Graduation Project about Shipping Carriers Preferences on Port Selection: A Literature Review

THE IMPLEMENTATION OF SHARIAH COMPLIANCE IN LOGISTICS OPERATIONS AT JEDDAH ISLAMIC PORT, SAUDI ARABIA

MUHAMMAD SUBHAN ISHAK

BACHELOR OF SCIENCE

PORTS AND MARITIME TRANSPORTATION

KING ABDULAZIZ UNIVERSITY

2021

THE IMPLEMENTATION OF SHARIAH COMPLIANCE IN LOGISTICS OPERATIONS AT JEDDAH ISLAMIC PORT, SAUDI ARABIA

By

MOHAMMED SUBHAN ISHAK

A Project Paper Submitted to Faculty of Maritime Studies, King Abdulaziz University in partial fulfilment of the requirements for the degree of

Bachelor of Science (Ports and Maritime Transportation)

February 2021

I dedicated this graduation project report to

My beloved parents who are always in my heart

DECLARATION

“I hereby acknowledge responsibility for the accuracy of all opinion, technical comment, report the facts, data, diagram, illustrations and photographs that have been suggested in this graduation project. I am fully responsible for the material submitted has been reviewed from aspects of copyright and ownership rights. King Abdulaziz University is not responsible for accuracy of any comments, reports and technical information and other facts and against claims of copyright and ownership rights.”

_____________________

MOHAMMED SUBHAN ISHAK (818888)

Date: January 28, 2020

PERMISSION TO USE

In presenting this research paper in fulfillment of the requirements for the bachelor degree from the King Abdulaziz University, I agree that the University Library may take it freely available for inspection. I further agree that the permission for copying of this research in any manner, in whole or in part, for scholarly purposes may be granted by my supervisor or, in his absence, by the Dean of Faculty of Maritime Studies (FMS). It is understood that any copy or publication or use of this research paper or parts it for financial gain shall not be allowed without my written permission. It is also understood that due recognition should be addressed to King Abdulaziz University for any scholarly use which may be made of any material from my research paper.

Request for permission to copy or to make other use of materials in this research paper, in whole or in part, should be addressed to:

Dean of Faculty of Maritime Studies (FMS)

King Abdulaziz University

23712 Al Murjan

Jeddah, Kingdom of Saudi Arabia

ABSTRACT

The main objective of this research is to assess the implementation of shariah compliance in logistics practices by Jeddah Islamic Port in Saudi Arabia. The research investigates four shariah principles that need to be complied by the port operations namely principle one, two, three and four. Data were collected from 150 relevant port workers. Correlation and Multiple Regression were used to examine the relationship between independent variables and dependent variable. The results showed that there are positive relationships between the four principles and the implementation of halal logistics in the port. The result also showed the principle two is the most dominant factor in the implementation of halal logistics in the port.

Keywords : Port studies, halal logistics, shariah compliance, Jeddah port, Saudi Arabia

ABSTRACT (IN ARABIC)

الهدف الرئيسي من هذا البحث هو تقييم تنفيذ الامتثال للشريعة الإسلامية في الممارسات اللوجستية من قبل ميناء جدة الإسلامي في المملكة العربية السعودية. يبحث البحث في أربعة مبادئ شرعية يجب أن تلتزم بها عمليات الميناء وهي المبدأ الأول والثاني والثالث والرابع. تم جمع البيانات من 150 من عمال الميناء المعنيين. تم استخدام الارتباط والانحدار المتعدد لفحص العلاقة بين المتغيرات المستقلة والمتغير التابع. وأظهرت النتائج وجود علاقة إيجابية بين المبادئ الأربعة وتنفيذ لوجستيات الحلال في الميناء. كما أظهرت النتيجة أن المبدأ الثاني هو العامل الأكثر انتشارًا في تنفيذ اللوجستيات الحلال في الميناء.

الكلمات المفتاحية: دراسات الموانئ، اللوجستيات الحلال، الامتثال الشرعي، ميناء جدة، المملكة العربية السعودية

ACKNOWLEDGEMENT

I would like to take this opportunity to extend my deepest gratitude to my supervisor, Dr. XXXX, for his expert advice, guidance and support throughout the entire research project.

I appreciate the support from the respondents who have contributed significantly by participating in the study and answering questionnaires. Without the help and support that received from you all, I would never have completed this program.

Besides that, I would like to thank King Abdulaziz University (KAU) for giving me this great opportunity to achieve my educational goals throughout the duration of my study. In addition, a special thanks to my friends, Ahmed, Fares, Abdulrahman, and Abdulrahim to give me so impressive help throughout the duration of this research paper. My special thanks also go to a number of admin staff at the College of Maritime Studies (FMS) who helped me a lot since my first day at the college until my graduation.

Last but not least, I will present my deepest thanks and appreciation to my beloved family for their constant support, patient, and understanding throughout my life for continuous encouragement during the research. Your endless contributions are very much appreciated.

TABLE OF CONTENTS

PAGE

DEDICATION ii

DECLARATION iii

PERMISSION TO USE iv

ABSTRACT v

ABSTRCT (IN ARABIC) vi

ACKNOWLEDGEMENT vii

TABLE OF CONTENTS xi

LIST OF TABLES xii

LIST OF FIGURES xiii

LIST OF APPENDICES xiv

LIST OF ABBREVIATION xv

CHAPTER 1 – INTRODUCTION

1.1 Introduction 1

1.2 Background of the Study 1

1.3 Problem Statement 3

1.4 Scope of the Research 4

1.5 Research Question 5

1.6 Research Objective 6

1.7 Significant of the Study 6

1.8 Limitation of the Study 7

1.9 Operational Definition 7

1.10 Summary 8

CHAPTER 2 – LITERATURE REVIEWS

2.1 Chapter Introduction 9

2.2 Halal Phenomenon 9

2.2.1 Definition of Halal 10

2.2.2 Shariah Compliance 11

2.3 Halal logistics in Port Logistics 12

2.4 Principle one 13

2.5 Principle two 14

2.6 Principle three 14

2.7 Principle four 15

2.8 Theories of Port Operations 16

2.9 Specific Operations affecting Halal Logistics at Ports 17

2.9.1 Documentation 17

2.9.2 Warehousing and Storage 18

2.9.3 Cargo Handling 19

2.9.4 Control and Inspection 20

2.10 Theoretical of Framework 21

2.11 Hypothesis 22

2.12 Summary 22

CHAPTER 3 – METHODOLOGY

3.1 Introduction 23

3.2 Research Design 23

3.2.1 Type of Study 24

3.2.2 Unite of Analysis 24

3.3 Population and Sample 25

3.4 Instrumentation 25

3.4.1 Questionnaire Design 25

3.5 Data Collection Procedure 29

3.6 Pilot Study 29

3.7 Techniques of Data Analysis 30

3.7.1 Factor Analysis 31

3.7.2 Reliability Test 31

3.7.3 Descriptive Analysis 32 3.7.4 Correlation Analysis 32

3.7.5 Multiple Regression Analysis 33

3.8 Summary 33

CHAPTER 4 – DATA ANALYSIS & RESULT

4.1 Introduction 34

4.2 Response Rate 34

4.3 Respondents’ Demographics 35

4.4 Factor Analysis 35

4.4.1 Factor analysis for Independent Variables 37

4.4.1.1 Factor Analysis for Attitude 37

4.4.1.2 Factor Analysis for Subjective Norm 38

4.4.1.3 Factor Analysis for Perceived Behavioural Control 39

4.4.1.4 Factor Analysis for Brand Awareness 40

4.4.2 Factor Analysis for Dependent Variable 41

4.5 Reliability Analysis 42

4.6 Descriptive Statistics 43

4.6.1 Descriptive Statistics of variable 1 43

4.6.2 Descriptive Statistics of variable 2 44

4.6.3 Descriptive Statistics of variable 3 45

4.6.4 Descriptive Statistics of variable 4 46

4.7 The Impact between Independent Variables and Dependent 48 Variable

4.7.1 Bivariate Analysis 49

4.8 Multiple Regression Analysis 50

4.9 Discussion of the Results 52

CHAPTER 5 – CONCLUSION

5.1 Introduction 53

5.2 Overview of the Study 53

5.3 Results of the Study

5.3.1 Result 1 54

5.3.2 Result 2 55

5.3.3 Result 3 55

5.4 Implication 56

5.5 Limitations and Future Research Directions 57

5.6 Conclusion 58

REFERENCES 59

LIST OF TABLES

Table 3.1 Instruments for Attitude 27

Table 3.2 Pilot-Test Analysis Results 30

Table 4.1 Response Data and Rate 34

Table 4.2 Demographic Data of the Students 36

Table 4.3 Results of Factor Analysis for Attitude 38

Table 4.4 Results of Factor Analysis for Subjective Norm 39

Table 4.5 Results of Factor Analysis for Perceived Behavioural Control 40

Table 4.6 Results of Factor Analysis for Brand Awareness 41

Table 4.7 Results of Factor Analysis for Intention to Purchase 42

Table 4.8 The Cronbach’s Alpha Values 42

Table 4.9 Descriptive Statistics of Attitude 44

Table 4.10 Descriptive Statistics of Subjective Norm 45

Table 4.11 Descriptive Statistics of Perceived Behavioural Control 46

Table 4.12 Descriptive Statistics of Brand Awareness 47

Table 4.13 Descriptive Statistics of Intention to Purchase Halal 48 Logistics

Table 4.14 Pearson Correlation Coefficient between IV and DV 49

Table 4.15 Multiple Regression of Independent Variables and 50 Dependent Variable

Table 4.16 Multiple Regression Analysis between IV and DV 52

LIST OF FIGURES

Figure 2.1 Halal Logo of Saudi Arabia 11

Figure 2.2 Theory of Planned Behaviour 17

Figure 2.3 Framework of the Research 21

LIST OF APPENDICES

Appendix A: Sample of Questionnaire 64

Appendix B: The Result of Factor Analysis 69

Appendix C: The Result of Demographic Analysis 77

Appendix D: The Result of Reliability Analysis 80

Appendix E: The Result of Descriptive Analysis 83

Appendix F: The Result of Correlation Analysis 86

Appendix G: The Result of Multiple Regression Analysis 87

LIST OF ABBREVIATIONS

TPB Theory of Planned Behaviour

SN Subjective Norm

PBC Perceived Behavioural Control

BA Band Awareness

CHAPTER 1

INTRODUCTION

1.1 Introduction

According to International Telecommunication Union data (ITU, 2015), there was 3.2 billion internet users in the world by end 2015, representing 45 percent of the global population at that time was using internet. With the rapid expansion of internet in the past decade, the marketing environment all over the world has been influenced dramatically. One remarkable phenomenon is that internet and computer have been implemented in lots commercial activities, including advertising, selling service, product transaction etc. (Lin & Sun, 2009). According to the statistic (2016), giving information on e-retailing sales worldwide that it has amounted to 1.55 trillion US dollars in 2015 and in 2019, the revenues are projected to increase to 3.4 trillion US dollars.

Figure 1.1 Internet User in the World

(Source: www.statista.com)

1.2 Background of the Study

A study has conducted that the population of Muslim represents up to 23% of the world population. Meanwhile, the Islam has the lowest median age as half of Muslims are 23 years old or younger (Pew Research Centre, 2012). While, there is 1.705 % of corresponding rate for Muslim population with the population annual growth rate is around 1.194%. Thus, Muslim population will reach xxxxxxxxxx by 2075 (Kettani, 2010). In Saudi Arabia, Muslim population was 29,981,000 or about 98.1% out of total population by 2019 (Pew Research Centre, 2019).

The stereotype of public towards halal products has limited merely on halal foods. Nevertheless, consumerism in Muslim society has increased to turn into a pervasive trend in the globe. The development of Halal products in logistics industry has a great deal of value on global beauty market within Muslim consumer as well as drawing much attention by non-Muslim counterparts, as for the ingredients, the customers usually insisted that there are stringent inspection and standard control of Halal products as well as strictly specifications and sanitation procedures (Jim & Gillian, 2012).

CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

The previous chapter has discussed the background of this research, and this chapter discusses the underpinning theory employed in the current study. It also reviews the extant literature regarding the influence of attitude, subjective norm, perceived behavioral control, and brand awareness on intention to purchase. This chapter starts from the Halal phenomenon around the globe which leading to the Halal conscious amongst Muslims and Non-Muslim customers in Saudi Arabia. Furthermore, it followed by a discussion about the theory of planned behaviors which includes four factors, namely, attitude, perceived behavior control, subjective norm, as well as brand awareness. Finally, this chapter outlines the theoretical framework and discusses the hypotheses development derived from theoretical framework.

CHAPTER 3

RESEARCH METHODOLOGY

3.1 Introduction

In this chapter, the methodology in conducting this research is discussed. Totally there are five parts mentioned elaborately of this chapter, that is, research design, population samples, instrumentation, data collection procedure and technique of data analysis. For each sector, more details are presented as follows.

3.2 Research Design

Research design is a way to test the hypothesis which used as a tool to analyze the relationship between variables. The quantitative method was used in this study. It specifically described the population and phenomenon of the respondents in characteristics. It is a way to identify the trend in a situation, and not the simple linkage between the different elements. By using this descriptive method, it generates the hypothesis used in the future studies, and provides a vivid picture for the connection between the variables.

CHAPTER 4

RESULTS AND DATA ANALYSIS

4.1 Introduction

This chapter mainly focuses on the result of the research which includes the demographic profile of the respondents, descriptive analysis, reliability analysis, factor analysis, correlation analysis and multiple regression analysis. The output of analyzing is to answer the research questions which have been mentioned in chapter 2.

4.2 Response Rate

For this research，totally 400 questionnaires were distributed in University Utara Saudi Arabia, and 365 questionnaires were received, thus, the response rate for this research is 91%. Sekaran & Bougie (2010) mentioned that it is acceptable if the response rate is 30%. The response rate is showed in Table 4.1.

CHAPTER 5

CONCLUSION

5.1 Introduction

This chapter is focusing on the discussion of result which presented in pervious chapter. The discussions are providing a reasonable support for the conceptual framework that there is a relationship between independent variables and dependent variable, to be more specific, there is a significant relationship between attitude, subjective norm, perceived behavioral control and brand awareness with intention to purchase Halal logistics in Saudi Arabia. This chapter is going to discuss the implication, limitation of study as well as the recommendation for the future study.

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Appendix A: Certification Letter for Survey

SURVEY QUESTIONNAIRE

Dear Participants,

I am a student in Ports and Maritime Transportation at King Abdulaziz University of Jeddah, Saudi Arabia. I am conducting a research entitle: “THE IMPLEMENTATION OF SHARIAH COMPLIANCE IN LOGISTICS OPERATIONS AT JEDDAH ISLAMIC PORT, SAUDI ARABIA”. The purpose of this study is to examine several factors influencing the implementation of halal logistics at Ports. This questionnaire is an important part of my dissertation accomplishment.

This questionnaire should only take about 10-15 minutes of your time. Your answers are anonymous. Do not write your name on the questionnaire paper, unless you want otherwise. All answers will be kept confidential. The result of this study will be presented at King Abdulaziz University of Jeddah, Saudi Arabia.

I sincerely hope you could spend your time to answer this survey. Again, I want to assure you that the result of this survey will be used in aggregate, without referring to any one individual, and will be used solely for academic research purposes.

Should you have any inquiry about this survey, please let me know. Thank you for your time and kind cooperation.

MOHAMMED SUBHAN ISHAK

B.Sc. (Ports and Maritime Transportation) Student

College of Maritime Studies

King Abdulaziz University, Jeddah, Saudi Arabia

Contact Number：012-24288667

Email： berry123@stud15,kau.edu.sa

Appendix B: The Result of Factor Analysis

Factor Analysis for Subjective Norm

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.	.920
Bartlett's Test of Sphericity	Approx. Chi-Square	2863.173
	Df	21
	Sig.	.000

Total Variance Explained
Component	Initial Eigenvalues	Extraction Sums of Squared Loadings
	Total	% of Variance	Cumulative %	Total	% of Variance	Cumulative %
1	5.735	81.926	81.926	5.735	81.926	81.926
2	.362	5.172	87.099
3	.237	3.384	90.482
4	.226	3.225	93.708
5	.184	2.626	96.334
6	.156	2.231	98.565
7	.100	1.435	100.000
Extraction Method: Principal Component Analysis.

Factor Analysis for Perceived Behavioural Control

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.	.814
Bartlett's Test of Sphericity	Approx. Chi-Square	901.485
	Df	10
	Sig.	.000

Total Variance Explained
Component	Initial Eigenvalues	Extraction Sums of Squared Loadings
	Total	% of Variance	Cumulative %	Total	% of Variance	Cumulative %
1	3.169	63.382	63.382	3.169	63.382	63.382
2	.873	17.469	80.851
3	.442	8.840	89.691
4	.293	5.856	95.547
5	.223	4.453	100.000
Extraction Method: Principal Component Analysis.

Appendix C: The Result of Correlation Analysis

Correlations
	iv1	iv2	iv3	iv4	dv
iv1	Pearson Correlation	1	.854**	.675**	.703**	.876**
	Sig. (2-tailed)		.000	.000	.000	.000
	N	360	360	360	360	360
iv2	Pearson Correlation	.854**	1	.630**	.757**	.821**
	Sig. (2-tailed)	.000		.000	.000	.000
	N	360	360	360	360	360
iv3	Pearson Correlation	.675**	.630**	1	.583**	.654**
	Sig. (2-tailed)	.000	.000		.000	.000
	N	360	360	360	360	360
iv4	Pearson Correlation	.703**	.757**	.583**	1	.712**
	Sig. (2-tailed)	.000	.000	.000		.000
	N	360	360	360	360	360
dv	Pearson Correlation	.876**	.821**	.654**	.712**	1
	Sig. (2-tailed)	.000	.000	.000	.000
	N	360	360	360	360	360
**. Correlation is significant at the 0.01 level (2-tailed).

Appendix G: The Result of Multiple Regression Analysis

Model Summaryb
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	.893a	.797	.795	.46660
a. Predictors: (Constant), iv4, iv3, iv1, iv2 b. Dependent Variable: dv

ANOVAb
Model	Sum of Squares	df	Mean Square	F	Sig.
1	Regression	303.845	4	75.961	348.909	.000a
	Residual	77.288	355	.218
	Total	381.133	359
a. Predictors: (Constant), iv4, iv3, iv1, iv2 b. Dependent Variable: dv

Coefficientsa
Model	Unstandardized Coefficients	Standardized Coefficients	t	Sig.
	B	Std. Error	Beta
1	(Constant)	.011	.124		.090	.928
	iv1	.602	.050	.586	11.944	.000
	iv2	.188	.051	.188	3.703	.000
	iv3	.079	.037	.072	2.164	.031
	iv4	.143	.046	.116	3.078	.002
a. Dependent Variable: dv

Residuals Statisticsa
	Minimum	Maximum	Mean	Std. Deviation	N
Predicted Value	1.2637	5.0700	4.0157	.91998	360
Residual	-1.52671	1.64384	.00000	.46399	360
Std. Predicted Value	-2.991	1.146	.000	1.000	360
Std. Residual	-3.272	3.523	.000	.994	360
a. Dependent Variable: dv