A RESEARCH PAPER ON THE ADOPTION OF E-COMMERCE IN THE SOUTHERN REGION SHIPPING INDUSTRY IN PENINSULAR MALAYSIA

THE ADOPTION OF E-COMMERCE IN THE SOUTHERN REGION SHIPPING INDUSTRY IN PENINSULAR MALAYSIA

A project report submitted in partial fulfillment of the requirements for the award of the degree of Masters of Science in Transport Planning.

Faculty of Built Environment

University Teknologi Malaysia

SUPERVISOR’S DECLARATION

We hereby declare that we have read this project report and in our opinion this project report is sufficient in terms of scope and quality for the award of the degree of Masters of Science in Transport Planning.

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Name of Supervisor :

Date :………………………

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Name of Examiner :

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STUDENT’S DECLARATION

I declare that this project report entitled “THE INFLUENCES OF E-COMMERCE IN THE SOUTHERN REGION SHIPPING INDUSTRY IN PENINSULAR MALAYSIA” is the result of my own research except as cited in the references. The project report has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.

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DEDICATION

ACKNOWLEDGEMENT

First of all, I would like to thank my God for granting me the privilege to take up this course and with good health, perseverance and patient to complete this study despite encountering many obstacles along the path to success.

In preparing this thesis, I was in contact with many people, shipping trade personnel, researchers, academicians and practitioners. They have contributed towards my understanding and thoughts. In particular, I wish to express my sincere appreciation to my main thesis supervisor, Professor for encouragement, guidance, critics and friendship. I am also very thankful to my co-supervisors Dr and Professor for their guidance, advices and motivation. Without their continued support and interest, this thesis would not have been the same as presented here.

I am also indebted to University Teknologi Malaysia (UTM) for providing the courses and their assistance in supplying the relevant literatures for the past 2 years.

My fellow postgraduate students should also be recognized for their support. My sincere appreciation also extends to all my colleagues and others who have provided assistance at various occasions. Their views and tips are useful indeed. Unfortunately, it is no possible to list all of them in this limited space. Finally, I am grateful to all my family members. I love you all.

Abstract

E-commerce has revolutionized the business environment by developing the digital economy that enhances value to consumers and improves the efficiency of business operations. However, optimizing the influence of e-commerce depends on the environmental context of industries and individual firms. The ports in the southern peninsular Malaysia are a bastion of growth because of the strategic position and technological improvements as incentives to shipping companies. Understanding the influences of e-commerce on the shipping industry in southern peninsular Malaysia requires the consideration of the Malaysian context and specific industry context. Knowing this would provide insight into the extent of influence of e-commerce and the gap between the ICT competencies with Singapore as the benchmark country to support policy changes and greater e-commerce adoption by business firms. The study considered e-readiness to measure the environmental context in Malaysia relative to Singapore. The investigation also considered the perspectives of business firms by interviewing the managers of six shipping companies. Results showed that the influences of e-commerce on the shipping industry are limited because of factors such as cost, insufficient understanding of e-commerce, and different strategic priorities. Policy changes are necessary in enhancing the influence or role of e-commerce on the shipping industry to heighten preparedness in the digital economy.

Keywords – E-commerce, shipping, logistics

TABLE OF CONTENTS

CHAPTER TITLE PAGE

TITLE i

SUPERVISOR’S DECLARATION ii

STUDENT’S DECLARATION iii DEDICATION iv ACKNOWLEDGEMENT v

ABSTRACT IN ENGLISH vi

ABSTRACT IN BAHASA vii

TABLE OF CONTENTS viii

LIST OF APPENDICES ix LIST OF TABLES ix

LIST OF FIGURES ix

1 INTRODUCTION

1.1 Background of the Study 1

1.1.1 E-Commerce in Malaysia 1

1.1.2 Southern Region Shipping Industry in Peninsular Malaysia 2

1.2 Problem Statement 4

1.3. Research Goal and Objectives 4

1.4 Scope and Limitations of the Study 5

2 LITERATURE REVIEW 6 2.1 Introduction 6

2.2 Concept of E-Commerce 6

2.3 Influences of E-Commerce on Business Firms 8

2.3.1 E-Commerce Influence on the

Value Chain 9

2.3.2 Influence of E-Commerce on the

Supply Chain and Logistics 10

2.3.3 Influence of E-Commerce on

Competitiveness 11

2.4. Challenges to E-Commerce 12

2.5 Success Factors of E-Commerce 13 2.6 Determinants of E-Commerce Adoption 14

2.7 Comparison of E-Commerce in

Shipping Industries 15

2.8 Benchmarking of E-Commerce in Singapore and

Malaysia 16

3 RESEARCH METHODOLOGY 20

3.1 Introduction 20

3.2 Research Design 21

3.3 Data Requirement 22

3.4 Data Collection and Analysis Methods 22

3.5 Research Timetable 24

4 DATA ANALYSIS 25

4.1 Introduction 25 4.2 Ports in Southern Peninsular Malaysia 25

4.3 Adoption of Shipping Companies of E-Commerce 27

4.3.1 Demographic Data 27

4.3.2 E-Commerce Capability of the Company 27

4.3.3 E-Commerce Adoption of Companies 27

4.3.4 Extent of E-Commerce Adoption

of the Companies 30

4.3.5 Attitudes of Managers towards

E-Commerce 32

4.4. Policy Recommendations on E-Commerce

in the Shipping Industry 34

5 CONCLUSION AND RECOMMENDATION 35

5.1 Introduction 35

5.2 Conclusion 35

5.3 Recommendations 39

REFERENCES AND BIBLIOGRAPHY 40 APPENDICES 43

LIST OF APPENDICES

Title Page

Appendix A: Survey Questionnaire 43

Appendix B: Geographical Distribution or Spread of Malaysian Ports 45

Appendix C: Facilities at Port Tanjung Pelepas (PTP) 46

Appendix D: Facilities at Johor Port 47

LIST OF TABLES

Title Page

Table 2.1 Critical Success Factors in Adopting E-Commerce 9

Table 2.2: Measures of the Areas of E-Readiness 17

Table 2.1: Classifications of E-Readiness 17

Table 2.4: Comparative E-Readiness of ASEAN Countries 18

Table 4.1: Technology Capabilities of Ports in Southern Peninsular Malaysia 26

Table 4.2: Shipping Companies Participating in the Study 28

Table 4.3: Adoption of E-Commerce by the Companies 29

LIST OF FIGURES

Title Page

Figure 2.1: Business and E-Commerce Goal Alignment 9

Figure 2.2: Linking Physical, Financial & Information Systems in E- Commerce 11

Figure 4.1: Use of E-Commerce Tools of the Companies 31

Figure 4.2: Extent of Linkage or Network of the Companies 32

CHAPTER 1

INTRODUCTION

1.1 Background of the Study

1.1.1 E-Commerce in Malaysia

Electronic commerce or e-commerce describes any type of business or commercial transaction, which involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge.

E-commerce allows users to exchange goods and services electronically with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years in Malaysia and should continue to proliferate in the business context. In the near future, there would be a blurring of boundaries between "conventional" and "electronic" commerce as more and more businesses move sections of their operations onto the Internet. With electronic commerce, everything starts out and stays digital; only different applications are needed to transfer and process the data as it winds its way through the whole process flows.

One of the business sectors in Malaysia adopting e-commerce is shipping. E-commerce offered various opportunities for market expansion and service efficiency to the shipping industry, which operates in a highly competitive environment. Although these comprise benefits common to different sectors, there is need to consider the particular influences of e-commerce on the shipping industry to provide an understanding of how e-commerce operates in the context of a given industry, including the benefits and downsides.

1.1.2 Southern Region Shipping Industry in Peninsular Malaysia

As the Malaysian national economy grew and developed over the years, the southern region’s sea freight logistics industry also grew to reflect the changes and growth in the national economy. The shipping industry would constitute one of the key drivers of economic growth besides manufacturing and agriculture in the next 10 years. The shipping industry players include shipping liners, warehouse operators, shipping and forwarding agents, haulage companies and others parties involved in shipping services. These firms are bound to play a vital role within integrated transport chain with all seaports in the southern peninsular Malaysia.

More than 90 percent of the world international trade is moved by water transport where ships are operated as liners, as tramps or sea merchants (own account industrial carriers). Some study reported that by 2010, total port capacity from all Malaysian ports is expected to have increased to about 600 million tons from 345 million tons in 2000. The throughput of containerized cargo should experience a double-digit growth. (UNCTAD, 2002) As all of us know, seaports are the point of entry and exit of goods from a place or country. It is also a point of transfer between two modes of transportation linking sea and land or an integration between container haulage and seaport. (Quintet and Vickerman, 2004) Currently two major ports residing in the southern region are the Johor Port and Port Tanjung Pelepas (PTP).

This study is trying to investigate major factors driving e-commerce adoption, and assess the organizational readiness for Malaysian shipping industry operating in the southern region in the state of Johor. This study used structured questionnaires and observation method in getting responses from IT managers, shipping & forwarding representative or decision-makers on e-commerce initiative. The transfer of goods or containers from one mode of transport to another supporting mode has been the primary function of seaport and more specifically, the port terminals. The most important or main objective of a seaport role is to have a speedy transport of cargo in or out of the port, nevertheless, the efficiency of operational productivity, data information exchange should be updated following the current electronic technology. In the current port trend with intense competition, ports not only have to compete with other ports but also with other modes of transportation. This intensified competition has force seaports around the nation to operate more efficiently. Yet, there are still problems issues raised such as equipments failures and secure real time information were not fully implemented or utilized. The failure in e-data distribution and e-information flows by not having a synchronized way to achieved better seaport’s information infrastructure. Therefore, in the southern region, the scenario is similar and requiring improvements. The need of an industry e-database is required to strengthen the southern logistics chain. For example, study discovered no specific information on numbers of sea freight logistics service providers. (South) Ineffective coordination between land and sea transport system. Study also found out there is lack of research and development especially in the domestic liners and the total market requirements.

Understanding the influence of e-commerce in these specific areas should provide insight on the use of e-tools in the shipping industry in terms of the problems that these can address and the particular benefits to shipping companies. Knowing these problems, which e-commerce can resolve together with the other benefits for shipping companies, should inform shipping companies about how they can optimize electronic technology to resolve problems and achieve benefits. An understanding of the influence of e-commerce on the shipping industry in the southern region of peninsular Malaysia could also inform policymakers about policy improvements. These should support strategic actions to ensure competitiveness in a future liberalized environment such as the use of e-knowledge and enhancements in the port priority systems, which involve mechanisms that can process the relevant documents faster, secure and coordinate the movement of goods and distributing of real time information in a secure manner.

This research paper highlights the current logistics framework with the objective of enhancing learning by gathering feedbacks from all sources in the shipping industry. The proposed transformation to e-knowledge-based economy should also certainly generate a new wave of ICT-based service activities. The rapid developments in transport, telecommunications and ICT nowadays would eventually form a significant influence on the growth of the shipping industry particularly in the southern region of Peninsular Malaysia.

1.2 Problem Statement

In today’s ‘Era of Networking Economy’, where individuals and companies worldwide are being electronically linked, business rules keep changing and companies have to respond fast to changes to survive the competition. The marketplace is changing every second at an increasing pace. The southern shipping industry needs to buck up immediately and prepare to compete in the growing world of e-commerce. It becomes important to focus on the following areas:

Lack in e commerce/knowledge in most related players in this industry;
Ineffective coordination between land and sea transport system relative to the linkages between private sectors and the Government agencies;
Lack in R&D, Shipping data and market requirements information; and
The need to form an industry database that would eventually help to strengthen the southern logistics chain by knowing who are who are dealing in which sea routes and the range of specialized shipments or service covered.

1.3. Research Goal and Objectives

The primary goal of the research is to review the current state in the sea-freight logistics industry to answer the questions where do we stand now and how ready are we to face the future globalization challenges.

The specific objectives for the investigation include:

· Identification of the current issues or problems experienced by shipping companies in terms of the process flows and linkages

· Determination and recommendation of the viable means of increasing ICT utilization to enhance productivity

· Determination and recommendation of policy changes to foster the effective adoption of e-commerce tools as part of competitive strategy

1.4 Scope and Limitations of the Study

Due to time limitations and some difficulties as constraints, the scope of the research is restricted to understanding the problems in process flows experienced by the shipping industry in southern peninsular Malaysia, the methods in e-commerce that could improve process flows in the logistics system of the shipping industry and recommendation of means of addressing problems on process flows. The means of collecting data for the research investigation is secondary data on previous studies and e-commerce trends together with interviews of managers with first hand involvement in e-commerce adoption or initiative of shipping companies. There are no hypotheses for the research because the intention is to explore the process flow problems experienced by shipping companies and recommend ICT solutions based on the data gathered from the interviews. This serves the purpose of strengthening the root of the concept of e-knowledge influences and the effective means of integrating sustainable development and all related parties into it. The research would also identify possible solutions from the use of the appropriate analytical methods in the research study.

There are however several limitations to this research. First, the interview information largely depends on self-reporting by the respondents and this could lead to biases in reporting. The information given during the interview depends on the subjective perspective of the respondents, albeit based on their professional experience as managers directly participating in the involvement of shipping companies in e-commerce. Second, access to information may not be that easy since some of the shipping companies could be hesitant in providing information. The research has to depend on available data. This also gives rise to issues in the confidentiality of information such as company assets, the volume of every individual company’s monthly or yearly performance and individual financial matters.

CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

The literature review explains the concepts capturing e-commerce and the results of previous studies on the impact of e-commerce on the shipping industry. The sources considered in the review include books, past articles journals, previous thesis, seminars papers, magazines related to current shipping issues, information posted on internet and some documents from the government agencies. There are also some variety of definitions of "electronic commerce" (e-commerce) in the literature. It has been defined as a combination of technologies. For a lot of people perspective or view, electronic commerce is defined as the buying and selling of products and services over the Internet, but they forgot there are many more aspects to it. From its inception, electronic commerce has included the shipping modes transactions and how shipping integrations over computer networks. The concept of e-commerce has now grown to include the dealing and handling of new methods such as electronic information.

2.2 Concept of E-Commerce

E-commerce comprises a key technological trend in the last decade. The significance of e-commerce has also elevated to an extent that many firms are looking at the future possibilities, costs, and other business implications of e-commerce. This trend refers to the manner of doing business, encompassing buying, selling and payment transactions using the computer linked to the Internet as tools (Moran and Avergun, 1997).

The distinguishing factor of e-commerce is its difference from the traditional modes of doing business, which involves reliance on telephone and facsimile equipments or face-to-face transactions. E-commerce enables business firms to deal with partners in business, suppliers, and customers through the Internet.

The idea of e-commerce came out in the 1990s as a term describing the pervasive utilization of computers and Internet connections by business firms. As e-processes emerged, the function of the Internet evolved as a significant tool in improving the efficiency of linkages with consumers and access to the different phases of the supply. The widespread utility of the Internet as a tool in doing business has revolutionized business practices and created infrastructure support to firm operations, particularly in industries strongly involved in transactional processes such as shipping. The uses of the Internet continue to evolve so that in the succeeding years, more uses are likely to emerge for the benefit of business firms and its stakeholders. Online functions would likely add value to the products and services of business firms heavily engaged in transactional processes by enhancing business performance and competitiveness.

However, the range of benefits offered by e-commerce to transactional businesses has also given rise to key issues, especially on privacy of users and security of information shared online. These issues emerged because of the wide accessibility, openness and interconnectivity as innate features of the Internet. (Smith et al., 1996) While the core features of e-commerce created benefits, these also led to the problem on invasion of privacy and identity theft. Via widely accessible and speedy online accessibility, exploitation of knowledge of the operation of network systems by perpetrators and limited or poor security element of online transaction processes allowed the unethical use of individual and financial data in committing cyber crimes. (Smith, 1994) The pervasiveness of the problem made internet security a separate industry but while efforts to manage securely information online emerge, so do the means of getting around these security systems. As such, efforts to develop information security systems for e-commerce should continue to emerge in the next years at a faster speed to ensure secure online transactions for the benefit of business firms and customers. The information security sector becomes a business ally of transaction-based firms engaged in e-commerce. Concerns for the shipping sector involve not only the decision to engage in e-commerce but also the selection of the particular online tool that supports both utility and security.

Rodgers, Yen and Chou (2002) provided that e-commerce establishes links among business partners, suppliers, employees and customers through three online systems, the Internet, intranet and extranet. The Internet enables product offering and service delivery together with the related transactions through online venues such as websites. Intranet systems connect employees by giving them a way of accessing and sharing information through a network system exclusive to the company. Intranet systems similarly operate as interactive, transactional and information-sharing systems but limited only to the members of he business firms. This operates based on the assumption that informed employees decide, act and perform better. Extranet systems facilitate the establishment of links and support the flow of information and exchanges between business firms engaged in collaboration or partnership. Extranets encourage business firms to invest in e-commerce to achieve a means of establishing linkages with other companies in a business-to-business relationship. These functions contribute improvements in logistics, streamlining of the operating process, and automated ordering systems in the shipping industry. By assuming these roles, e-commerce then operates as a strategy of supply-chain management. (Hall and Braithwaite, 2001)

Best practices in e-commerce emerged from the widening experiences of firms with this mode of doing business. Most, if not all of the best practices address the key issues in adopting e-commerce. Zott, Amit and Donlevy (2000) identified two best practices for firms to create value through e-commerce. One is improving the efficiency of transactions so that the adoption of e-commerce should improve the quality of transactions by and with the firm. The other is developing stickiness to secure repeat transactions by establishing trust, rewarding loyalty, and personalizing transactions. Jeffcoate, Chappell and Feindt (2002) explained assessment and continuous improvement as other best practices in adopting e-commerce. Some criteria for assessment are shown in Table 2.1 below, which if considered by firms in adopting e-commerce and improving e-commerce components would ensure that the performance of firms would be at the level of the best performing e-commerce firms in the industry.

Table 2.1 Criteria for Assessment in E-Commerce

Source: (Jeffcoate, Chappell and Feindt, 2002)

2.3 Influences of E-Commerce on Business Firms

According to Greenstein and Feinman (2000), developments in technology and the shifts in business or industry trends could influence changes in the business environment. These environmental changes in turn influence business firms to rethink the corporate goal or mission. A change in the mission with consideration of technological developments would in turn cause changes in the technology or IT goal of the company. Exploration of available technological tools would lead to the adoption of Internet based e-commerce goal. The achievement of this goal then involves planning and actual engagement in e-commerce tools. E-commerce, as a technological development influences business firms in this manner by shifting goals and the course of action of business firms as shown in Figure 2.1 below.

Figure 2.1: Business and E-Commerce Goal Alignment

Source: (Greenstein and Feinman, 2000)

Specifically, e-commerce influences the strategic direction of business firms in three areas, which are value chain, supply chain and logistics, and competitiveness. The influence of e-commerce in these three areas is subject to discussion in the succeeding sections.

2.3.1 E-Commerce Influence on the Value Chain

Traditionally, the value chain supports the flow of information from suppliers to the business firms and then to customers. In the case of e-commerce, suppliers, business firms, and customers exchange information at various levels in the value chain. This changes the nature of the value chain from a sequential process to a multi-level and simultaneous process with a customer orientation. Instead of the business serving an intermediary role, the empowerment of customers enables them to gain access to the information systems of suppliers such as the inventory system to make orders online or trace product or service delivery fulfillment throughout the stages of the supply chain. Through e-commerce tools such as websites and database systems, customers can access the internal information system of suppliers and business firms to take control of the fulfillment process. The empowerment of customers creates a higher value for products and services.

2.3.2 Influence of E-Commerce on the Supply Chain and Logistics

Supply chain and logistics comprise important areas influenced by e-commerce because of the alignment between e-commerce and supply chain and logistics as processes. The management of the supply chain centers on decreasing the time involved in finishing and processing goods to ensure a speedier meeting of orders. Speeding up the production process then lowers the cost involved in maintaining inventory and minimizes the inefficiencies in distribution. Logistics comprise the aggregate processes of planning, implementation, and control of the flow of raw materials in storage or inventory of goods and services from the source to the end consumption to make these processes efficient in conforming to the expectations of customers. (Langley et al., 2000) The management of information is important in developing an efficient supply chain and logistics. E-commerce tools supports the effective management of information needed to achieve an efficient supply chain and logistics. (Loebbecke and Powel, 1998) E-commerce improves supply chain and logistics by linking physical, financial, and information systems as shown in Figure 2 below (Kalakota and Whinston, 1997).

Figure 2.2: Linking Physical, Financial & Information Systems in E-Commerce

Source: (Kalakota and Whinston, 1997)

E-commerce tools that support information management in supply chain and logistics include the Internet, intranet and extranet that support various linkages such as business-to-business (B2B), business-to-consumer (B2C), business-to-business-to-consumer (B2B2C), and other relationship enabled by e-commerce. E-commerce link business collaborates, customers, suppliers, top management or decision-makers, and employees. In the context of shipping, the adoption of e-commerce by shipping companies would enable customers to access updated information on freight charges, schedules, tariffs and delivery or fulfillment time requirements, and other transport cost to enable them to decide on which service to engage from which company. However, from the perspective of logistics, the greatest barrier to the adoption of e-commerce tools is the high initial investment cost. Nevertheless, with expected cost reduction and decreased cycle time, there are various ways of achieving returns on investment. One is faster business processes because information and financial flows accompany the physical goods. This means that information replaces inventory to reduce warehouse costs. Another is the creation of savings from faster business processes causing cutbacks in expenditures on distribution, inventory, and warehouse functions. Business firms do not need to build warehouses since they can utilize the warehouse facilities of suppliers and coordinate delivery through network systems of information exchange. (Kalakota and Whinston, 1997)

2.3.3 Influence of E-Commerce on Competitiveness

There is a direct relationship between the degree of engagement in e-commerce and competitiveness in terms of market share and financial performance because the greater investment in e-commerce tools also leads to greater returns for these firms. The firms that effectively engaged in e-commerce were also the firms that have achieved competitive positions. In the case of the shipping industry, many of the competitive firms are those that have adopted e-commerce initiatives to enable customers to calculate costs and time of delivery, verify or cancel shipping arrangements, track the status of packages of freight, receive electronic invoices and remittances, and access useful information from their personal computer or handheld devices. (Leinbach and Sien, 1999; Ryder, 2001)

2.4. Challenges to E-Commerce

E-commerce has benefits and downsides emerging from the complexities occurring in adopting or adjusting to this technological development. These challenges also coincide with the issues arising from the adoption of e-commerce. Nevertheless, these challenges also identify the areas requiring resolution to ensure a successful e-commerce initiative. Vizard (2000) provided that cost comprises an issue posing a strong challenge to business firms. Cost considerations could dissuade business firms from engaging in e-commerce even with expectations of great potential benefits to the business firm. Leadership plays an important role in resolving the dilemma of firms over the cost of engaging in e-commerce. The strategic decision-making over options such as e-commerce depends upon the assessment of firm executives over the cost involved in engaging in e-commerce relative to the available resources of the company and the expected returns. Moreover, leaders of transaction-based firms should recognize that despite the costs, e-commerce could be a necessary enabler for the company. When the competitors of the business firm start to engage in e-commerce, other firms have no other option but also to take the initiative. This means that for transaction-based firms, the better option is to understand and plan for e-commerce to experience the benefits as a first mover, especially in transactional industries with limited engagement in e-commerce.

Nickles (2000) identified security problems as another challenged faced by business firms in engaging in e-commerce. The extent of security depends on the extent of investment in e-commerce and the selection of the appropriate components of he e-commerce initiative. Some actions could be considered to ensure that companies address the security problem. One is being on top of the current trends in information security technology in order to access better security components for e-commerce systems. The other is optimizing existing technology to experience the greatest benefits from engaging in e-commerce.

E-commerce streamlining (Rao, 2002) or standardization (Lal, 2005) also comprises a challenge experienced by business firms. Experiencing the benefits of e-commerce depends in part on the achievement of a certain level of standardization in terms of IT language and linkage necessary to support interconnectivity. Without this, e-commerce would become limited only to intranet. Companies engaging in e-commerce also need to look into the use of standard ICT tools for business, especially those created to cater to the needs of an industry. By selecting appropriate ICT tools, the firm secures connectivity with business partners, suppliers, employees, and customers.

2.5 Success Factors of E-Commerce

There are key success factors for engaging in e-commerce. These represent the requirements in successfully adopting e-commerce.

Greenstein and Feinman (2000) identified vision as one success factor for e-commerce. Integration of e-commerce into the vision of a business firm guides organization-wide action towards the achievement of e-commerce. This means that performance depends on the extent of achievement of e-commerce objectives. The vision of a business firm determines the key parties, the respective contributions of these parties, the activities and competencies needed, and the expected results. Thus, the vision of a firm comprises the underlying basis for the e-commerce initiative.

Follit (2000) identified leadership as another success factor for e-commerce. E-commerce comprise a business innovation, there should be a champion for e-commerce in the company to influence the acceptance and cooperation to the adoption of e-commerce as a business solution. It is important for the leader to assume a strong position in directing the e-transformation of the business. The e-commerce leader should hold a strong position in controlling the e-transformation of the organization to ensure the effective adoption of e-commerce.

Corbitt (2003) identified corporate culture as another success factor in e-commerce adoption. In adopting e-commerce, change in corporate culture and the concurrent change management strategy are requirements in ensuring the alignment between the requisites of e-commerce and the norms, practices and values of the organization in using online tools to facilitate business processes. Culture change requires a shift in the view of managers and employees over e-commerce tools relative to their work and the performance of the business. Without a change in perception, e-commerce tools would not likely receive the acceptance and enthusiasm needed for the effective use of e-commerce in achieving goals.

Marzulli (2000) also identified the aggregate of strategic planning, corporate communication, and organizational flexibility as another success factors in adopting e-commerce. Planning enables businesses to identify objectives, anticipate potential problems, and develop contingency solutions. Corporate communication secures acceptance and cooperation by making sure that all managers and employees understand the importance of e-commerce to the business. Flexibility supports the capability of business firms to adjust to the changes needed in adopting e-commerce.

2.6 Determinants of E-Commerce Adoption

Lal (2004) listed factors as the determinants of a firm’s adoption of e-commerce. These determinants measure to what extent a business firm has adopted e-commerce. First is the overall attitude of managers and employees over the e-commerce initiative. Attitude finds reflection from the views, degree of acceptance, cooperativeness, and actual use of ICT tools. An overall positive attitude towards e-commerce eases the adoption process. Second is the bandwidth or rate of data transmission used since a higher bandwidth means greater efficiency of information flows. Fourth is firm size and profitability as measures of the benefits derived from e-commerce. Fifth is efficiency in transactions and relative competitiveness as other measures of success in adopting e-commerce.

Bolongkikit et al. (2006) reported that the adoption of e-commerce in Malaysia varies depending on the size or scale of operation of business firms and the industry. The adoption of e-commerce by small firms is at its infancy when compared to the greater adoption of e-commerce tools by larger firms. This makes cost a determinant of engagement in e-commerce. In the shipping industry, larger firms engage in e-commerce tools while there is limited information on e-commerce tools for small firms relying on manual management of information. Different industries also differ in the extent of adoption of e-commerce functions. In the shipping industry, the overall engagement in e-commerce is still limited only to the large firms. Even so, the extent of use of e-commerce tools is also limited. This is yet no widespread link between e-commerce and profitability and competitiveness benefits.

2.7 Comparison of E-Commerce in Shipping Industries

Malaysia has a long way to go in the adoption of e-commerce in the shipping industry. A ranking of the overall physical infrastructure for sea transportation e-commerce of developed and developing countries showed that Malaysia ranks twenty-first. Singapore ranked first because of its development of the most advanced physical infrastructure such as port facilities and ICT capabilities in the world. (Wong, 2001) This means that Malaysia face a wide room for improvement in the integration of e-commerce into shipping services. The developments in Singapore could comprise a point of reference for improvements in Malaysia because of the geographic proximity of the countries as well as common socio-cultural ties. Wong (1996; 1998) explained that the successful adoption of e-commerce in the shipping and transportation sectors in Singapore is mostly due to the role of the government in promoting the diffusion of ICT technology to both households and business. The Singapore government commenced investments in ICT as early as the 1980 to support economic development through the establishment of its information and digital sectors. The diffusion of ICT was accompanied by the digitization of the production of ICT goods, establishment of network infrastructures, and development of the information as a separate economic sector.

2.8 Benchmarking of E-Commerce in Singapore and Malaysia

E-readiness is the measure used in comparing the e-commerce capability of Malaysia and other ASEAN countries. E-readiness refers to the extent of preparation of a country in participating in the digital economy. Preparedness then depends on the assessment of five areas. These areas are: 1) infrastructure, 2) e-society, 3) e-commerce, 4) e-government, and 5) ICT products and services trade as shown in Table 4.1 below. How well the countries perform in these areas reflects the extent of e-readiness. A higher degree of e-readiness means a more conducive environment for the proliferation of e-commerce in different industries while a lower degree of e-readiness means a poorer environment for the adoption of e-commerce by industries, particularly the transaction-based shipping industry. (Baliamoune, 2002; Kiiski and Pohjola, 2002)

Table 2.2: Measures of the Areas of E-Readiness

Infrastructure

E-Society

E-Commerce

E-Government

ICT Products & Services Trade

§ Communication infrastructure

§ Internet access services

§ End-user services

§ Affordability

§ Home users

§ Business users

§ Education

§ Workforce

§ Localization

§ Public access points

§ Current status

§ Taxation

§ Legal framework

§ Physical distribution

§ Penetration

§ Use type

§ Organization

§ Promotion

§ Communication sector

§ IT sector

§ ISP sector

Source: (Baliamoune, 2002; Kiiski and Pohjola, 2002)

The measures of the areas of e-readiness provide the means of assessing the degree of preparation of Malaysia in engaging in the digital economy compared to Singapore and other ASEAN countries.

There are four classifications of the e-readiness of countries based on the assessment of the five areas as shown in Table 4.2 below. Countries could be emerging, evolving, embedding or extending depending on the e-readiness progress of the economies. These classifications comprise the stages of preparation for the digital economy. Emerging means being at the starting point of e-readiness while extending means at the advanced stage of e-readiness.

Table 2.3: Classifications of E-Readiness

Emerging

Evolving

Embedding

Extending

§ Basic infrastructures are in place or planned for placement in the short-term

§ Existence of political commitment towards the country’s ICT development

§ Comprehensive infrastructure in place and subject to updates to meet the multi-dimensional needs of the country

§ General acceptance by government, firms & households of technology

§ Incorporation of e-commerce requirements into laws and regulations aligned with international standards

§ World-class adoption of technological innovations

§ Innovation and re-invention of technology-assisted means of doing things better

Source: (Baliamoune, 2002; Kiiski and Pohjola, 2002)

By considering the areas of readiness and the classification of e-readiness, Malaysia is at par with two ASEAN countries, Philippines and Thailand, and below the level of e-readiness of Singapore, the benchmark country as shown in Table 4.3 below. This means that the government of Malaysia already has a general acceptance of technological advancements as enabler of various processes. Building technological competence also finds reflection in laws and regulations. However, there is still need for momentum to achieve fully a level of innovativeness on the part of households, business firms, and the government that changes the way of doing things using digital or electronic tools and processes.

Table 2.4: Comparative E-Readiness of ASEAN Countries

Infrastructure

E-Society

E-Commerce

E-Government

ICT Goods & Services Trade

Extending

Singapore

Embedding

Malaysia, Thailand, Philippines

Malaysia, Thailand

Malaysia, Thailand, Philippines

Evolving

Indonesia, Vietnam

Philippines, Indonesia, Vietnam

Indonesia, Vietnam

Emerging

Cambodia, Laos

Source: (Baliamoune, 2002; Kiiski and Pohjola, 2002)

Relative to the shipping industry, this means that electronic tools and processes are available to shipping companies. Nevertheless, there is need to encourage the adoption of these tools and processes into business vision, culture and operations. Doing so requires greater responsiveness of infrastructures, more intense e-penetration of the different sectors of society, stronger role of e-government, better incentives for e-commerce, and development of competencies in ICT goods and services trade. These are necessary if Malaysia wants to reach the level of e-readiness of Singapore, which has advanced infrastructures, high levels of reach and use of ICT tools across the different sectors, widespread adoption of e-commerce by different industries, strong role of the e-government in developing digital competencies of the economy, and the establishment of its ICT industry to meet domestic and international demand for ICT goods and services.

CHAPTER 3

METHODOLOGY

3.1 Introduction

This chapter discusses the approach of the study and the research design encompassing the data requirements, the methods of data collection, the technique of data analysis, and the timeframe of the study.

E-commerce (electronic commerce) solutions bring the open standards and universal access of the Internet to the core business processes of buying and selling goods and services, integration and link up all related parties in one similar industry. The methodology reflects these three areas.

n Benchmarking by comparing e-commerce adoption measures between Malaysia and Singapore to understand the status of the shipping industry in Malaysia in terms of e-commerce adoption and identify the areas for improvement. Singapore is the country employed in the comparison because of the proximity with Malaysia and the top country in terms of e-commerce adoption in the shipping industry.

n Interviews with managers of shipping companies such as shipping managers and port managers using a survey questionnaire comprised of open-ended and closed questions to understand the perspective of shipping companies towards e-commerce.

n Observations of the current scenario and identification of surroundings sensitive issues emerging from e-commerce in the shipping industry in southern peninsular Malaysia would support policy recommendations to improve the industry environment for e-commerce.

3.2 Research Design

Mixed method combining the qualitative and quantitative study was the research design applied in the study. Mixed method enables the achievement of both completeness and confirmation values. This design combines qualitative and quantitative data and retains the validity component of these two types of data to achieve a high validity.

Mixed methods enabled the researcher to come up with a complete and contextual understanding of the influence of e-commerce of the shipping industry of southern peninsular Malaysia, with qualitative and quantitative data contributing different views of the research topic. The underlying principle of the mixed method is the achievement of results that is unlikely achieved by using one approach to the exclusion of the other or vice versa. Data combined using the two methods supports the reliability or the replication of findings. Obtaining both qualitative and quantitative data also supports a comprehensive understanding of the research topic. Aside from supporting significant levels of validity and reliability, employing the mixed method could also lessen researcher bias in the interpretation of the results because conclusions find support from both qualitative and quantitative data.

A qualitative study operates by deriving detailed first hand descriptions of a case, phenomenon, or relationship (Rubin and Rubin, 2006). This approach meets in part the requirements of the research because it supports the drawing of comprehensive information on the non-measurable aspects of the investigation such as the opinions and accounts of managers of shipping companies over the impact of e-commerce on business.

A quantitative study employs deduction to test and draw theories. This enabled the derivation of generalizations for the shipping industry in southern peninsular Malaysia. This approach also provided measurable data on the research topic. (Blaxter, Hughes and Tight, 1998) The quantitative aspect contributes measurable data from the closed questions and comparative measures used in the study.

3.3 Data Requirement

To meet the objectives of the research of determining the influences of e-commerce in the southern region shipping industry in peninsular Malaysia, the data requirements include primary and secondary data.

Secondary data comprise of definitions, explanation of concepts, application of principles, statistics, and results of previous studies reported in different sources such as books, journals, magazines, newspapers, business reports, government reports, and online media.

Primary data comprise information derived from the respondents of the study. Primary data comes from the results of the survey of managers of firms forming part of the shipping industry. Data from the survey would provide answers to the influences of e-commerce to the southern region shipping industry in southern peninsular Malaysia.

3.4 Data Collection and Analysis Methods

Collecting secondary data is through desk or library research to scan books, journals, reports, and online sources for information significant to the study such as definitions, concepts and results of previous studies on the topic. Secondary data comprised the framework of the investigation.

Survey was the method in gathering primary data. Survey constitutes a descriptive method that operates by collecting data from a wide range of respondents. This method applies to researchers requiring an understanding of the link between variables by considering the perspective of different parties. (Saunders, Lewis and Thornhill, 2003) In the research investigation, the research variables are influences of e-commerce on the various aspects of shipping industry.

Survey supports the collection of unbiased data to come up with generalizations. This method of data collection has advantages and concurrent disadvantages that required consideration before its application in the study. First, the survey method can establish the relationship between variables but fails to cover the direction of the relationship (Salant and Dillman, 1994). The mixed method addresses this dilemma by using closed and open-ended questions in the survey questionnaire. Second, survey method draws data from many respondents but is heavily reliant on self-reported data dependent on the subjective perspective of the respondents (Salant and Dillman, 1994) creating the risks of unreliability of data. Use of uniform measures in treating the answers addresses this potential issue. Third, the survey method enables the drawing of information from many respondents but requires a long period of data collection (Salant and Dillman, 1994). The resolution to this issue is compliance with a research timetable as shown in the last section of this chapter that provides sufficient time for the survey.

The survey method applied by using a survey questionnaire, shown in Appendix A below, directed at managers of selected firms in the shipping industry in southern peninsular Malaysia. The survey questionnaire has a section on closed questions and open-ended questions. These questions supported the collection of measurable data and accounts of managers on the influences of e-commerce on the shipping industry in southern peninsular Malaysia based on the engagement of their firms in e-commerce. The collection of both closed and open-ended questions ensures the comprehensiveness of data.

Closed questions obtain responses by selecting from a given set of options such as yes or no, agree or disagree, or by checking or ranking preferred answers (Saunders, Lewis and Thornhill, 2003). Closed questions place a range of possible answers in order to test theories. Closed questions applied in the study by determining demographic data and reflect measures of the influence of e-commerce on the shipping industry in peninsular Malaysia. Open-ended questions applied in drawing attitudes and experiences of managers of shipping companies on e-commerce. (Saunders, Lewis and Thornhill, 2003) The combination of survey questions gave respondents room to select their answers and provide explanations. This also allowed the use of qualitative data in collaborating quantitative data.

Interview and observation also constituted methods of data collection. These are qualitative methods (Creswell, 2003). Combining interview with the survey method led to an effective means of collecting data from the respondents. Observation of the situation of the shipping industry in southern peninsular Malaysia also supported the derivation of insights into the research topic.

Snowball sampling served as the means of selecting the respondents of the study. This method determines the research respondents through the network of the researcher. A sample emerges by requesting referrals from existing respondents. This sampling method relies on known contacts. (Creswell, 2003) The researcher commenced with known contacts with first hand knowledge and experience of e-commerce involvement of shipping companies and expanded outwards to the network until the respondents were able to represent different perspectives.

After the collection of data, the collation and organization of data according to categories or themes reflecting the research objectives was one analytical method. Statistical treatment also comprised an analytical method. These methods provided results that inform about the influences of e-commerce on the shipping industry in southern peninsular Malaysia. The presentation of results was through tables, graphs and charts as applicable to support a clear and organized research report. Results of the study were the bases of the conclusion.

3.5 Research Timetable

The research will start and proceeds through the schedule below:

First Month

Submit proposed research proposal

First Month

Wait for comments and approval of proposed research proposal

First and Second Month

Develop the literature review

Third and Fourth Month

Format questionnaire, sample target and conduct research on respondents

Fifth Month

Conduct data analysis

Fifth Month

Draft of dissertation

Sixth Month

Submit final dissertation

CHAPTER 4

DATA PRESENTATION AND ANALYSIS

4.1 Introduction

The chapter presents the results of the study. The chapter has three explanatory sections. One section compares the extent of influence of e-commerce on the shipping industry in Malaysia and Singapore to determine the state of e-commerce adoption in Malaysia and determine the areas requiring improvement. Another section explains various aspects of e-commerce adoption of shipping companies in southern peninsular Malaysia to understand the business perspective of shipping companies towards e-commerce. The last section discusses policy recommendations on the improvements needed to create an environment conducive to the greater adoption of e-commerce in the shipping industry in southern peninsular Malaysia.

4.2 Ports in Southern Peninsular Malaysia

Two ports are located in southern peninsular Malaysia (see Appendix B below), which are Johor Port and Port Tanjung Pelepas with similarities and differences in facilities (see Appendix C and D below). Johor Port was established in 1977 while Port Tanjung Pelepas was officially launched in 2000 to become the latest fast growing port in Malaysia. Although, established decades apart, the port authorities of the two ports have engaged in efforts to enhance technological capabilities to add value to the services offered to shipping companies.

Table 4.1 below lists down the technological capabilities of Johor Port and Port Tanjung Pelepas. Both ports utilize a vessel clearance system that operates through a paperless declaration system. Shipping companies only need to register their vessels in order to form part of the port database. After a one-time registration, shipping companies can clear their vessels for entry or exit of the port by accessing the online network system. Another common technology feature is the container management system involving an electronic planning system that maps out the berthing and cargo areas and organizes freight movement to ensure space and time efficiency. Johor Port also provides free zone information processing system and marine services systems that provides information through search or online chat with port agents over concerns or issues of shipping companies. This requires registration in the e-community webpage of Johor Port at http://jpbi.johorport.com.my/ecommunity to obtain a username and password used to access the services. PTP takes pride in its smartrail system, gate control and monitoring system, port radar system that utilize satellite technology to manage the movement of cargo and ensure security in its facilities.

Table 4.1: Technology Capabilities of Ports in Southern Peninsular Malaysia

Johor Port

Port Tanjung Pelepas

Vessel Clearance System

Johor Port Container Terminal System

Container Management System

Free Zone Information Processing System

Smartrail System

Marine Services System

Gate Control and Monitoring System

Port Radar System

Source: (Johor Port Berhad, 2009; Port Tanjung Pelepas, 2009)

Overall, these ports have the infrastructure to support the provision of electronic services to shipping companies. These e-services provide incentives for shipping companies such as faster processing of clearance and other documents, efficient movement of cargo or freight from the ships to the cargo terminal or from the terminal to the ships, and better access to information. These incentives also encourage shipping companies to adopt e-commerce to experience the benefits of these e-services.

However, there remain areas for improvement in the technological capabilities of these ports. One is the interconnectivity of the network systems of the different ports to enable the tracking of movement of ships or cargo from one port to the other within the Malaysian border. Another is the integration of the satellite system in the case of Johor Port. This would improve management of traffic and security of the port. Last is the adoption of the electronic logging of freight containers and other information for easy access online again in the Johor Port.

4.3 Adoption of Shipping Companies of E-Commerce

4.3.1 Demographic Data

There are six respondents representing the six companies in the shipping industry selected to participate in the study. The selection and contacting of the companies was through the researcher’s network. However, even if the selection process is not random, the companies have different business focus and other varying characteristics to provide representation to the shipping companies operating in Johore at the southern portion of peninsular Malaysia. The respondents were all managers of operations of the companies with years of employment ranging from five to twenty years. The position and years of employment supported the in-depth knowledge of the respondents about business operations including the engagement of the company in e-commerce.

4.3.2 E-Commerce Capability of the Company

There are six companies participating in the study. Three companies operated in Johor Port and the remaining three in Port of Tanjung Pelepas as shown in Table 4.2 below.

Of the six companies, three are medium companies and three are large companies. Size could be determinant of the engagement of these companies in e-commerce. Three of the companies operated in the domestic market while the other three are multinational companies but one operates only in Asia while the two operated globally. The scope of operation could also have an impact on the extent of engagement in e-commerce with global operations demanding e-commerce capabilities to operate successfully in the global digital economy while the pressure is not that strong in domestic operations. There is a direct relationship between the size of the company and the source of capitalization since the multinational companies source their capital from inside and outside of the company, which means external investors while the medium companies relied on internal capitalization or the assets of the company. This could also explain the extent of engagement in e-commerce since access to capital is a determinant of e-commerce, as an area of high investment. The six companies had different business focus, with four of the companies involved on shipping and freight forwarding while two specialize in logistics services for the shipping industry. The focus of the business could also explain the extent of engagement in e-commerce of the companies.

Table 4.2: Shipping Companies Participating in the Study

Company

Port of Operation

Size

Scope

Source of Capitalization

Category

Johor Port

Medium

Domestic

Internal

Shipping & Freight Forwarding

Johor Port

Medium

Domestic

Internal

Freight Forwarding

Johor Port

Large

Multinational (Asia)

Both Internal & External

Shipping & Transport Services

Port of Tanjung Pelepas

Large

Multinational (Global)

Both Internal & External

Liner & Logistics

Port of Tanjung Pelepas

Medium

Domestic

Internal

Logistics

Port of Tanjung Pelepas

Large

Multinational (Global)

Both Internal & External

Shipping, Freight Forwarding, Logistics

Source: Questionnaire Responses

Although selected using snowball sampling, the six companies varied in characteristics to achieve a certain degree of representation for the companies forming part of the shipping industry in southern peninsular Malaysia.

4.3.3 E-Commerce Adoption of Companies

There are common and differing trends in the adoption of e-commerce of the companies as shown in Table 4.3 below. Two of the large companies have adopted e-commerce while there is uncertainty whether the third company has adopted e-commerce. This means that there are exceptions to the general assumption that large firms are likely to engage more in e-commerce when compared to small and medium firms. Although the third large company operates across Asia, its business focuses on shipping and transport services and there may not be sufficient pressure to adopt e-commerce. Concurrently, there is also an exception to the assumption that companies with a wider access to capitalization tends to engage more in e-commerce because of the financial capability to invest in online tools and processes.

Table 4.3: Adoption of E-Commerce by the Companies

Company

Adoption of E-commerce

Company Vision

Leadership

Corporate Culture

Strategic Planning & Corporate Communication

Uncertain

Yes

Uncertain

Yes

Uncertain

Yes

Uncertain

Yes

Source: Questionnaire Responses

None of the respondents reported that their companies have not engaged in e-commerce but some were uncertain whether the companies did engage in e-commerce. The uncertain answers pertained to the companies operating in the Johor Port while the affirmative answers related to companies operating at PTP. This could mean that the existing technological infrastructures in the two ports have varying incentive impacts on the shipping companies to adopt e-commerce. The technological infrastructure at PTP is advanced than at Johor Port primarily because of the broader application of the network system and the use of the satellite system. Moreover, two of the companies operating at PTP focused on logistics services, which provide a greater incentive for engagement in e-commerce because of the reliance of logistics on network connections to facilitate product, financial and information flows.

Nevertheless, an area for improvement in the adoption of e-commerce even for the companies who have adopted e-commerce is the role of leadership. All the participants were uncertain on whether top executives of the company advocated or spearheaded e-commerce. Although the decision to engage in e-commerce emanated from the decision of the top executives, company leaders may not have been active in influencing the acceptance of e-commerce by the entire organization. Stronger leadership role in influencing the adoption of e-commerce could explain in part, the uncertain answers and comprise areas for improvement in companies with e-commerce initiatives.

4. 3.4 Extent of E-Commerce Adoption of the Companies

The extent of e-commerce adoption of the companies depends on the extent of use of e-commerce tools, particularly Internet, intranet and extranet as shown in Figure 4.1 below. Relative to the size of the company, there was only one medium firm using the Internet while all the large firms use the Internet. These four companies have corporate or official websites providing information about the company. Most of the websites were informational. Only one website of a large company provided a semblance of transactional service through its tracking system. Nevertheless, even the tracking system assumed the completion of a transaction done with the company but not through its website. Two of medium companies do not have company websites, which supports the uncertain answers since these companies likely rely more on manual systems relative to online transaction processes.

Figure 4.1: Use of E-Commerce Tools of the Companies

The extent of linkage established through e-commerce tools also determines the engagement in e-commerce as shown in Figure 4.2 below. Although all the large companies all had websites, only two were able to establish links with business partners using online tools. These two firms were engaged in logistics services for the shipping industry, which necessitated the development of online linkages with business partners to facilitate the efficient flow of productions, finance or payments, and information to deliver products and service to end consumers. The other large firm focused on transportation services across Asia but online tools were not optimized to facilitate linkages with business partners. The same situations existed in the case of linkages with suppliers and employees. Only the two large logistics firms had intranet and extranet systems. This means that involvement in logistics services as a specialized area is the factor, which also comprises the benefit of e-commerce, encouraging firms to engage in e-commerce. Only one medium company was able to establish linkages with business partners, suppliers, employees and customers. This company also specialized in logistics services for the shipping industry.

Figure 4.2: Extent of Linkage or Network of the Companies

Although all the companies formed part of the logistics chain by acting as intermediaries, involvement in logistics management services as a separate service supported the adoption of e-commerce by the companies. In addition, the market reach of the companies also determined the engagement in e-commerce. Two of the companies operating in the domestic market had limited involvement in e-commerce. These companies may take part in e-commerce in dealing with the ports but without e-commerce capabilities of its own.

4.3.5 Attitudes of Managers towards E-Commerce

Perceptions of the benefits of e-commerce to the companies varied. Although all the respondents had experience with e-commerce tools in using port services, there is differing perspectives over the use online tools. Most of the respondents had a basic understanding of how e-commerce operates in the logistics chain but there are some respondents, especially those operating in the domestic market, without full appreciation of the value of e-commerce as a replacement for manual systems. Again, operating on a global scale, requiring the need to link with various parties comprise an incentive for e-commerce adoption relative to domestic operations where there are other means of connecting with parties outside of the Internet. Appreciation of the role of e-commerce in the shipping industry is an area for improvement to enhance the e-readiness of the shipping industry for the global digital economy. E-commerce could support the internationalization of domestic firms and enhance the competitiveness of multinational firms that have adopted e-commerce.

There is common agreement on the importance of cooperation in the success of e-commerce, especially for the firms that commenced e-commerce initiatives. Apart from the tools for establishing linkages, cooperation of the people using the tools is important to achieve efficiency. Cooperating develops from a thorough understanding of the system and the individual roles in the system. However, some of the respondents commented that cooperation occurs in a process so that during the initial stages of the e-commerce initiative, organizations may experience strain to a certain extent or resistance especially with lack of support from above to influence the change in culture to support new electronic strategies. Core concerns of managers and employees about e-commerce include job security and their competence in meeting the additional or new requirements electronic-supported operations. Companies need to plan and prepare for the adoption of e-commerce to ensure greater acceptance and achieve cooperation.

The problems in the adoption of e-commerce pertain to technical and non-technical factors. One problem mentioned is the limited investment in e-commerce. Four of the companies have company websites but the use of websites as a tool for establishing linkages is not maximized because of limited investments in website development. Limited investment also affects the quality of tools acquired to support e-commerce adoption such as limited number of computers shared by employees and poor Internet connection. Another problem is the limited knowledge sharing and training given to employees in shifting to online processes. This cause resistance problems and adversely affect the performance of employees. This then also affects the quality of service and overall benefits experienced by adopting e-commerce. Training is necessary for the effective transition into electronic systems. Still another problem is the inconsistencies in the bandwidth of different parties or lack of network systems of some parties. This means that greater use of online tools by households and businesses would also lead to a wave of adoption of e-commerce by more companies. Greater involvement in e-commerce by shipping companies would also support the development of standards in e-commerce to ensure higher connectivity.

Recommended solutions were at the business and government levels. On the part of business firms, the greater role of leadership in influencing e-commerce adoption is a recommended solution as well as the recognition of e-commerce adoption as involving effective change management. On the part of the government, improvement of infrastructure and encouragement of online use of businesses and households would support greater adoption of e-commerce.

4.4. Policy Recommendations on E-Commerce in the Shipping Industry

The policy recommendations on e-commerce in the shipping industry target the areas of e-readiness. In the case of infrastructure, there is need for the leveraging of existing infrastructures to enhance the value of broadband connections and Internet access. Doing so would encourage greater use of online functions by households and business firms and enhance the vibrancy of e-commerce systems. With regard to e-society, the government needs to provide incentives that foster the greater use of online transactions by business firms and households. Online transactions encourage e-commerce. Education on ICT also another means of supporting e-commerce adoption in the shipping industry. The promotion of localization of content language of online tools also encourages greater involvement in online transactions. With regard to e-commerce, the improvement of the physical infrastructures for the shipping industry is important in supporting the adoption of online transactions. Relative to e-government, improved transformation strategies, greater web presence, and greater use of online transactions in service delivery would create a ripple effect in the business sector including the shipping industry. In relation to the trade in ICT goods and services, more intense trade in ICT goods and service, implying the development of the ICT industry in the country and importation of ICT innovations, would also support the greater influence of e-commerce in the business sector, including the shipping industry.

CHAPTER 5

CONCLUSION & RECOMMENDATION

5.1 Introduction

The study covered the influences of e-commerce on the shipping industry in the southern peninsular Malaysia. To guide the investigation, the study has three sections. First is the identification of the current issues experienced by the shipping industry in the southern peninsular Malaysia in terms of process flows and linkages. Second is the determination and recommendation of viable means of enhancing the use of ICT to contribute a number of benefits to the company. Third is the determination and recommendation of improvements in policy to enhance the effectiveness of e-commerce adoption tools as part of competitive strategy. These inform on the influences of e-commerce on the shipping industry in southern peninsular Malaysia. The discussion provides a summary of the results, conclusions, and recommendations for future research.

5.2 Conclusion

Understanding the problems and issues faced by the shipping industry in southern peninsular Malaysia in terms of e-readiness reflects the influence of e-commerce on the shipping industry in southern peninsular Malaysia. The e-readiness of the Malaysian economy reflects the extent of its preparation for involvement in the global digital economy. There are five aspects of e-readiness, which are technological infrastructure, e-society, e-commerce, e-government, and ICT products and services trade. Economies can fall under four stages depending on the extent of development of the five areas, which are emerging, evolving, embedding or extending. In using Singapore as a benchmark, Malaysia falls under the embedding phase relative to Singapore’s placement in the extending phase. The differences lie in the existence of infrastructures and acceptance of technology by the government and society but there is lack of solid move to change, for the better, the way of doing things to digital processes and systems.

There are two ports in southern peninsular Malaysia, which are Johor Port and Port Tanjung Pelepas. These have integrated technological infrastructures in port services and systems such as the vessel clearance system and automated cargo management. These e-services provide incentives for shipping companies such as faster processing of clearance and other documents, efficient movement of cargo or freight from the ships to the cargo terminal or from the terminal to the ships, and better access to information. These incentives also encourage shipping companies to adopt e-commerce to experience the benefits of these e-services. However, there remain areas for improvement including the interconnectivity of networks systems of different ports in Malaysia and improvements in the infrastructures at Johor Port to provide better e-services. The integration of electronic tools in port services together with the areas for improvement reflect the strong influence of e-commerce on the shipping industry, at least in terms of port services.

Based on the perspective of business firms operating in Johor Port and Port Tanjung Pelepas, there are exceptions to the assumption that large firms are likely to engage in e-commerce when compared to small or medium companies. This is because there are also medium firms than engage in e-commerce while there are also large firms that do not employ e-commerce. There is a similar exception in considering the source of capitalization of the firms since there are companies with greater source of capitalization that do not engage in e-commerce while there are also companies with limited source of income that engage in e-commerce. The area of specialization is a determining factor since all the companies involved in logistics as area of specialization all adopted e-commerce. Although shipping companies necessarily form part of the logistics chain, the companies that focused on the provision of specialized logistics services had greater impetus to adopt e-commerce. This means that e-commerce has the greatest impact on logistics in the shipping industry.

Concurrently, the e-commerce tools adopted by the companies also varied. Again, the determining factor is engagement in logistics as a specialized process or service. The companies adopting e-commerce used the Internet, intranet and extranet but only to a limited extent. Although majority of the companies have a website, these are solely informational and not transactional. Only one company provided a tracking service in its website but even this assumes a previous transaction for consumers to use the tracking service. Although e-commerce has influenced shipping companies by providing alternative tools, the uptake of these tools in the shipping industry is limited.

Due to the limited use of e-commerce tools, the creation of linkages with different parties, particularly with business partners, suppliers, employees and customers. Optimization of Internet functions is necessary to establish a good relationship with customers while an extranet supports the establishment of linkages with business partners and suppliers, and an intranet facilitates the establishment of linkages with employees. As such, even while e-commerce has influenced the shipping industry by providing different means of establishing linkages with different parties in support of the achievement of business goals such as creation of value or enhanced competitiveness, the impact is limited by the non-optimization of these tools by shipping companies.

Most of the respondents had a basic understanding of how e-commerce operates in the logistics chain but there are some respondents, especially those operating in the domestic market, without full appreciation of the value of e-commerce as a replacement for manual systems. The limited understanding of the operation of e-commerce explains the limited use of e-commerce and its concurrent influence in the industry. Understanding of the benefits of e-commerce is necessary to support its adoption. The companies that have adopted e-commerce expressed agreement to the necessity of cooperation to the success of e-commerce. The adoption of e-commerce is a process requiring effective change management strategies to address problems in e-commerce adoption such as limited capital and resistance. E-commerce influences the shipping industry at the business level by creating opportunities for change in various aspects including vision, culture and strategic planning.

Problems in the adoption of e-commerce have been identified as falling under technical and non-technical aspects. One problem is limited investments in e-commerce because of only a basic understanding of the operation of e-commerce. Limited investment also affects the quality of tools acquired to support e-commerce adoption such as limited number of computers shared by employees and poor Internet connection. Another problem is the limited knowledge sharing and training given to employees in shifting to online processes that causes resistance problems and the performance of employees. A third problem is inconsistencies in bandwidth of the different parties because of variances in the quality of e-commerce tools used. These problems reflect the negative impact of e-commerce. Nevertheless, these may be necessary to achieve improved processes and systems in the successful adoption of e-commerce.

The solutions recommended were at the business and government levels. Business level solution is the stronger role of leadership in directing e-commerce adoption, ensuring better understanding of the functions of e-commerce, and development of an effective and responsive change management strategy. Government level solution comprises improvements in the infrastructure and encouragement of online use of businesses and households would support greater adoption of e-commerce.

Policy recommendations based on the influences of e-commerce on the shipping industry in southern peninsular Malaysia focuses on the areas for improvement in e-readiness. There is need to leverage existing infrastructures to improve the value obtained from already existing broadband connections and Internet access. The government needs to establish incentives that more widespread use of online transactions by households and business firms through ICT education and localization of online language. Improving physical infrastructures in support of business such as the enhancement of the online services at Johor Port or the streamlining of the network systems of different ports to enhance the effectiveness of e-commerce systems are areas for improvement in e-commerce. In e-government, improved transformation strategies, greater web presence, and greater use of online transactions in service delivery would create a ripple effect in the business sector including the shipping industry. Trade in ICT goods and services requires more intense trade in ICT goods and service, implying the development of the ICT industry in the country and importation of ICT innovations, would also support the greater influence of e-commerce in the business sector, including the shipping industry.

5.3 Recommendations

The recommendations for the study pertain to the content and objectives of the study as well as areas for future research. In terms of the content of the study, one recommendation is the expansion of the sources of primary data to ensure a greater representation of the shipping industry in southern peninsular Malaysia. Another recommendation relative to the content is the use of quantitative measures beyond descriptive statistics. Together with the collection of data from a greater number of sources, the results would yield better support for the study. With regard to the area for future research, one is the focus on the influence of e-commerce on the two ports and the other is focus on the influence of e-commerce on the different stages of the logistics chain.

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APPENDICES

Appendix A: Survey Questionnaire

____________________________________________________________________

Instructions: Please place an answer on the line provided.

A. Demographic Data

Name (optional):_________________________________________________________

Position in the Company:__________________________________________________

Department or Area of Specialization:_______________________________________

Years of Employment:____________________________________________________

Instructions: Please place a check/s on the line provided following your selected answer.

B. E-Commerce Capability of the Company

1. Select the best description of the size of the company.

Small_____ Medium_____ Large_____

2. Select the best description of the scope of operation of the company.

Domestic_____ Multinational_____

3. Select the best description of the source of capital of the company.

Internal_____ Both Internal & External_____

C. E-Commerce Adoption of the Company

1. Has your company adopted e-commerce?