Transportation Research Part E 41 (2005) 201–215

www.elsevier.com/locate/tre

Logistics managersÕ stated preferences for freight

service attributes
a,*
Romeo Danielis , Edoardo Marcucci b, Lucia Rotaris a

a
Dipartimento di Scienze Economiche e Statistiche, Universita degli Studi di Trieste, P.le Europa 1, 34127 Trieste, Italy
b
Istituto di Scienze Economiche, UniversitaÕ di Urbino, via Saffi 42, 61029 Urbino PU, Italy

Received 6 July 2003; received in revised form 27 February 2004; accepted 23 April 2004

Abstract

This paper reports the results of an adaptive conjoint analysis (ACA) experiment performed in two Ital-
ian regions that estimates logistics managersÕ preferences for freight service attributes. Two sets of estimates
have been obtained: (a) the utilities associated to each attribute level for each experiment, and (b) the attri-
bute utility via an ordered probit model. Both estimates indicate, on average, a strong preference for attri-
butes of quality (time, reliability, and safety) as opposed to cost.
Ó 2004 Elsevier Ltd. All rights reserved.

Keywords: Freight transport; Transport demand; Stated preference; Logistics; Conjoint analysis

1. Introduction

In a globalised and competitive environment, characterised by complex logistics and supply

chain structures, assessing firmsÕ value of service for freight transport is important for many dif-
ferent actors. Carriers, for example, could take advantage of knowledge of a firmÕs willingness to
pay for specific service characteristics in order to customize their services, differentiating them
properly and strengthening their own competitive position. Public agencies, sectoral authorities

*
Corresponding author. Tel.: +39-040-5587076; fax: +39-040-567543.
E-mail address: danielis@univ.trieste.it (R. Danielis).

1366-5545/$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tre.2004.04.003
202 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

or local governments could acquire valuable information and make better investments decisions
or implement regulations to increase the efficiency of the transport system and improve the com-
petitiveness of a region. Finally, researchers could use estimates of freight service attributes to feed
their transport demand models.
Several methodologies can be used to analyse how shippers evaluate and select freight transport
services. Mangan et al. (2002) propose the following classification: input-oriented, output-ori-
ented and process-oriented models. This paper implements and tests the potential of an adaptive
conjoint analysis (ACA) methodology––an output-oriented type of model in ManganÕs
classification.
Conjoint analysis is a stated preference-based technique, largely used and discussed in transport
studies on freight and passenger transport (see, for example, Fowkes and Shinghal, 2002a,b;
Maier et al., 2002; Maier and Bergman, 2001; Bolis and Maggi, 2002; Fridstrøm and Madslien,
2002). Stated preferences are collected via choice experiments, often in face-to-face interviews,
and analysed within the framework of discrete choice models. Though widely used in transport
studies, applying these to freight transport is still fraught with difficulties. Bergkvist (2001) argues
that the evaluation of freight transport attributes is still in its infancy compared to passenger
transport. Important issues concerning theory, data and sampling, experimental design, model-
ling, and interview and software still need to be tackled.
An important theoretical issue is which framework best accounts for the fact that freight service
evaluation and selection happens within a firm, possibly with the involvement of more than one
person. Winston (1979) suggests a utility maximising framework in which the logistic managerÕs
seeks to maximise his personal utility by performing outstandingly and by devising efficient trans-
port solutions for his company. Should he fail, he may ultimately lose his job. A potential prin-
cipal-agent problem may arise if the transport manager has different information and goals than
the company ownersÕ. Rose and Hensher (2004) propose an interactive agency conjoint experi-
ment methodology to take into account that choices are made in a context of interdependence
both with the shipper and with the carriers.
The theoretical framework influences how the experiment is designed and conducted, which
attributes to include, if to specify the mode of transport as an attribute or not, and so on.
Various modelling approaches could be used to analyse the data collected in the experiment,
ranging from the frequently used logit models to the more recent mixed logit or latent class mod-
els. Experiments can be conducted by mail, paper-and-pencil questionnaires, face-to-face inter-
views, computer-administered software or, possibly, by making use of the world-wide-web.
Various computer software exists––such as LASP, MINT, and ACA––specifically designed for
conjoint experiments.
Notwithstanding the large variety of approaches adopted, freight transport stated preference
studies recently conducted in Europe found some interesting empirical regularities. For instance,
there is a consensus on the importance of reliability in determining mode choice. Estimates of
value of time performed so far fall within a reasonably small range (see de Jong, 2000; Bergkvist,
2001). On the other hand, some authors find relevant differences among shippers preferences
according to the specific sector of activity (Maier and Bergman, 2001), while others see a more
homogenous picture (Bolis and Maggi, 2002).
Building on this literature, this paper investigates logistics managersÕ preferences for service at-
tributes in two Italian regions, Friuli Venezia Giulia and Marche, located in the North-East and in
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 203

the Centre of Italy, respectively. Experiments are conducted with the ACA software developed by
Sawtooth Software Inc. for marketing applications (Sawtooth Software, 1991–2002). This soft-
ware is characterised by the following features:

(a) It provides utility estimates for each attribute level at the end of each interview. This feature
allows us to perform segmentation analyses of the relationship between stated preferences and
shipmentÕs and firmÕs characteristics.
(b) It collects data on respondentsÕ choices among hypothetical options to perform standard
econometric estimates of discrete choice models.
(c) It is adaptive since questions are customised from previous answers, thus making interviews
more time-efficient, 1 though affecting design orthogonality.

Consequently, two sets of results will be presented and compared––individual estimates for
each shipper, and aggregate estimates for the whole and segments of the sample.
The hypothetical alternatives presented in the experiments are consistent with the theoretical
principles of the abstract-mode inventory model developed by, among others, Baumol and Vinod
(1970). In the abstract-mode inventory model, firmsÕ decisions are based on the total logistics cost,
which is the sum of the direct shipping cost, in-transit carrying cost, ordering cost, recipientÕs
inventory carrying cost, safety stock cost, and loss and damage cost. These costs are product
and firm specific and depend on travel time, reliability, and loss and damage but do not require
mode specification (Danielis and Rotaris, 2002). Hypothetical options are, therefore, character-
ised by service attributes only. This model specification has the advantage of avoiding a potential
correlation bias between service attributes and the mode variable and is consistent with any uni-
modal or multimodal shipment type. The disadvantage is that it does not allow us to estimate
mode-specific constants to be used in unimodal choice forecasting.
Four attributes characterise each hypothetical option: cost, time, reliability and damage. The
first three attributes appear quite frequently in the literature, whereas the fourth one is seldom
included, though it resulted very important in our experiments.
Methodological and experimental issues are discussed in Section 2. The sample is presented in
Section 3, and ACA estimates are reported in Section 4. Econometric estimates are presented in
Section 5. Section 6 contains some comments and conclusions.

2. Methodology

Face-to-face interviews with logistics managers were administered via a laptop computer
equipped with ACA version 4. Each interview consisted of two parts. In the first, basic informa-
tion about the firm was collected and managers asked to describe the characteristics of the typical

1
The ACA manual describes adaptive as follows: The term ‘‘adaptive’’ refers to the fact that the computer-
administered interview is customised for each respondent; at each step, previous answers are used to decide which
question to ask next, to obtain the most information about the respondentÕs preferences . . . Questioning is done in an
‘‘intelligent’’ way; the respondentÕs utilities are continually re-estimated as the interview progresses, and each question is
chosen to provide the most additional information, given what is already known about the respondentÕs values.
Respondent utilities are available upon completion of the interview.
204 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

transport relation on the input and output sides of the company. In the second, with reference to
the typical shipment, managers were asked to answer the questions generated by the ACA soft-
ware. Two independent ACA experiments were generally performed: one regarding the input side
and one the output side of the firm. In a number of cases only one experiment could be completed.
Each interview lasted about an hour.
An ACA experiment is made up of four sets of questions: (1) unacceptable levels; (2) impor-
tance of attribute levels; (3) paired-comparison trade-offs; and (4) calibrating concepts. Detailed
description of each section can be found on the ACA technical paper (Sawtooth Software, 1991–
2002). Few theoretical points are discussed in this section.
An important characteristic of ACA software is that it estimates the utility associated with each
level of each attribute, both for qualitative and quantitative variables. In order to compare pref-
erences across respondents it is therefore necessary to keep attribute levels fixed. On the other
hand, it is important to customise hypothetical scenarios as much as possible since freight ship-
ments are highly heterogeneous. To meet both requirements, we expressed attribute levels as re-
ported in Table 1. The base scenario is the following: transport cost is equal to the current cost of
the typical shipment; travel time is equal to current travel time of the typical shipment; there is no
risk of delay and no risk of damage and loss. Variations from the base scenario are expressed in
absolute terms for the time attributes, and in percentage terms for transport cost and risk of
damage.
In the first step, the ACA software allows the respondent to define which attribute levels are
considered acceptable and which are not. Attribute levels judged unacceptable are not used in
the hypothetical profiles. In SwaitÕs terminology (Swait, 2001), unacceptable levels in the ACA
procedure are assumed to be ‘‘hard cut-offs’’, that is compensatory behaviour takes place only
within limits defined by the respondent. Given the heterogeneity among shipments, we initially
made use of this feature to enhance the realism of the hypothetical profiles and to improve the
informational content of the choice experiments. Excluding unacceptable levels has the further
positive effect of reducing the number of attribute levels, therefore reducing the number of ques-
tions asked, shortening the length of interviews and avoiding possible fatigue distortions.
Respondents made large use of the ‘‘unacceptability’’ feature (Table 2).
A ‘‘10% increase in transport cost’’ is considered unacceptable in 49 out of 64 cases, a ‘‘risk
of 3 days delay’’ in 56 cases, a ‘‘3 days of more travel time’’ is frequently viewed as unacceptable,
as it is a ‘‘risk of damage or loss equal to 10% of the shipment value’’.

Table 1
Attributes and attribute levels used in the ACA experiment
Attribute # 1 Attribute # 2 Attribute # 3 Attribute # 4
Cost Travel time Punctuality Damage and loss
10% below current cost Equal to current travel time No risk of delay No risk of damage and loss
5% below current cost 1 more day than current Risk of a 1/2-day delay Risk of damage and loss equal
travel time to 5% of shipment value
Equal to the current cost 3 days more than current Risk of a 1-day delay Risk of damage and loss equal
travel time to 10% of shipment value
5% above current cost 5 days more than current Risk of a 3-day delay
travel time
10% above current cost
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 205

Table 2
Number of times a level was judged unacceptable over 64 experiments
Attributes and levels No.
Cost
10% below 1
5% below 0
Equal 0
5% above 30
10% above 49

Travel time
Equal 0
1 more day 0
3 more days 54
5 more days 59

Risk of delay
Zero risk 0
Risk of a 1/2-day 0
Risk of a 1-day 27
Risk of a 3-day 56

Risk of damage and loss

Zero risk 0
Risk of 5% 1
Risk of 10% 56

The unacceptability feature, however, has two negative side effects. Firstly, a mis-specification
error might occur by not showing levels outside the respondentsÕ cut-offs. Swait (2001, p. 906)
states that ‘‘in fact, any method that does not account for cut-offs and their potential violation,
if cut-offs are in fact being used and violated, will cause parameter bias’’. Secondly, since respond-
ents define their individual choice set, individual utility estimates are not homogeneous across
interviews. More precisely, the software distributes 400 utility points among attribute levels.
The number of attribute levels might differ among firms as respondents may exclude some
of them, such that individual utilities are not easily comparable. For this reason, we decided to
perform 29 experiments without the unacceptability feature.
The central part of the ACA questionnaire is the choice section, called the ‘‘paired-comparison
trade-off questions’’ section. Two profiles appear on the computer screen as in Fig. 1. Profiles can
be described using all attributes at once (full profile), or just some of them (partial profile). We
decided to use the full-profile setting for the first 64 experiments, and partial-profile for the
remaining ones, since the former produced unsatisfactory econometric results (as discussed in Sec-
tion 4). Respondents were asked to compare the two profiles and express their preferences using a
9-point scale.
As explained in the ACA technical paper, these values are priors that are updated after each
graded paired-comparison via a quasi-ordinary least square estimating procedure. Finally, utilities
are calibrated with the information obtained in the calibration concept section.
206 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

Which transport service would you prefer?

10% above current cost 5% below current cost

Zero risk of delay Risk of a 1-day delay

Zero risk of damage and loss Risk of damage and loss equal to 10% of shipment value

1 day more than the current time 3 days more than the current time

Strongly Strongly

Prefer Indifferent Prefer

Left Right

1 2 3 4 5 6 7 8 9

Fig. 1. An example of the a graded paired-comparison question.

3. The sample

The sample consists of 65 manufacturing firms, specialised in a variety of products. 35 firms are
located in Friuli Venezia Giulia, a region in the north-east of Italy bordering with Austria and
Slovenia, while the remaining 30 firms are located in Marche, a region in the centre of Italy. Firms
are mostly small or medium sized: 21 have less than 100 employees, 36 have between 100 and 500
employees, and 8 firms have more than 500 employees. All firms buy transport services from
third-party providers, while only 15 outsource transport, inventory and/or packaging services.
Whenever possible, two separate experiments were performed: one for the shipment of outputs
and one for that of inputs. A total of 93 experiments were collected, 65 regarding outputs and 28
regarding inputs.
Managers were asked to define how they organise logistics on the input and output side. On the
input side, 38 managers responded that they buy inputs according to production forecasts, 21
according to the actual demand, and only 5 try to follow just-in-time principles. On the output
side, 35 firms produce according to sale forecasts, 14 on demand and 16 firms adopt a just-in-time
approach. Shipments classified by transit time (less than 6 h, 6–12 h, 12–24 h, and more than 24 h)
appear to be almost equally represented, both for inputs and outputs. In 83 out of 93 experiments,
road was identified as the mode of transport used for the typical shipment. This information will
be used to perform segmentation analysis.

4. ACA estimates

For each experiment, the ACA software provides an estimate of the utility associated with at-
tribute levels. Estimates can be analysed separately, aggregated over sample segments, or over the
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 207

Table 3
Average utility by attribute level in the ‘‘with unacceptable’’ and ‘‘without unacceptable’’ sub-samples
Attribute and levels ‘‘With unacceptables’’ sub-sample ‘‘Without unacceptables’’ sub-sample
Average utility Average utility Average utility Average
(absolute value) (difference) (absolute value) utility (difference)
(1) (2) (3) (4)
Cost
10% below 79.1 59.7 40.0 17.1
5% below 49.8 30.4 32.6 9.6
Equal to current cost 19.5 0.0 22.9 0.0
5% above 8.6 10.9 11.0 11.9
10% above 4.3 15.2 0.2 22.8

Transit time
Equal to current transit time 60.2 0.0 53.3 0.0
1 day more 4.1 56.1 38.6 14.7
3 days more 3.8 56.4 18.4 34.9
5 days more 0.0 60.2 1.0 52.2

Risk of delay
No risk of delay 56.5 0.0 50.8 0.0
Risk of a 1/2-day 15.1 41.3 34.5 16.3
Risk of a 1-day 4.3 52.2 19.2 31.6
Risk of a 3-day 2.1 54.4 0.5 50.3

Risk of damage and loss

No risk of damage and loss 106.1 0.0 52.7 0.0
Risk of 5% 2.2 103.9 24.2 28.5
Risk of 10% 1.3 104.9 0.0 52.7

entire sample. Table 3 presents average utility estimates over the ‘‘with unacceptable’’ and ‘‘with-
out unacceptable’’ sub-samples.
Table 3 is to be read as follows. The first column presents average utility values for each attri-
bute level for the ‘‘with unacceptables’’ sub-sample. It indicates that, given a total of 400 points,
on average 79.1 is the utility associated to a 10% transport cost discount. The utility decreases by
almost 20 points (to 49.8) when the 5% reduction is applied. The second column presents the dif-
ferences in utility associated with each level minus the utility of the base scenario levels. This al-
lows us to make comparisons across attributes. For instance, a transit time increase of one day
decreases utility by an amount equal to 1.85 times a transport cost decrease of 5% with respect
to the current cost. Due to the unacceptability feature, utility changes rapidly as one deviates from
the status quo but then stays almost constant. Without the unacceptability feature (column 3 and
4), however, there is an almost linear relationship between utility and attribute level change.
Let us define the following compensation index (CI)
DU X
CIXC ¼ 
DU C
208 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

where DUX is the variation of utility associated with either a 1-day increase in travel time, a 1/2
day increase in the risk of delay, or a risk of damage and loss increase equal to 5% of the shipment
value, and DUC is the variation of utility associated with a 5% transport cost reduction. Conse-
quently, assuming a linear transport cost function:

 CITC (travel time compensation index) represents how many times a 5% transport cost reduc-
tion should be applied in order to compensate the disutility of a 1-day increase in travel time.
 CIRC (reliability compensation index) represents how many times a 5% transport cost reduction
should be applied in order to compensate the disutility of a 1/2 day increase in the risk of delay.
 CIDC (damage and loss compensation index) is how many times a 5% transport cost reduction
should be applied in order to compensate the disutility of a 5% increase of damage and loss risk.

The index is constructed using the levels considered acceptable by all respondents (with only
one exception for 5% risk of loss and damage, see Table 2). It therefore represents a reasonable
indicator for comparing results obtained with the two data sets. Table 4 presents some aggregate
results (rows 2 and 3 can be derived from Table 3). Compensation costs are calculated based on
compensation indices, on information on the average transport cost, and on the average value of
the commodities transported.
The result obtained for the average value of freight travel time is within the range (on the low
side) reported in the paper by de Jong (2000) summarising the European value-of-time estimates.
Results denote a high aversion to risk of delay: an hour of unexpected delay is valued about 50%
more than an hour of expected travel time. Caution should be used in interpreting this results
since we did not explicitly specify the exact amount of the risk involved (e.g., 90% or 50%).
Our estimates, therefore, measure generic aversion to risk of loss and damage. A more precise
specification of risk attributes will be tested in future research projects.
Thanks to the availability of utility estimates at the firm level, we used the above indices to com-
pare managersÕ preferences in different production sectors. The results reflect, among other fac-
tors, the influence of shipmentsÕ heterogeneity with regard to travel times and to the value of
the transported goods.

Table 4
Average compensation indices
Compensation index type CITC CIRC CIDC
Aggregate results 1.80 1.41 3.36
‘‘With-unacceptables’’ sub-sample 1.85 1.36 3.42
‘‘Without-unacceptables’’ sub-sample 1.52 1.69 2.96

Compensating costs (Euros) Compensating cost of Compensating cost for Compensating cost of a
an hour of travel time the risk of a 1 h delay risk of loss and damage
equal to 50 Euros per 1000
Euros shipment value
Aggregate results 6.1 9.5 4.1
‘‘With-unacceptables’’ sub-sample 6.2 9.2 4.1
‘‘Without-unacceptables’’ sub-sample 5.1 11.4 3.6
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 209

Tables 5 and 6 present results for input and output flows, respectively. Let us name ‘‘cost
sensitive’’ those sectors with low indices and ‘‘quality sensitive’’ those with high indices.
Since the sample size within each sector is quite small the results are not statistically robust.
However, it is interesting to note that the variability of the compensation index is very high, espe-
cially for risk of damage and loss. These findings are in line with Maier and Bergman (2001).
Chemicals and fibres, and machines are the sectors which appear to have consistently high quality
indices. Furniture scores high on CITC and CIRC, whereas electric and electronic equipment

Table 5
Sectoral results for shipments of inputs
Travel time compensation index Reliability Damage and loss
compensation index compensation index
Chemicals and fibres 3.8 Furniture 3.4 Paper and paper products 6.5
Machines 2.2 Chemicals and fibres 2.5 Chemicals and fibres 5.0
Furniture 2.1 Paper and paper products 2.1 Machines 4.5
Wood 2.0 Machines 2.1 Building 4.1
Textiles and clothing 1.7 Electric and electronic 1.8 Electric and electronic 3.9
equipment equipment
Building 1.7 Wood 1.8 Food and tobacco 3.6
Paper and paper products 1.5 Textiles and clothing 1.2 Wood 3.3
Food and tobacco 1.4 Building 1.0 Furniture 2.8
Electric and electronic 1.3 Food and tobacco 1.0 Metal products 2.1
equipment
Metal products 1.3 Metal products 0.9 Textiles and clothing 1.4

Table 6
Sectoral results for shipments of outputs
Travel time compensation index Reliability Damage and loss
compensation index compensation index
Food and tobacco 5.2 Food and tobacco 3.0 Wood 6.2
Chemicals and fibres 4.3 Chemicals and fibres 2.8 Machines 6.1
Electric and electronic 3.1 Leather products 2.6 Textiles and clothing 5.7
equipment
Machines 2.6 Electric and electronic 2.3 Food and tobacco 5.0
equipment
Textiles and clothing 2.0 Building 1.9 Chemicals and fibres 4.5
Building 2.0 Metal products 1.9 Electric and electronic 4.5
equipment
Paper and paper products 2.0 Textiles and clothing 1.8 Building 4.3
Rubber and plastic products 2.0 Rubber and 1.7 Furniture 4.1
plastic products
Minerals 1.9 Wood 1.4 Non-metallic minerals 3.7
Furniture 1.7 Furniture 1.3 Leather products 3.0
Metal products 1.4 Machines 1.3 Paper and paper products 2.9
Wood 1.4 Paper and paper products 1.2 Metal products 2.5
Leather products 1.0 Minerals 1.0 Rubber and plastic products 2.1
Non-metallic minerals 0.2 Non-metallic minerals 0.3 Minerals 1.2
210 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

presents intermediate values. Among all sectors, metal products shows the lowest quality
requirements.
With regards to the shipment of outputs, chemicals and fibres and food of tobacco are quality
sensitive sectors. Electric and electronic equipment ranks higher than in the case of input flows.
Among the cost sensitive sectors, non-metallic mineral has the lowest time requirements. Other
cost sensitive sectors appear to be minerals, metal products, and paper and paper products which
typically involve bulk shipments.
Further information on logistics managersÕ preferences can be derived by comparing average
compensation indices by type of shipments and firmÕs characteristics. To verify if the difference
in the mean values between two segments of the sample is statistically significant, a t-test of the
differences in the means is calculated (Table 7).

Table 7
Average compensation indices and the p-value of the t-test of the differences in the means
Input flows Output flows p-Value
CITC 1.76 2.60 0.15
CIRC 1.71 1.89 0.73
CIDC 3.70 4.05 0.62

Road only Not road only

CITC 2.22 1.55 0.31
CIRC 1.90 0.91 0.07
CIDC 3.84 4.86 0.24

Within 12 h door-to-door travel time More than 12 h door-to-door travel time

CITC 2.61 1.59 0.01
CIRC 2.04 1.49 0.11
CIDC 3.92 3.98 0.93

Less than 500 employees More than 500 employees

CITC 2.20 1.83 0.54
CIRC 1.84 1.47 0.45
CIDC 4.18 2.51 0.03

Other than JIT input flows JIT input flows

CITC 1.58 2.26 0.23
CIRC 1.12 2.68 0.02
CIDC 3.66 3.74 0.94

Other than JIT output flows JIT output flows

CITC 2.09 2.41 0.57
CIRC 2.05 1.66 0.34
CIDC 3.70 4.30 0.38

Outsourcing transportation only Outsourcing transportation and inventory

CITC 2.21 1.84 0.48
CIRC 1.76 1.94 0.68
CIDC 3.84 4.47 0.36
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 211

The null hypothesis of equal means can be rejected with confidence in only few cases. However,
we provide hereafter a general comment of the results.

 Input vs. output flows: All compensation indices are larger for output than for input flows. Time
compensation indices are significantly different. A possible explanation is that customer satis-
faction prevails over internal production logistics concerns.
 Road-only vs. other-than-road-only shipments (e.g. road and rail): Average time and reliability
compensation indices are higher for shipments using road transportation only. The opposite
is true for safety. The absolute difference among means is considerable, although the t-test is
statistically significant only for reliability. The result confirms that road has mainly a time-
related advantage over other modes.
 Less than 1-day door-to-door travel time vs. 2-days or more door-to-door travel time: As expected,
the perceived importance of travel time and reliability declines the longer the travel time.
 Less than 500 employees vs. more than 500 employees: Larger firms are characterised by smaller
time reliability and safety compensation indices, that is, cost is more important than the quality.
A possible explanation is that larger firms have high bargaining power allowing them to impose
higher quality standards on their third-party providers.
 Other than JIT input flows vs. JIT input flows: Firms organising their input flows on JIT prin-
ciples are more sensitive to reliability (with a 0.02 p-value) than those who do not. They are also
slightly more sensitive to travel time, whereas there is no difference with reference to safety.
 Other than JIT output flows vs. JIT output flows: Similarly to the case of input flows, JIT output
flows are more sensitive to reliability, but the absolute value and statistical significance is much
lower than for inputs. Firms operating on JIT principles are also slightly more sensitive to tra-
vel time. There is no difference with regard to safety.
 Outsourcing transportation only vs. outsourcing transportation and inventory: The two types of
firms do not show statistically significant mean values. Outsourcing does not seem to alter qual-
ity requirements.

So far we have presented results based on individual ACA estimates at the aggregate, sectoral
and sample segment level. Although informative, they are ACA point estimates with no informa-
tion on their statistical significance. A standard statistical estimate for freight service attributes is
presented in the next section.

5. Ordered probit estimate

With the data collected during the paired-comparison trade-off section of the ACA test one
can estimate an ordered probit model of the choice probabilities of alternative freight services.
A logit model was first tested using data collected with the ‘‘with unacceptables’’, full-profile
set-up. As reported in Danielis and Rotaris (2002), such data did not produce satisfactory results.
Cost, time and reliability were not statistically significant and showed the wrong sign. Only dam-
age was statistically significant and showed the expected sign. This result was attributed to a lex-
icographic bias due to the overwhelming importance of damage overshadowing the role of the
other three variables. In other words, choice was determined by damage only since respondents
212 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

were not willing to trade it off with other attributes. Therefore, we decided to turn to a simpler
(without unacceptables) partial profile set-up. Interviewees were prompted with a choice between
two profiles characterized by two attributes at a time.
Partial-profile data were collected in 29 experiments providing 239 observations on choices
among alternative profiles and information on preference intensity. A fixed-effect 2 ordered probit
model could be estimated. As Greene (2003, p. 736) explains, the model is built around a latent
class regression such as

y  ¼ x0 b þ e

where y* is unobserved. What we observe is:

y¼1 if y  6 0
y¼2 if 0 < y  6 l1
y¼3 if l1 < y  6 l2
..
.
y¼9 if l7 6 y 

By assuming e to be normally distributed and normalising its mean and variance respectively
to zero and one, the following probabilities are obtained:

Pr obðy ¼ 1jxÞ ¼ Uðx0 bÞ

Pr obðy ¼ 2jxÞ ¼ Uðl1  x0 bÞ  Uðx0 bÞ
Pr obðy ¼ 3jxÞ ¼ Uðl2  x0 bÞ  Uðl1  x0 bÞ
..
.
Pr obðy ¼ 9jxÞ ¼ 1  Uðl7  x0 bÞ

The resulting log-likelihood function is then optimised. Table 8 presents the results. All varia-
bles have the expected sign and are statistically significant.
One can derive (Table 9) the marginal rate of substitution between quality attributes and cost,
as well as the implicit compensating cost using the values reported in Table 8, information on the
average transport cost and on average value of the commodities transported. Notice that the re-
sults are similar to the ACA estimates. Values derived from the ordered probit model show that
logistics managers require a higher compensation for accepting an increase in the risk of delay of
1 h than for accepting an increase of 1 h in travel time.

2
Since each experiment provides a set of repeated observations leading to an auto-correlation bias, following Maier
et al. (2002) a ‘‘corrected’’ model was estimated through a fixed-effect variable implemented through a vector of
individual specific constants equal to the number of experiments performed.
 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215 213

Table 8
Ordered probit estimates
Variables Coefficients t-Statistic
Constant 1.4079 4.25
Cost 3.2709 2.95
Time 0.3480 6.89
Reliability 0.4767 6.54
Damage 13.4873 6.44
l1 0.3442 4.09
l2 0.6893 6.70
l3 0.8798 7.83
l4 1.0571 8.88
l5 1.2783 10.45
l6 1.7774 13.18
l7 2.2545 14.41
Log-L 444.00
Log-L(c) 500.99
Chi-square (32 d.f.) 113.97

Table 9
Marginal rates of substitution and implicit compensating costs in Euros
Ordered probit
Value t-Statisticsa
Marginal rate of substitution between travel time and cost 0.1064 3.41
Marginal rate of substitution between reliability and cost 0.1457 3.39
Marginal rate of substitution between loss and damage and cost 4.1234 3.55
Compensating cost of an hour of travel time 7.1 –
Compensating cost of 1 h deterioration in reliability 9.7 –
Compensating cost of a risk of loss and damage equal 4.2 –
to 50 Euros per 1000 Euro shipment value
a
t-Statistics for the ratio of the coefficients are constructed based on a first-order expansion of a Taylor series for the
MRS around the point estimate (see Ortúzar et al., 1994, p. 416).

6. Conclusions

An adaptive conjoint analysis was performed, within the theoretical framework of the abstract
mode choice model, using a stated-preference database collected by interviewing 65 logistics man-
agers. 93 different experiments were conducted with the aid of the ACA 4.0 software. This study
estimates logistic managersÕ preference for freight transport service attributes identified as: freight
cost, travel time, risk of delay and risk of loss and damage. Two sets of results have been derived:
ACA estimates of the utilities associated to each attribute level for each experiment, and econo-
metric estimates of attribute utility within the discrete choice modelling framework.
Both estimates indicate, on average, a strong preference for quality attributes over cost. They
indicate a high willingness to pay for quality in freight transport services, especially for reliability
and safety. Such results indicate a high demand for quality that, given the actual characteristics of
214 R. Danielis et al. / Transportation Research Part E 41 (2005) 201–215

the Italian freight transport system, will not be easily met due to increasing congestion on the
roads and to the inefficient intermodal transport system.
This result confirms that successful modal shift policies should focus mainly on the quality as-
pects of the mode to be promoted. The need to improve freight transport quality, in general and
of intermodal transport in particular, is well established in political debate. The EU White Paper
argues in favour of strategies such as interoperability among railway operators, telematics, ecc.
aimed at improving freight transport quality. Political, infrastructural and regulatory decisions
are taken at various levels to improve the quality performance of the transport system and the bal-
ance among different modes of transport. The results presented in this paper can quantify the trade-
offs implicit in such choices from the point of view of the shippers. But a larger sample size and a
more sophisticated econometric technique is needed to improved the predictive power of the
model. Moreover the transferability of the results to other geographical areas needs to be tested.
The segmentation analysis performed on the ACA estimates and, to a lesser extent, the econo-
metric analysis allowed us to infer some tentative conclusions on the determinants of shippersÕ
preferences. The type of good shipped, either as input or output, has a strong influence on pref-
erences. The shorter the travel time the more important time and reliability become relative to
cost. Finally, firm size is negatively related to the intensity of preferences for quality attributes.
The adoption of JIT inventory principles increases the preference for reliability, whereas out-
sourcing arrangements have no influence on preference structure. Because of recent trends to-
wards an increase in shipment distances, a decrease in firm size, and an increase in the number
of firms adopting JIT inventory principles and outsourcing transport services, the resulting trends
in freight service attributeÕs valuation are not clear cut, though an increase in the preference for
quality relative to cost seems likely. Given the small sample size, these conclusions should be con-
sidered tentative, providing hints for successive research efforts, more than for informed decision
making at the firm or policy level. However, it is our opinion that estimates of the monetary value
of freight transport quality attributes could allow freight transport providers to tailor their serv-
ices to specific demand needs. The methodology presented in this paper can help us understand
how freight service demand is segmented relative to manufacturing sectors, position in the supply
chain, and the transport routes used. The estimated model can help simulate and predict market
share variations relative to changes in the quality of service supply.

Acknowledgement

The research has been funded by the Friuli Venezia Giulia Region, by the Ministry of Univer-
sity and Research, and by the National Research Council. Previous versions of the paper benefited
from the comments of the participants to the Swiss Transport Research Conference held at Asc-
ona (March 2002) and the Stella meeting held at Siena (June 2002). The help of Jacopo Zotti for
the econometric analysis is gratefully acknowledged. All usual caveats apply.

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