The effect of supply chain security

management on security performance in

container shipping operations
Ching-Chiao Yang and Hsiao-Hsuan Wei
Department of Shipping and Transportation Management, National Kaohsiung Marine University, Kaohsiung City, Taiwan,
Republic of China

Abstract
Purpose – The aim of this study is to empirically identify crucial dimensions of security management in the container shipping sector in Taiwan and
assess their impacts on security performance.
Design/methodology/approach – Data for this study were collected by questionnaire survey. An exploratory factor analysis was performed to
identify crucial security management dimensions in the container shipping sector. Multiple regression analysis was then performed to examine the
effect of security management on the security performance.
Findings – Four crucial security management dimensions were identified: facility and cargo management; accident prevention and processing;
information management; and partner relationship management. Multiple regression analysis revealed that information management and partner
relationship management had significant positive effects on safety performance, whereas partner relationship management had a significant positive
effect on customs clearance performance.
Research limitations/implications – This study primarily focuses on the effect of security management on security performance. Future research
could identify the drivers and barriers to comply with supply chain security initiatives.
Practical implications – Container shipping firms can improve safety and customs clearance performance by focusing security management efforts
on facility and cargo management, accident prevention and processing, information management, and partner relationship management.
Social implications – Government administrators or other authorities may want to consider using crucial container shipping security management
dimensions as criteria for assessing security performance in container shipping firms.
Originality/value – This study presented is the first to assess the effect of security management on security performance in the container shipping
sector. Particularly, partner relationship management is found to be the key dimension for supply chain security success.

Keywords Supply chain security management, Container shipping supply chain security management,
Container shipping supply chain security performance, Taiwan, Multiple regression, Factor analysis, Supply chain management,
Multiple regression analysis

Paper type Research paper

1. Introduction increases the risk of interruptions or shutdowns of supply

chains, the development of multiple security initiatives to
Globalization of the world economy is forcing multinational enhance supply chain security without affecting efficiency has
firms to integrate global manufacturing with international become an important issue for these multinational firms
logistics and transport systems. To compete in this dynamic (Sheu et al., 2006; Hintsa et al., 2009; Rao and Goldsby,
marketplace, multinational firms must emphasize their core 2009; Thai, 2009), particularly since the September 11
competencies and outsource their logistics value-added terrorist attacks in the USA.
activities to third-party logistics providers. Thus, the International trade relies on the movement of large volumes
movement of a container to different parts of the globe of goods and raw materials around the world by overseas
involves various service parties (Russell and Saldana, 2003; shipping (Sarathy, 2006; Marlow, 2010). More than 90 per
Sheu et al., 2006). Given that such a situation obviously cent of world’s shipped goods are shipped in containers,
which are particularly vulnerable to security threats (Lee and
The current issue and full text archive of this journal is available at Whang, 2005; Sarathy, 2006). Since the 9/11 terrorist attacks
www.emeraldinsight.com/1359-8546.htm in 2001, the US has implemented a series of security

Supply Chain Management: An International Journal Received 28 July 2011

18/1 (2013) 74– 85 Revised 23 November 2011
q Emerald Group Publishing Limited [ISSN 1359-8546] 3 March 2012
[DOI 10.1108/13598541311293195] Accepted 30 April 2012

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 Supply chain security management Supply Chain Management: An International Journal
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initiatives (United Nations Conference on Trade and manufacturers, ocean carriers, freight forwarders, logistics
Development, 2006), including the Customs-trade service providers, customs, and buyers. Obviously, container
Partnership Against Terrorism (C-TPAT), Container shipping is an integral component of the supply chain and is
Security Initiative (CSI), and 24-Hour Advanced Vessel responsible for handling and carrying cargos across the ocean.
Manifest Rule (24-hour rule), in an effort to efficiently It links consigners and consignees as well as connects all
maintain container shipping security. The World Customs entities in the supply chain (Closs and McGarrell, 2004;
Organization (WCO) also announced the Framework of Willis and Ortiz, 2004; Lee and Song, 2010). The security of
Standards to Secure and Facilitate Global Trade (the SAFE container shipping supply chain invariably affects overall
Framework) in June, 2005. supply chain security performance. Thus, this study
In the center of Asia-Pacific region, Taiwan, which has an specifically focuses on the security management and security
island-based economy, relies heavily on its import and export performance of container shipping supply chain.
trade. According to a recent report published by the Ministry
of Transportation and Communication (MOTC) (2010), 2.1 Supply chain security management
over 99 per cent of Taiwan’s international trade is carried by Since the disastrous events of September 11, 2001, supply
sea, thus maritime transportation plays a very important role chain security has become a crucial part of logistics (Lee and
in the economy. Further, statistical data published by the Whang, 2005; Thai, 2009). Traditionally, attention to
Ministry of Economic Affairs (MOEA) (2011) indicates that security was considered an interference with the flow of
each company experiences an average of 1.2 supply chain trade, but today it factors greatly into an organization’s risk
security incidents each year and each incident results in an profile (Banomyong, 2005; Thai, 2009). A supply chain
average loss of 110,000 US dollars1. Moreover, the supply disruption can have direct negative effects on a firm’s supply
chain security incident rate of medium and small sized chain performance, thus supply chain security management is
enterprises is 2.5 times higher than that of large enterprises. viewed as an important issue (Thai, 2009). The purpose of
To enhance the competitiveness of its international logistics supply chain security management is to support the
environment to attract foreign direct investment, the organization in safely achieving its business goals and
government of Taiwan has introduced various security objectives. Closs and McGarrell (2004, p. 8) defined supply
initiatives to comply with global trends. Specifically, the chain security management as “the application of policies,
Ministry of Finance (MOF) (2011) has introduced the procedures, and technologies to protect supply chain assets
Authorized Economic Operator (AEO) to comply with the (products, facilities, equipment, information, and personnel)
WCO SAFE framework. Because most of the security from theft, damage, or terrorism, and to prevent the
initiatives are voluntary and perceived costly by firms, only introduction of unauthorized contraband, people, or
50 enterprises were Authorized Economic Operators at the weapons of mass destruction into the supply chain”.
end of October 2011. These enterprises included not only Studies in supply chain security initiatives have recently
manufactures but also logistics service providers. received a great deal of attention. Sheffi (2001) suggested that
Supply chain security management is regarded as crucial to firms should cooperate with government and add security
sustaining competitive advantage (Thai, 2009). However, measures to prevent new attacks, create strategic inventory,
although many studies have focused on supply chain security and change the corporate process to cope with the heightened
(Voss et al., 2009; Yang, 2011), relatively few have empirically security environment. Since security-related sources of risk
examined the effect of supply chain security management on can occur at the various points along the supply chain,
security performance. Particularly, ocean carriers and including goods, factories, supply chain providers and
terminal operators play important roles in the supply chain partners, supply chain facilities, freight carriers, people, and
process (Closs and McGarrell, 2004). Thus, this study aims information (Sarathy, 2006), firms should endeavor to
to examine the relationship between security management mitigate supply chain risks through the supply chain security
and security performance in the container shipping sector. management.
There are five sections in this paper. Section 1 introduces the To effectively implement supply chain security
motivation and purpose of the research. Section 2 reviews the management, a firm needs to attend to physical security,
literature on supply chain security management, container information security, and freight security (Rice and Caniato,
shipping supply chain security management, and security 2003) by assuming a supply chain security orientation to
performance. Research hypotheses are also presented. Section enhance security preparation and planning, security-related
3 describes the research methodology, including data collection partnerships, organizational adaptation, and security
and measures, sampling technique, and methods of analysis. dedicated communication and technology (Autry and
Section 4 presents the study results. The final section discusses Bobbitt, 2008). As can be seen in Table I, supply chain
the conclusions and implications of the findings. security operations of firms have been evaluated from various
perspectives, including personnel, information, facility,
inventory and transportation security, transportation
2. Literature review and research hypotheses
tracking and visibility, storage management, shipping
Prior to discussing the container shipping supply chain management, management education, internal operations
security, it is useful to discuss the concepts of overall supply management, and supply chain education (Closs and
chain and container shipping supply chain. A supply chain McGarrell, 2004; Closs et al., 2008). Additionally, two
encompasses all activities associated with the flow and voluntary security initiatives, C-TPAT and AEO, have been
movement of goods, services, and related information from widely adopted by firms to strengthen the overall security of
the point of origin to the point of consumption (Murphy and the international supply chain and facilitate the movement of
Wood, 2008). The global supply chain is an international cargo. Such security attributes have been classified by
system encompassing many entities including suppliers, Gutiérrez and Hintsa (2007) in six dimensions:

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Table I Previously identified management determinants of overall supply chain security

Determinants Previous studies
Facility management Rice and Caniato (2003), Closs and McGarrell (2004), Sarathy (2006), Gutiérrez and Hintsa (2007), Closs
et al. (2008)
Cargo management Rice and Caniato (2003), Sarathy (2006), Gutiérrez and Hintsa (2007)
Inventory management Sheffi (2001), Closs and McGarrell (2004), Closs et al. (2008)
Information management Rice and Caniato (2003), Closs and McGarrell (2004), Sarathy (2006), Gutiérrez and Hintsa (2007), Autry
and Bobbitt (2008), Closs et al. (2008), Speier et al. (2011)
Personnel management and security training Closs and McGarrell (2004), Sarathy (2006), Gutiérrez and Hintsa (2007), Closs et al. (2008)
Business partner and company management Sheffi (2001), Closs and McGarrell (2004), Sarathy (2006), Gutiérrez and Hintsa (2007), Closs et al.
(2008), Speier et al. (2011)
Crisis management and disaster recovery Sheffi (2001), Russell and Saldana (2003), Gutiérrez and Hintsa (2007)

1 facility management; communication infrastructure, human resources, and data

2 cargo management; security. Yang (2006) concluded that port security assessment
3 human resources management; plan should include personnel control, ship and
4 information management environmental control, facilities control, and management
5 business network and company management systems; and training. Moreover, in today’s modern electronic commerce-
6 crisis management and disaster recovery. based marketplace, the container shipping industry has faced
increased challenge with regard to information security and
2.2 Container shipping supply chain security thus has to ensure the security of information in terms of
management confidentiality, availability, integrity, nonrepudiation, and
Assurance of security across maritime is the critical factor to authentication (McNicholas, 2008).
facilitate international trade (Closs and McGarrell, 2004). Recently, Thai (2009) applying quality management to
Few studies specifically focused on security measures in the study security in maritime transport, found the following 13
container shipping industry. Hawkes (1989, p. 9) defined dimensions to be critical to successfully manage security: well-
container shipping security as “those measures employed by structured security policy, security risk assessment, risk-based
owners, operators, and administrators of vessels, port security mitigation strategies and plans, communication and
facilities, offshore installations, and other marine consultation with stakeholders, security monitoring and
organizations or establishments to protect against seizure, review, continuous security improvement, use of specific
sabotage, piracy, pilferage, annoyance, or surprise”. In organizational structures, senior management commitment
container shipping supply chains the major risks leading to and leadership, employee empowerment, employee
security problems include cargo, vessels, ports, people, involvement, security training, security design and process
information, and financing (Organization for Economic control, and security incident handling and response.
Cooperation and Development, 2003; Barnes and Obviously, a container shipping firm’s capability to integrate
Oloruntoba, 2005; United Nations Conference on Trade the security management dimensions along the container
and Development, 2006; Lorenz, 2007). Thus, the shipping supply chains is crucial for it to ensure smooth
International Ship and Port Security Code (ISPS), CSI, and performance and sustain its competitive advantage.
24-hour rule are maritime regulations specifically designed to Compared with overall supply chain security with the
enhance container shipping supply chain security previously-mentioned security initiatives and findings for
(Banomyong, 2005). The C-TPAT program, a partial container shipping specifically, container shipping supply
extension of the CSI, was implemented to increase chain security activities, as well as initiatives established to
container shipping supply chain security (Barnes and regulate these activities, are primarily designed to address the
Oloruntoba, 2005; United Nations Conference on Trade facility-related security, including ports, vessels, cargos,
and Development, 2006; Marlow, 2010; Kim, 2011). information, and people (United Nations Conference on
Compliance with C-TPAT regulations requires that Trade and Development, 2006) (see Table II). It is important
container shipping firms meet several criteria governing to note that container shipping firms are often not just
security procedures, container security, physical access involved in port-to-port transfer of cargo but are actually
controls, personnel security, procedural security, security responsible for the movement of cargo along the whole
training and awareness, physical security, information distribution channel and provide door-to-door services
technology security, business partner requirements, as well (Marlow, 2010).
as security assessment, response, and improvement.
A number of previous studies have identified the security 2.3 Container shipping supply chain security
issues related to container shipping industry. Banomyong performance
(2005) and Yang (2010) examined the impact of CSI on Because supply chain security treats greatly affect the
container shipping supply chain. Frankel (2005) suggested performance and safety of container shipping, an effective
that container shipping security measures include cargo security performance measurement system might help
security, ship security, personnel security, access control, organizations better understand how things are working and

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Table II Previously identified management determinants of container shipping supply chain security
Determinants Previous studies
Vessel management Organization for Economic Cooperation and Development (2003), Barnes and Oloruntoba (2005),
Frankel (2005), Yang (2006), Lorenz (2007), Kim (2011)
Cargo management Organization for Economic Cooperation and Development (2003), Barnes and Oloruntoba (2005),
Frankel (2005), Lorenz (2007), Kim (2011)
Facility management Yang (2006), Lorenz (2007), Lirn and Wang (2010), Yang (2010), Kim (2011)
Information management Frankel (2005), McNicholas (2008)
Personnel management and security training Organization for Economic Cooperation and Development (2003), Barnes and Oloruntoba (2005),
Frankel (2005), Yang (2006), Thai (2009), Lirn and Wang (2010), Kim (2011)
Partner relationship management Thai (2009), Lirn and Wang (2010)
Accident prevention and processing Thai (2009)

readily identify areas that need improvement (Bichou et al., (Bichou, 2011; Yang, 2011). The C-TPAT is a voluntary
2007; Enoma and Allen, 2007). Container shipping security supply chain security program led by US Customs and Border
performance can generally be assessed by hard (objective) Protection. C-TPAT certification benefits businesses by
measures and soft (perceptual or responsive) measures speeding up inspections at the border, reducing costs, and
(Dalton et al., 1980; Shang and Lu, 2009). Because actual increasing customer satisfaction (Sheu et al., 2006). It also
incident data are difficult to obtain and perceptual measures helps businesses predict the movement of goods and lead-time,
are valid indicators of security performance (Fawcett et al., decrease the number of customs inspections, reduce the time
1997; Shang and Lu, 2009; Voss et al., 2009), this study used taken to release cargo by customs and waiting times at borders,
perceptual-based measures to assess the security performance and increase supply chain visibility (Diop et al., 2007).
of container shipping firms. To summarize, an efficient and secure container shipping
Security performance is defined as the measurement and supply chain can reduce time in customs clearance and
comparison of actual levels of achievement with regard to decrease the frequency of accidents, two measures of security
security. It is related to the prevention of any malicious threat, performance. This study used a composite measure of
damage, and disturbance to an organization (Yang, 2006). performance covering these two dimensions recommended
Many studies have identified performance indicators of by Dess and Robinson (1984) to evaluate the supply chain
container shipping security performance. Container shipping security performance of container shipping companies.
supply chain security influences customs clearance process
and safety performance (Frankel, 2005; Yang, 2006). 2.4 Research hypotheses
Customs clearance performance is defined as the Prior studies have examined the effect of container shipping
measurement and comparison of actual levels of supply chain security management on security performance.
achievement with regard to the efficiency of the customs Banomyong (2005) argued that an efficient and secure
clearance process. Safety performance refers to the level of container shipping supply chain can help firms to build and
machinery damage or personnel injury resulting from human sustain their competitiveness by reducing transit time,
error, mechanical failure, or adverse weather (Yang, 2006; decreasing transport costs, and increasing reliability and
Vinodkumar and Bhasi, 2010). cargo security. Frankel (2005) pointed out that the container
Although the implementation of security initiatives can result shipping security could significantly improve a firm’s
in additional cost, supply chain security management has performance including usefulness, effectiveness, costs,
several benefits, including a reduction in theft, cyber crime, reliability, and safety.
terrorism, smuggling, counterfeit goods, and damage to goods Recently, Peleg-Gillai et al. (2006) investigated the benefits
(Organization for Economic Cooperation and Development, of the investment of supply chain security initiatives. Several
2003; Gutiérrez and Hintsa, 2006; Martens et al., 2011). benefits including product handling and safety, customer
According to a report published by the European Commission service, reduction in inventory, coast savings, process
(2006), enhancing supply chain security can reduce theft and improvement, supply chain visibility, the customs clearance
losses, reduce the number of delayed shipments, improve process, speed of operations, and higher customer satisfaction
planning, increase customer loyalty and employee were identified to ocean carriers and logistics service
commitment, reduce the number of safety incidents, lower providers. Thai (2007) pointed out that container shipping
inspection costs of suppliers and increase cooperation with supply chain security improvements can enhance service
them, reduce crime and vandalism, and improve security and quality in terms of increased reliability of service, social
communication between supply chain partners. responsibility awareness, increased efficiency in operations
Furthermore, container shipping security management and management, as well as enhanced image in the market.
facilitates international trades by reducing transit time Moreover, Shang and Lu (2009) demonstrated the positive
(Organization for Economic Cooperation and Development, effect of safety management on safety performance in
2003; Banomyong, 2005), improving customs clearance container terminal operations.
efficiency (Sheu et al., 2006; Peleg-Gillai et al., 2006; Diop Based on the review of the literature on container shipping
et al., 2007), and increasing port operational efficiency security management and security performance, a conceptual

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model could be created to portray the relationship between Figure 2 Procedure for developing a questionnaire
security management and security performance using safety
performance and customs clearance performance as measures
(see Figure 1). This study tests two research hypotheses:
H1. Security management has a positive effect on the safety
performance in the container shipping sector.
H2. Security management has a positive effect on the
customs clearance performance in the container
shipping sector.

3. Methodology
3.1 Measures
Data for this study were collected from a questionnaire survey
which was designed based on the stages outlined by Churchill
and Iacobucci (2002). As can be seen in Figure 2, we first
specified the information we needed and then determined the
following: the type of questionnaire needed and its method of
administration, the contents of individual questions, the form
of response to each question, the wording of each question,
the sequence of questions, and the physical characteristics of
the questionnaire. The previous steps were re-examined and
revised if necessary. The final step of the questionnaire design
is pre-testing the questionnaire.
Based on a review of previous studies (see Tables I and II)
and personal interviews with container shipping executives,
30 security management attributes in the container shipping
context were developed and are presented in section 4. Four
measures adapted from Shang and Lu (2009) to measure
safety performance. They were the decrease in frequency of
accidents, the decrease in cargo loss and damage, the decrease
in frequency of equipment failure, and the decrease in
number of personal injuries. Three measures of customs
clearance performance were drawn from previous studies.
They were increase in cargo flow, decrease in number of
customs inspections, and decrease in waiting time at the
border (Gutiérrez and Hintsa, 2006; Peleg-Gillai et al., 2006;
Diop et al., 2007). Respondents were asked to their response
to question items using a five-point Likert scale, 1
corresponding to “strongly disagree” and 5 “strongly agree”.
In the process of determining items for use in a
questionnaire, it is crucial to ensure content validity. The
content validity of the questionnaire used in this study was
ensured through a review of previous studies and then
discussed with six container shipping executives and experts
from major container shipping firms in Taiwan, including

Figure 1 Research framework

Evergreen Line, Yang Ming Line, Wang Hai Line, CMA

CGM (Taiwan), APL (Taiwan), and OOCL (Taiwan).
Finally, the researchers contacted 20 container shipping
executives in Taiwan by telephone to explain the aim of the
pilot test for improving questionnaire. The pilot questionnaire
was mailed to the 20 container shipping executives and 12
pilot questionnaires were returned. No particular confusion
with respect to format or question type was found. Thus,
these questionnaires were considered usable and potentially
viable for data analysis.

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3.2 Sampling technique Table III Profile of respondents and their employing companies
The sample for this study was based on the Directory of the
National Association of Chinese Ship owners and Shipping Number of Percent of
Agencies in Taiwan published in 2011. The questionnaire respondents respondents
survey was initially sent with a cover letter and postage-paid Job title
return envelope to 178 container shipping executives. The Vice president or above 19 22.4
initial mailing elicited 56 usable responses. A follow-up Manager/assistant manager 39 45.9
mailing was sent two weeks after the initial mailing. An
Director/vice director 9 10.6
additional 29 usable responses were returned. The total
Clerk 14 16.5
number of usable responses was 85, making an overall
Sales representative 2 2.3
response rate of 47.8 percent.
Other 2 2.3
A comparison of early respondents (those who responded to
the first mailing) and late respondents (those who responded Ownership pattern
to the second mailing) was carried out to test for non- Local firm 59 69.4
response bias (Armstrong and Overton, 1977). The 85 Foreign-owned firm 14 16.5
respondents were divided into two groups based on their Foreign-local firm 12 14.1
response wave (first and second). T-tests were performed on
the responses of the two groups. At the 5 per cent significance Type of business
level, there were no significant differences between the two Container shipping company 29 34.1
groups’ perceptions of the 30 security management attributes. Container shipping agency 44 51.8
Although the t-test results did not rule out the possibility of Container terminal operator 12 14.1
non-response bias, they suggested that non-response bias was Age of firm (years)a
not a problem, since late group’s responses were similar to 1-5 2 2.4
those of the earlier one.
6-10 7 8.3
11-20 18 21.4
3.3 Research method
21-30 16 19.1
This study aimed at assessing security management on
security performance in the container shipping sector. A 31 or above 41 48.8
review of previous studies related to security issues indicated Number of employees
that the vast majority of published articles were qualitative 50 or less 41 48.2
and quantitative and empirical studies were limited (Voss 51-100 8 9.4
et al., 2009). Yang (2011) employed factor analysis to identify 101-500 18 21.2
the critical risks of container shipping supply chain security 501-1,000 7 8.2
and Martens et al. (2011) performed multiple regression 1,001 or above 11 13.0
analysis to examine the antecedents to supply chain
effectiveness. Because multiple regression analysis is the Annual revenue (million NT$b)c
most widely used method of analyzing causal relationships 10 or less 14 17.1
between a single dependent variable and several independent 11-100 21 25.6
variables (Hair et al., 2009), this study first performed 101-1,000 18 22.0
exploratory factor analysis to identify crucial security 1,001-5,000 10 12.2
management dimensions, and then multiple regression 5,001 or above 19 23.1
analyses was used to examine the effect of security
management on security performance. All statistical Notes: aOne respondent did not provide this information. bOne US dollar
equals approximately 32.5 New Taiwanese (NT) dollars. cThree respondents
operations were performed using SPSS 18.0 for Windows.
did not provide this information
3.4 Profile of respondents and their employing
companies
age of respondents’ employing firms, almost half of employing
The profile of respondents and their employing companies is
provided in Table III. Respondents’ responses indicated that firms (48.8 per cent) had been in operation for 31 years or
more than 68 per cent of respondents were either a vice more, 21.4 per cent had been in operation between 11 and 20
president or above, or a manager/assistant manager. Far fewer years, and 10.7 per cent had been in operation ten years or
respondents were a director/vice director (10.6 per cent), less.
clerk (16.5 per cent), sales representative (2.3 per cent), or in Almost half of respondents’ employing firms (48.2 per cent)
other position (2.3 per cent). As regards ownership pattern of employed 50 or less employees, while 21.2 per cent employed
respondents’ employing firms, over two-thirds were local between 101 and 500 employees. Respondents were also
firms (69.4 per cent), while just under a third were foreign- asked to provide information about their company’s annual
owned firms (16.5 per cent) and foreign-local firms (14.1 per
revenue. Results presented in Table III show that 25.6 per
cent). The container shipping sector generally includes
cent of respondents reported that their employing company’s
container shipping companies, container shipping agencies,
and container terminal operators. Table III shows that half of annual revenue was between NT$11 million and NT$100
respondents (51.8 per cent) worked for container shipping million, while the revenue of 35.3 and 17.1 per cent of
agencies, 34.1 per cent for container shipping companies, and respondents’ employing companies was over NT$1,001
14.1 per cent for container terminal operators. As regards the million and NT$10 million or less, respectively.

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4. Results of analyses management. In other words, for container shipping firms in

Taiwan to enhance supply chain security, they need to
4.1 Respondents’ perceptions of security management
improve the collaborative relationships with their supply chain
attributes
partners.
To evaluate the implementation of security management in
Respondents were also asked to indicate their perceptions
the container shipping sector, respondents were asked to rate
of the security performance of their employing firms. As can
30 security management attributes using a five-point Likert
scale ranging from “1 ¼ strongly disagree” to “5 ¼ strongly be seen in Table V, respondents rated the decrease in number
agree”. Results, as shown in Table IV, indicated that the top of personnel injuries as the most satisfactory security
five crucial security management attributes as perceived by performance item, followed by the increase in cargo flow,
respondents were: adequate inspections during the shipping the decrease in cargo loss and damage, the decrease in
process and reporting of anomalies; monitoring and frequency of equipment failure, the decrease in frequency of
controlling the access procedures; recording the entry/exit of accidents, decrease in waiting times at the border, and
people and vehicles; installation of a 24 hr camera system or decrease in number of customs inspections. Clearly,
CCTV; and removing computer access and return of security
pass when staff leave or are dismissed. Conversely, the five Table V Respondents’ perceptions of security performance
least crucial security management attributes were: performing
background checks on firms’ new and existing employees; Security performance attributes Mean SD Rank
encrypting and coding information; establishing collaborative Decrease in number of personnel injuries 4.153 0.681 1
relationships with customs administrations or other Increase in cargo flow 4.012 0.681 2
authorities; encourageing business partners to enhance Decrease in cargo loss and damage 3.953 0.770 3
supply chain security; and regularly evaluating business Decrease in frequency of equipment failure 3.918 0.727 4
partners. Decrease in frequency of accidents 3.918 0.820 4
These results implied that container shipping firms in Decrease in waiting times at the border 3.835 0.754 6
Taiwan focus mostly on facility and cargo management and Decrease in number of customs inspections 3.788 0.742 7
less on partner relationship management and information

Table IV Respondents’ perceptions of security management attributes

Security management attributes Mean SD Rank
Adequate inspections during the shipping process and reporting of anomalies 4.376 0.597 1
Monitoring and controlling the access procedures 4.365 0.652 2
Recording the entry/exit of people and vehicles 4.353 0.667 3
Installation of a 24hr camera system or CCTV 4.341 0.682 4
Removing computer access and return of security pass when staff leave or are dismissed 4.333 0.642 5
Storing goods of different types separately 4.306 0.708 6
Storing goods in a safety area and protecting against unauthorized access 4.294 0.651 7
Recording and controlling the stock 4.294 0.737 7
Requesting people who have access to buildings to carry an identification card 4.282 0.781 9
Documenting security incidents 4.271 0.662 10
Investigating security incidents and clearly defining the responsibility for them 4.250 0.615 11
Distributing security issues and information throughout the organization 4.247 0.671 12
Carefully selecting low risk and high security business partners 4.238 0.701 13
Providing security incidents statistical data for modifying security policy 4.224 0.661 14
Regularly backing up all commercial data and programs 4.214 0.725 15
Running security training programs in the workplace 4.212 0.709 16
Protecting business information from unauthorized access and usage 4.202 0.768 17
Having a good system for recording and controlling commercial intercourse 4.200 0.669 18
Frequently testing computer system against unauthorized access and recording the results 4.176 0.862 19
Facility protection and clearly marking control areas 4.176 0.789 19
Regularly conducting security analysis to improve security performance 4.165 0.769 21
Quickly sharing information with all employees in the case of security incidents 4.165 0.670 21
Regularly exchanging data with customs administrations 4.165 0.687 21
Providing adequate training program on supply chain security issues 4.118 0.778 24
Adopting international standards for container security 4.118 0.747 24
Regularly evaluating business partners 4.094 0.718 26
Encouraging business partners to enhance supply chain security 4.000 0.707 27
Establishing collaborative relationships with customs administrations or other authorities 3.976 0.771 28
Encrypting and coding information 3.976 0.845 28
Performing background checks on firms’ new and existing employees 3.906 0.750 30

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respondents were more satisfied with safety performance than a 24 hr camera system or CCTV; requesting people who
customs clearance performance. have access to buildings to carry an identification card;
monitoring and controlling the access procedures;
4.2 Crucial security management dimensions recording the entry/exit of people and cars; facility
Exploratory factor analysis with VARIMAX rotation was protection and clearly marked control areas; storing
employed to identify crucial security management dimensions goods of different types separately; recording and
in container shipping. An eigenvalue greater than one was controlling the stock; adequate inspections during the
used to determine the number of factors in each data set shipping process and reporting of anomalies; and storing
(Churchill and Iacobucci, 2002). To aid interpretation, only goods in a safety area and protecting against unauthorized
variables loading on each factor at 0.5 or higher were access. Because these nine security management attributes
extracted, a conservative criterion based on Hair et al. (2009). were related to facility and cargo management, this factor
The initial factor analysis revealed that four factors accounted was identified as a facility and cargo management
for approximately 71.43 per cent of the total variance. dimension. It accounted for 55.17 per cent of the total
However, this interpretability was rendered problematic variance.
because five items (carefully selecting low risk and high 2 Factor 2, designated the accident prevention and
security business partners, regularly evaluating business processing dimension, consisted of six items, namely:
partners, providing adequate training program on supply
providing security incidents statistical data for modifying
chain security issues, running security training programs in
security policy; quickly sharing information with all
the workplace, and adopting international standards for
employees in the case of security incidents; investigating
container security) loaded on two factor or loaded on each
factor with a factor loading lower than 0.5, resulting in their security accidents and clearly defining the responsibility
removal. Exploratory factor analysis was repeated and four for them; regularly conducting security analysis to
factors were identified (see Table VI). These factors improve security performance; documenting security
accounted for 72.86 per cent of the total variance and were incidents; and distributing security issues and
found to underlie security management dimensions based on information throughout the organization. Because all
respondents’ responses. They are labeled and are described in these items were related to accident prevention and
the following: processing, this factor was classified as an accident
1 Factor 1, named the facility and cargo management prevention and processing dimension. It accounted for
dimension, consisted of nine items, namely: installation of 7.68 per cent of the total variance.

Table VI Factor analysis of security management

Security management attributes Factor 1 Factor 2 Factor 3 Factor 4
Installation of a 24hr camera system or CCTV 0.820 0.148 0.217 0.254
Requesting people who have access to buildings to carry an identification card 0.775 0.218 0.084 0.243
Monitoring and controlling the access procedures 0.774 0.325 0.272 0.193
Recording the entry/exit of people and vehicles 0.747 0.389 0.235 0.175
Facility protection and clearly marking control areas 0.745 0.157 0.186 0.186
Storing goods of different types separately 0.673 0.244 0.458 -0.034
Recording and controlling the stock 0.637 0.209 0.388 0.204
Adequate inspections during the shipping process and reporting of anomalies 0.635 0.392 0.344 0.127
Storing goods in a safety area and protecting against unauthorized access 0.607 0.127 0.457 0.213
Providing security incidents statistical data for modifying security policy 0.233 0.865 0.197 0.254
Quickly sharing information with all employees in the case of security incidents 0.243 0.771 0.222 0.160
Investigating security incidents and clearly defining the responsibility for them 0.326 0.763 0.227 0.320
Regularly conducting security analysis to improve security performance 0.361 0.749 0.187 0.247
Documenting security incidents 0.199 0.739 0.361 0.166
Distributing security issues and information throughout the organization 0.199 0.720 0.432 0.274
Protecting business information from unauthorized access and usage 0.285 0.224 0.790 0.245
Regularly exchanging data with customs administrations 0.217 0.269 0.720 0.200
Frequently testing computer system against unauthorized access and recording the results 0.296 0.280 0.701 0.184
Regularly backing up all commercial data and programs 0.282 0.361 0.687 0.275
Removing computer access and return of security pass when staff leave or are dismissed 0.347 0.315 0.635 0.240
Encrypting and coding information 0.304 0.168 0.567 0.389
Establishing collaborative relationships with customs administrations or other authorities 0.111 0.222 0.234 0.786
Encouraging business partners to enhance supply chain security 0.254 0.216 0.224 0.679
Having a good system for recording and controlling commercial intercourse 0.254 0.411 0.193 0.674
Performing background checks on firms’ new and existing employees 0.283 0.228 0.293 0.630
Eigenvalues 13.793 1.920 1.373 1.129
Percentage variance 55.172 7.678 5.490 4.515

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Ching-Chiao Yang and Hsiao-Hsuan Wei Volume 18 · Number 1 · 2013 · 74 –85

3 Factor 3, termed the information management dimension, investigated by calculating the Variance Inflation Factor
comprised six items: protecting business information from values (VIFs). The values were all below the recommended
unauthorized access and usage; regularly exchanging data cut-off value of 10 and therefore within an acceptable level,
with customs administrations; frequently testing computer suggesting no need for concern over possible multicollinearity
system against unauthorized access and recording the (Hair et al., 2009).
results; regularly backing up all commercial data and Regression models were analyzed for each of the dependent
programs; removing computer access and return of variables separately as shown in Table VIII. Results indicated
security pass when staff leave or are dismissed; and that two models were statistically significant at the p ¼ 0.05
encrypting and coding information. Because all items level, and explained approximately 53.8 and 34.8 per cent of
were information-related activities, this factor was the variance in safety performance and customs clearance
identified as an information management dimension. It performance, respectively. Moreover, D-W values were all
accounted for 5.49 per cent of the total variance. close to 2 and fell in the range of 1.5-2.5, indicating the
4 Factor 4, named the partner relationship management residuals were not correlated and the autocorrelation problem
dimension, consisted of four items: establishing did not exist in this study.
collaborative relationships with customs administrations The first regression model, with safety performance as the
or other authorities; encouraging business partners to dependent variable, was found to be significant
enhance supply chain security; having a good system for (R2 ¼ 0:538; F ¼ 23:264) at the p ¼ 0.01 statistical level.
recording and controlling commercial intercourse; and Results showed information management (estimate ¼ 0.293)
performing background checks on firms’ new and existing and partner relationship management (estimate ¼ 0.265) to
employees. Since three of the four items were related to be positively related to safety performance. However, the
partner-related activities, this factor was identified as a impacts of facility and cargo management and accident
partner relationship management dimension. It accounted prevention and processing were not found to be significant.
for 4.52 per cent of the total variance. Thus, the impact of security management on safety
performance was partially supported in this study (H1).
4.3 Reliability test
The final model which regressed the four security
A reliability test based on Cronbach Alpha values and
management dimensions on customs clearance performance
corrected item-total correlation coefficients was used to
was also found to be significant (R2 ¼ 0:348; F ¼ 10:669) at
examine the consistency and reliability of measures. As shown
in Table VII, the Cronbach Alpha value and corrected item- the p ¼ 0.01 statistical level. Results indicated that only
total correlation coefficient of each measure were well above partner relationship management (estimate ¼ 0.345) was
the suggested threshold of 0.75 and 0.5 respectively, positively related to customs clearance performance, thus
considered adequate for confirming a satisfactory level of the impact of security management on customs clearance
reliability in research (Nunnally, 1978; Churchill and performance was partially supported in this study (H2).
Iacobucci, 2002).
Table VII also shows respondents’ agreement level with 5. Discussion and conclusions
each security management dimension. Facility and cargo
management (mean ¼ 4.310) was found to be the key security This study has examined the effect of security management
management dimension to container shipping firms, followed on security performance in the container shipping sector. The
by accident prevention and processing (mean ¼ 4.220), main findings are summarized in the following.
information management (mean ¼ 4.178), and partner Findings relating to respondents’ perceptions of security
relationship management (mean ¼ 4.021). management indicated that container shipping firms in
Taiwan primarily focus on facility and cargo management
4.4 The effect of security management on security and less on partner relationship management and information
performance management and the respondents were generally dissatisfied
Multiple regression analysis was performed to examine the with their company’s customs clearance performance.
effect of security management on security performance. A Factor analysis was used to identify four crucial security
summed scale of each independent variable and dependent management dimensions: facility and cargo management,
variable was created for regression analysis. Four security accident prevention and processing, information
management dimensions were used as independent variables management, and partner relationship management.
in a series of regression models with security performance in Specifically, facility and cargo management was found to be
terms of safety performance and customs clearance the key security management dimension to container shipping
performance as dependent variables. Multicollinearity was firms, followed by accident prevention and processing,

Table VII Reliability test results

Security management dimensions No. Mean SD Cronbach Alpha Range of corrected item-total correlation
Facility and cargo management 9 4.310 0.063 0.941 0.712-0.872
Accident prevention and processing 6 4.220 0.045 0.946 0.786-0.909
Information management 6 4.178 0.114 0.912 0.686-0.835
Partner relationship management 4 4.021 0.126 0.832 0.610-0.704
Safety performance 4 3.985 0.114 0.936 0.800-0.923
Customs clearance performance 3 3.878 0.118 0.865 0.581-0.848

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Ching-Chiao Yang and Hsiao-Hsuan Wei Volume 18 · Number 1 · 2013 · 74 –85

Table VIII Multiple regression analysis results (standard b coefficients)

Security management dimensions Safety performance Customs clearance performance
Facility and cargo management 0.189 0.169
Accident prevention and processing 0.088 2 0.027
Information management 0.293 * * 0.171
Partner relationship management 0.265 * * 0.345 * *
F-value 23.264 10.669
p-value 0.000 0.000
R2 0.538 0.348
Adjusted R2 0.515 0.315
D-W value 2.036 1.715

information management, and partner relationship Finally, the results of this study could also contribute to
management. Multiple regression analysis revealed that support the design of policy measures in the sector. The
information management and partner relationship government administrators or other authorities could employ
management had significant positive impacts on safety supply chain security management attributes and dimensions
performance, while partner relationship management was as the criteria to assess container shipping firms’ supply chain
found to have a positive impact on customs clearance security performance and further to provide a good
performance, consistent with findings reported in previous international logistics environment to facilitate the
studies (Banomyong, 2005; Peleg-Gillai et al., 2006; Voss international trade and attract foreign direct investments.
et al., 2009). However, facility and cargo management and Moreover, results can help customs authority encourage
accident prevention and processing were not found to have enterprises to obtain the AEO certificate and further to
significant positive impacts on security performance. cooperate with other countries’ customs authority on supply
The study has a number of practical implications for chain security.
container shipping firms. First, the results derived from This study has several limitations. First, the investment in
respondents’ perceptions of supply chain security security initiatives may cause additional costs in the short-
management attributes imply that container shipping firms term. Differences in firm size and type may result in different
have to carefully select low risk business partners and resources for supply chain security management. Thus, future
regularly evaluate their security performance to improve research could identify the drivers and barriers to compliance
supply chain security. Moreover, container shipping firms can with supply chain security initiatives. Moreover, since the
encourage their business partners to participate in C-TPAT or resource-based view is a theory widely used to explain
AEO programs. In today’s modern electronic commerce- performance differences across firms in the strategic
based marketplace, container shipping firms need to further management field (Barney, 1991; Amit and Schoemaker,
improve information security through several security 1993), further research could apply this theory to ascertain
management activities such as encrypting and coding antecedent and consequent relationships between resources,
information, regularly backing up commercial data, and security management capabilities, and performance. Another
protecting business information from unauthorized access. worthwhile area for future research might be use of the
Second, results derived from factor analysis and multiple strategic group concept to classify container shipping firms
regression analysis have indicated that security management is into different security management capability oriented firms
the main driver to improve container shipping firms’ safety based on the security management dimensions identified in
performance and customs clearance performance. the present study. Finally, the data were collected at one point
Considering these findings, container shipping firms are in time and therefore the hypothesized relationships were
advised to develop their security management in the aspects examined in a static fashion. Longitudinal research could be
of facility and cargo management, accident prevention and employed to indicate how perceptions of supply chain security
processing, information management, and partner change over time.
relationship management. Importantly, the global movement In conclusion, this paper represents the first to identify
of each container involves different service parties and crucial security management dimensions and assess their
container shipping firms must prioritize partner relationship effects on safety performance and customs clearance
management to improve their safety performance and performance in the container shipping sector.
customs clearance performance. In addition, an effective
information management could significantly decrease the
Note
number of personnel injuries, frequency of accidents and
equipment failure, and the cargo loss or damage. 1 One US dollar equals approximately 32.5 New Taiwanese
Third, this study found partner relationship management to (NT) dollars.
be the key dimension for supply chain security success,
consistent with findings reported by Cook (2003) and Voss
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on perceptions of safety performance in container terminal
operations”, Transport Reviews, Vol. 29 No. 1, pp. 1-19. Ching-Chiao Yang is an Associate Professor in the
Sheffi, Y. (2001), “Supply chain management under the Department of Shipping and Transportation Management
threat of international terrorism”, The International Journal at National Kaohsiung Marine University, Taiwan. He
of Logistics Management, Vol. 12 No. 2, pp. 1-11. received a PhD in Transportation and Communication
Sheu, C., Lee, L. and Niehoff, B. (2006), “A voluntary Management Science from National Cheng Kung
logistics security program and international supply chain University, Taiwan. His research interests are transport
partnership”, Supply Chain Management: An International logistics, supply chain security management, supply chain
Journal, Vol. 1 No. 4, pp. 363-74. management, strategic management, and marketing. His
Speier, C., Whipple, J.M., Closs, D.J. and Voss, M.D. (2011), research papers have been published in various academic
“Global supply chain design considerations: mitigating journals, including the International Journal of Shipping and
product safety and security risks”, Journal of Operations Transport Logistics, the International Journal of Logistics
Management, Vol. 29 Nos 7-8, pp. 721-36. Research and Applications, the Transportation Journal, the
Thai, V.V. (2007), “Impacts of security improvements on International Journal of Production Economics, the
service quality in maritime transport: an empirical study of Transportation Research Part E: Logistics and Transportation
Vietnam”, Maritime Economics and Logistics, Vol. 9 No. 4, Review, and others. Ching-Chiao Yang is the corresponding
pp. 335-56. author and can be contacted at: [email protected]
Thai, V.V. (2009), “Effective maritime security: conceptual Hsiao-Hsuan Wei received a Master’s degree in Shipping
model and empirical evidence”, Maritime Policy and and Transportation Management from National Kaohsiung
Management, Vol. 36 No. 2, pp. 147-63. Marine University, Taiwan. Her research topic is evaluating
United Nations Conference on Trade and Development security management and safety performance for the
(2006), Maritime Security: Elements of an Analytical container shipping service.

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