Logistics service quality and relationship quality in third party relationships

The market for third party logistics (TPL) service has expanded hugely over the past few years as its total revenue has reached $333 billion globally. It is expected that the industry will grow substantially, and became increasingly complex. As the industry matures, a number of authors have recognised that logistics service quality is becoming a vital tool for delivering superior logistics service performance and thus creating customer satisfaction. Concurrently, considerable evidence has been accumulated that shows relationship quality is useful in the marketing channel context in driving customer loyalty. However, empirical research investigating the effects of the relationships among logistics service quality, customer satisfaction, relationship quality and customer loyalty has received relatively little attention in the literature. This study attempts to fill this void by investigating customers' satisfaction with TPL providers' services across industrial sectors in the UK and the relationship quality they have with them. It empirically tests the validity of Mentzer et al's (2001) Logistics Service Quality PQ) scale for measuring logistics service quality and the LSQ process model that underpins it. A disaggregated model of relationship quality is also used to assess its impact on customer loyalty. Structural equation modelling analysis of the data collected by mail survey of 183 logistics-related managers confirms that LSQ measures are generalisable across industrial sectors in the UK. The results show that technical quality dimensions of logistics service do not drive customers' satisfaction, but serve as the order qualifiers while the functional quality dimensions act as order winning criteria that differentiates TPL providers' service excellence for customer satisfaction. It also supports existing theoretical studies that suggest that relationship quality produces loyal customers. The research contributes to both marketing and logistics discipline in that it empirically demonstrates the positive link between logistics service quality and customer satisfaction as well as customer satisfaction, relationship quality and customer loyalty.