Direct Shipping vs. Bonded-warehouse Shipping? Logistics Modes Selection under Disruption Risk and Channel Co-opetition

Abstract

Multinational firms (MNFs) have traditionally relied on retail channels to distribute products globally. Cross-border e-commerce now enables direct consumer access, but long-distance deliveries face disruption risks, highlighting the need for suitable logistics modes. This paper examines two common cross-border logistics modes: direct shipping and bonded-warehouse shipping, to identify the optimal approach for MNFs facing disruption risks. We analyze a dual-channel supply chain where the direct channel faces disruption risk in direct shipping but avoids it with bonded-warehouse shipping. We find that, when the disruption probability is not excessively high, the MNF prefers bonded-warehouse shipping if its bargaining power is weaker or stronger than the local retailer’s. In contrast, direct shipping is more beneficial. Moreover, in the scenario where the probability of channel disruption is low and the local retailer’s bargaining power is weaker than that of the MNF, the local retailer reaps greater benefits from bonded-warehouse shipping.

Keywords

Cross-border shipping / bonded-warehouse / dual-channel / channel disruption

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