 3 (1.3) 4 (1.7) Less than 1 1 - 5 5 - 10 Over 10 No response 71 (29.8) 92 (38.7) 16 (6.7) 55 (23.1) 4 (1.7) Employees Frequency (%) Less than 10 10 - 30 30 - 50 50 - 100 Over 100 No response 77 (32.4) 103 (43.3) 4 (1.7) 6 (2.5) 45 (18.9) 3 (1.3) Total 238 (100.0) H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 122 categories include various service providers involved in port logistics processes. Regarding annual turnover, there are 92 firms with turnovers ranging from over U$ 1 million to less than U$ 5 million, representing the highest count. Moverover, there are 103 firms with the highest numbers of employees falling between over 10 and less than 30. These findings indicate significant diversity in terms of business types, annual turnover, and the number of employees within the sample. 4.2. The results of reliability and validity tests Before testing the hypotheses, this study conducted a confirmatory factor analysis to assess the stability of the data. The results are presented below. As presented in Table 2, trust is represented by three items (tru 4 is deleted), while communication is represented by four items. The measurement model exhibits excellent fitness indices, indicating a good fit. Additionally, the factor loading coefficients for all items exceed 0.5, and AVE coefficients are also above 0.5, confirming satsfactory validity. However, item 4 in trust category is excluded from the analysis due to its factor loading coefficient falling below the required criterion. Despite this exclusion, reliability remains high, with trust scoring 0.898 and communication scoring 0.899 based on Cronbach’s alpha coefficient, demonstrating good internal consistency. As presented in Table 3, both flexibility and customer relationships consist of five items each. The validity of the measurement model is satisfactory as all fitness indices exceed the required criteria. Additionally, the factor loading coefficients and the AVE values are all within acceptalbe ranges, indicating good validity. Moreover, the reliability of the constructs is high, with flexibility scoring 0.915 and customer relationships scoring 0.939 based on Cronbach’s alpha coefficients, demonstrating strong internal consistency and reliability. Therefore, there are no issues with the reliability of the measures. Table 4 displays the relationships between the variables. To assess discriminant validity, the AVE is compared with the square of the correlation coefficients for each variable. The results indicate that the AVE values are higher than the corresponding squared correlation coefficients, confirming discriminant validity. Therefore, there are no issues with the results in terms of discriminant validity. 4.3. The results To test the hypotheses, path analyses were conducted. The results are represented below. The results of the hypotheses testing are presented in Table 5. However, the fitness indices do not meet the criteria for all indices, indicating differences between the characteristics of the population and the sample. As a result, the findings can only be generalized to the sample firms. Hypothesis 1 is supported, suggesting that trust has a positive effect on flexibility and customer relationships. Hypothesis 2 is partially supported, revealing that communication has a positive effect on flexibility (H. 2–1 is supported), but it has no effect on customer relationships (H. 2–2 is rejected). Hypothesis 3 is supported, indicating that flexibility has a positive effect on customer relationships. The following reuslts pertain to the interaction effects of trust and communication on the relationship between flexibility and customer relationships. As presented in Table 6, trust is divided into two clusters. Cluster 1 represents a group with low trust between port logistics firms and shippers, with an average score of 3.93. On the other hand, cluster 2 comprises a group with high trust, with an average score of 5.75. These clusters are demonstrated as a result of the ANOVA analysis, indicating distinct levels of trust between the groups. Based on this classification, this study proceeds to analyze the interaction effect of trust and flexibility on customer relationships. As presented in Table 7, the high cluster exhibits higher values in tvalue, F-value, and R-square compared to the low cluster. Consequently, hypothesis 4–1 is supported, suggesting the presence of an interaction effect between trust and flexibility on customer relationships. As presented in Table 8, communication is categorized into two clusters. The first cluster represents a group with high communication, having an average score of 5.26, while the second cluster comprises a group with low communication, having an average score of 3.57. This classification is demonstrated through ANOVA, establishing distinct clusters based on communication levels. Next, this study examines the result of the interaction effect between communication and flexibility on customer relationships. As presented in Table 9, the high cluster demonstrated higher values in t-value, F-value, and R-square compared to the low cluster. Consequently, hypothesis 4–2 is supported, indicating the existence of an interaction effect between communication and flexibility on customer relationships. Now, let’s proceed with the discussion of the results. 5. Discussion The results of the analyses can be discussed as follows. First, trust between port logistics firms and shippers has a positive effect on flexibility and customer relationships. Port logistics firms provide flexible services for shippers, share information and resources on the basis of a high level of mutual understanding, and achieve common goals when there is a high level of trust between them. These results align with previous findings by Christoffersen (2013), Stuart et al. (2012), and Cho (2012), which also demonstrated the positive impact of trust on performance. Establishing trust as an internal resource of port logistics firms takes time, and the existing trust with shippers becomes a valuable asset of firms. Moreover, trust between port logistics firms and shippers contributes to effective collaboration, represents a rare resource, is not easily imitated by competitors, and holds a unique position among other resources. Additionally, the relationshhip between trust and performance involves social complexity and causal ambiguity. Therefore, port Table 2 The result of a confirmatory factor analysis on trust and communication. Items Estimate S.E. C.R. P Factor loading AVE tru 1 2.212 0.356 6.216 0.000 0.865 0.756 tru 2 2.493 0.385 6.472 0.000 0.984 tru 3 1.829 0.271 6.760 0.000 0.742 tru 4 1.000 - - - 0.388 com 1 1.143 0.070 16.303 0.000 0.933 0.681 com 2 1.158 0.071 16.425 0.000 0.945 com 3 0.799 0.061 11.905 0.000 0.595 com 4 1.000 - - - 0.778 Notes) Chi-square=4.202, df=4, P =0.379, GFI=0.996, AGFI=0.960, CFI=1.000, IFI=1.000, TLI=0.999, RMSEA=0.015; tru: trust; com: communication Table 3 The result of a confirmatory factor analysis on flexibility and customer relationships. Items Estimate S.E. C.R. P Factor loading AVE fle 1 1.029 0.056 18.226 0.000 0.841 0.690 fle 2 1.017 0.049 20.883 0.000 0.899 fle 3 0.734 0.068 10.730 0.000 0.615 fle 4 0.937 0.049 19.068 0.000 0.862 fle 5 1.000 - - - 0.902 cus 1 0.940 0.062 15.198 0.000 0.834 0.731 cus 2 1.010 0.064 15.714 0.000 0.853 cus 3 1.220 0.069 17.685 0.000 0.958 cus 4 1.014 0.051 19.710 0.000 0.805 cus 5 1.000 - - - 0.814 Notes) Chi-square=13.993, df=9, P =0.123, GFI=0.989, AGFI=0.930, CFI=0.998, IFI=0.998, TLI=0.990, RMSEA=0.048; fle: flexibility; cus: customer relationships H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 123 logistics firms that have already developed trust with shippers can leverage it as a core competency and a means to maintain a sustainable competitive advantage in the market. Second, port logistics firms that engage in frequent communication with shippers are better able to provide flexible services. Through information exchange with shippers, these firms can tailor their service processes to meet the specific needs of shippers, thereby delivering excellent services. As a result, they can enjoy a sustainable competitive advantage in the market. However, the effect of communication on customer relationships is not supported in the result. In practice, when service providers engage in high levels of communication with customers, customer needs may increase, potentially leading to a strain in the relationship between service providers and customers. It is important for both port logistics firms and shippers to recognize that not all needs of shippers can be accommodated, and excessive demands from shippers might negatively affect the relationship with port logistics firms. Third, the flexibility of port logistics firms enhances customer relationships with shippers. Port logistics firms capable of providing flexible services to shippers can effectively align their objectives and establish superior relationships with shippers. Since port logistics services always involve non-face-to-face interactions with customers, the flexibility of service providers plays crucial role in fostering positive customer relationships. Specifically, the flexibility of port logistics services is considered an intangible asset that contributes to the development of long-term relationships with shippers, given the high uncertainty prevalent in international logistics. Therefore, port logistics firms that prioritize and develop flexibility as an intangible asset can build enduring relationships with shippers, ultimately serving as a foundation for attaining sustainable competitive advantages in the market. Fourth, there are interaction effects between independent variables (trust and communication) and flexibility on customer relationships of port logistics firms. According to the aforementioned results, port logistics firms should proactively emphasize trust and communication with shippers to strengthen their flexibility and customer relationships. Additionally, providing flexible services for shippers is essential, alongside building enduring and trustful relationships with them to achieve common objectives. Moreover, establishing flexible processes that cater to the specific needs of shippers through sustainable communication is vital. As demonstrated in the results, port logistics firms should prioritize cultivating long-term relationships with shippers and achieving common goals based on these relationships, rather than solely focusing on enhancing performance through trust and communication. Therefore, by enhancing trust and communication with shippers, providing flexible services, and maintaining long-term relationships, port logistics firms can effectively achieve shared objectives. Table 4 The result of correlation analysis. Variables Average Standard deviation Trust Communication Flexibility Customer relationships Trust 5.275 1.010 1.000 Communication 4.778 1.004 0.401 *** (0.161) 1.000 Flexibility 4.488 1.034 0.458 *** (0.210) 0.704 *** (0.496) 1.000 Customer relationsips 4.240 1.151 0.408 *** (0.196) 0.670 *** (0.449) 0.763 *** (0.583) 1.000 Notes) * ** <0.01; The numbers in parentheses are the square of a correlation coefficient. Table 5 The results of empirical test. H. Path Estimate S.E C.R. P Results H. 1-1 Trust→Flexibility 0.099 0.043 2.288 0.022 Supported H. 1-2 Trust→Customer relationships 0.029 0.013 2.257 0.024 Supported H. 2-1 Communication→Flexibility 0.813 0.085 9.573 0.000 Supported H. 2-2 Communication→Customer relationships -0.034 0.053 -0.636 0.525 Rejected H. 3 Flexibility→Customer relationships 0.652 0.073 8.954 0.000 Supported Notes) Chi-square=223.347, df=96, P =0.000, GFI=0.822, AGFI=0.682, CFI=0.886, IFI=0.888, TLI=0.819, RMSEA=0.152 Table 6 The result of cluster analysis on trust. Cluster 1 2 ANOVA (F) Low (n =62) 3.93 396.006 (p =0.000) High (n =176) 5.75 Table 7 The interaction effect between trust and flexibility on customer relationships. Path Low cluster (n =62) High cluster (n =176) t F R 2 t F R 2 Flexibility→ Customer relationships 3.518 *** 12.373 *** 0.171 16.287 *** 265.271 *** 0.604 Note) * ** <0.01 Table 8 The result of cluster analysis on communication. Cluster 1 2 ANOVA (F) High (n =170 5.26 332.676 (p =0.000) Low (n =68) 3.57 H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 124 6. Conclusion The objective of this study is to examine the effects of trust and communication on flexibility and customer relationships between port logistics firms and shippers. To accomplish this objective, the theoretical relationships among the variables were assessed based on prior research, and data was collected through a survey administrated to port logistics firms. The reliability and validity of the data were evaluated using confirmatory factor analysis and Cronbach’s alpha coefficients. The hypotheses were tested utilizing a structural equation model analysis, cluster analysis, analysis of variance, and regression analysis. The theoretical implications of the results were discussed earlier, and the ensuing sections cover managerial implications, limitations and future research directions. The managerial implications can be outlined as follows: First, managers within port logistics firms should actively forster trust and communication with shippers, treating them as valued customers. The approach will strengthen flexibility and enhance customer relationships. To address the diverse requirements of shipers throughout port logistics processes, managers should establish adaptable service protocols that are responsive to the needs communicated through tust-based interactions. Cultivating enduring relationships with shippers will play a pivotal role in achieving mutual objectives. Consequently, managers should develop flexible service processes firmly grounded in trust and effective communication with shippers, thereby nurturing stronger customer relationships. This is pivotal for gaining a competitive edge in the market. Second, managers of port logistics firms should prudently manage excessive demands from shippers. While communication helps managers understand the needs of shippers, it is crucial to discern overly burdensome demands that could strain relationships between service providers and customers. Research indicates a negative impact customer relationships stemming from such excessive demands. Therefore, managers need to carefully evaluate the appropriate level of communication necessary to establish and maintain optimal relationships between port logistics firms and shippers. Striving for a balanced and mutually benefical approach becomes imperative in fostering these relationships. Strong relaionships enable port logistics firms to enjoy competitive advantages in the market. Third, communication and trust act not only as preceding variables but also as interacting variables influencing the flexibility and customer relationships of port logistics firms. Managers must construct flexible services aligned with customer needs to pave the way for sustainable relationships with shippers. To achieve this, it is pivotal for managers to cultivate enduring long-term relationships through trust and effective communication. This underscores the necessity of creating a cooperative culture founded on trust and communication, complementing the provision of flexible services and thereby nurturing long-term relationships with shippers. These firms can provide customers with high quality port logistics services. Notwithstanding the aforementioned implications, this study is not devoid of limitations, which are delineated as follows. First, the postulation regarding the effect of communication on customer relationships has been negated. While this study attributes this outcome to the detrimental impact of communication stemming from the excessive demand placed by shippers, a more comprehensive exploration of the intricate relationship between these variables is warranted. Second, the fitness indices of the structural model fail to meet satisfactory standards. Although this study offers an explanatory by confining to generalizability of results to the sampled firms, a more exhaustive examination is imperative to shed light on this matter. Third, this study did not explore cultural or regional variations since the population comprises port logistics firms in the Republic of Korea. Therefore, based on the fitness indices, the results are generalized to the sample firms. These limitations inherently guide the future research directions, propelling the need for further investigations in this domain. Declaration of Competing Interest None. Acknowledgement This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF2021S1A5A2A01066725). Appendix 1. The operational definitions of the variables Variables Measuring items Researchers Communication Frequency of contact with shippers (com 1) Continuous contact with shippers in relation to works (com 2) Informal contact with shippers in relation to works (com 3) Smooth contact with shippers (com 4) Chen et al. (2011) Cho (2012) Trust Strict fulfillment of promises with shippers (tru 1) Responsible conduct in relation to shippers (tru 2) A degree of doing your best to the needs of shippers (tru 3) A high level of recognition by shippers for port logistics services (tru 4) Doney and Cannon (1997) Jeung and Lee (2014) Flexibility An increase of operational flexibility through cooperation with shippers (fle 1) An ability to respond to the changing needs of shippers (fle 2) An ability of sustainably sharing information with shippers to respond to the change of market environment (fle 3) An ability of providing value-added services in the whole port logistics processes (fle 4) An ability to cooperatively work with shippers when problems are happened (fle 5) Stank et al. (2001)/(2002) Bae and Lee (2008) (continued on next page) Table 9 The interaction effect between communication and flexibility on customer relationships. Path Low cluster (n =62) High cluster (n =176) t F R 2 t F R 2 Communication→ Customer relationships 17.055 *** 290.885 *** 0.634 3.570 *** 12.745 *** 0.162 Note) * ** <0.01 H.-S. Bae The Asian Journal of Shipping and Logistics 40 (2024) 118–125 125 (continued) Variables Measuring items Researchers Customer relationships Close information exchange with shippers for port logistics management (cus 1) A degree of reflecting the needs of shippers when port logistics services are provided (cus 2) A degree of sharing information concerned with port logistics with shippers (cus 3) An ability of providing port logistics services which shippers want (cus 4) The mutual effort for achieving port logistics performance with shippers (cus 5) Stank et al. (2001) Bae and Lee (2015) References Agarwal, U. A., & Narayana, S. A. (2020). Impact of relational communication on buyersupplier relationship satisfaction: Role of trust and commitment. Benchmarking: An International Journal, 27(8), 2459–2496. 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