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Supply Chain Security: Agency Theory and Port Drayage Drivers

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  • Michael H. Belzer
  • Peter F. Swan

Abstract

Supply chain security presents numerous challenges to governments interested in defending against terrorist threats. While most approaches stress technological solutions, scholars and policy-makers tend to overlook economics, labour market issues, and industrial relations. Applying agency theory from behavioural economics, this article analyses threats to the US supply chain and opportunities for efficient solutions. Using data from a sophisticated web-based survey of owner-operator cost-of-operations, it shows that drayage drivers are among the lowest paid truck drivers and workers in the US. We provide evidence that low pay is associated with both safety and security risk. Low-wage labour and subcontracting present challenges to US and foreign supply-chain security because the market attracts workers who have few other employment options. In this environment, principals and agents currently make inefficient and inequitable contracts because markets do not reflect the complete costs associated with low-probability/high-impact events like cargo theft and transport security.

Suggested Citation

  • Michael H. Belzer & Peter F. Swan, 2011. "Supply Chain Security: Agency Theory and Port Drayage Drivers," The Economic and Labour Relations Review, , vol. 22(1), pages 41-63, May.
    • Handle: RePEc:sae:ecolab:v:22:y:2011:i:1:p:41-63
    DOI: 10.1177/103530461102200103
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    References listed on IDEAS

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    1. Peter Cappelli & Keith Chauvin, 1991. "An Interplant Test of the Efficiency Wage Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 769-787.
    2. Monaco, Kristen, 2010. "Wages and Working Conditions of Truck Drivers at the Ports of Long Beach and Los Angeles," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 49(1).
    3. Dale L. Belman & Kristen A. Monaco, 2001. "The Effects of Deregulation, De-Unionization, Technology, and Human Capital on the Work and Work Lives of Truck Drivers," ILR Review, Cornell University, ILR School, vol. 54(2A), pages 502-524, March.
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    Cited by:

    1. Martina de Gramatica & Fabio Massacci & Woohyun Shim & Uğur Turhan & Julian Williams, 2017. "Agency Problems and Airport Security: Quantitative and Qualitative Evidence on the Impact of Security Training," Risk Analysis, John Wiley & Sons, vol. 37(2), pages 372-395, February.
    2. Liang, Xinrui & Fan, Shiqi & Lucy, John & Yang, Zaili, 2022. "Risk analysis of cargo theft from freight supply chains using a data-driven Bayesian network," Reliability Engineering and System Safety, Elsevier, vol. 226(C).
    3. Chenming Jiang & Linjun Lu & Jian John Lu, 2017. "Socioeconomic factors affecting the job satisfaction levels of self-employed container truck drivers: a case study from Shanghai Port," Maritime Policy & Management, Taylor & Francis Journals, vol. 44(5), pages 641-656, July.

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