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Joint logistics and financial services by a 3PL firm: Effects of risk preference and demand volatility

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  • Wang, Fan
  • Yang, Xiao
  • Zhuo, Xiaopo
  • Xiong, Minghua

Abstract

This paper considers a third-party logistics (3PL) firm that provides integrated logistics and financial services to a budget-constrained manufacturer with different risk preferences. We adopt a mean–standard deviation objective function to reflect different risk preferences and concentrate on the effects of risk preference and demand volatility. Interestingly, we discover that substitution and complementary effects exist between the interest and freight rates of the 3PL firm. The effects of risk preference and demand volatility on the equilibrium interest rate become more significant when supply chains engage in price competition. Furthermore, we demonstrate that the 3PL firm prefers a risk-averse manufacturer.

Suggested Citation

  • Wang, Fan & Yang, Xiao & Zhuo, Xiaopo & Xiong, Minghua, 2019. "Joint logistics and financial services by a 3PL firm: Effects of risk preference and demand volatility," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 312-328.
    • Handle: RePEc:eee:transe:v:130:y:2019:i:c:p:312-328
    DOI: 10.1016/j.tre.2019.09.006
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