Dual-Channel Financing with Bank Credit and 3PL Direct Financing: Operational and Financing Decisions in a Capital-Constrained Supply Chain

This study examines how bank financing and direct financing provided by a third-party logistics (3PL) firm affect the operational and financing decisions of a capital-constrained retailer. It focuses on a dual-channel financing setting in which both funding sources are available and investigates whether the retailer uses them simultaneously, how creditor priority affects equilibrium outcomes, and how procurement cost and logistics pricing shape financing choices. A Stackelberg game model is developed for a supply chain comprising a retailer, a 3PL firm, and a bank. Two benchmark settings, namely bank financing only and direct 3PL financing only, are first analyzed. The study then examines the dual-channel financing equilibrium when the 3PL firm acts as the senior creditor and further extends the model to consider bank seniority and endogenous logistics pricing. When the 3PL firm is the senior creditor, the retailer does not use both funding sources simultaneously in equilibrium; instead, it chooses either bank financing only or direct 3PL financing only. The 3PL firm prefers bank financing when logistics pricing is low and procurement cost is high, whereas it prefers direct financing when logistics pricing is high or when both logistics pricing and procurement cost are low. When logistics pricing is endogenous, the optimal lending rate set by the 3PL firm is zero. This study extends the literature on 3PL financing by explicitly incorporating a dual-channel financing structure that includes both bank credit and direct 3PL lending. It highlights the strategic role of creditor priority and shows how procurement cost and logistics pricing jointly shape the financing equilibrium, thereby providing managerial insights into financing design and operational decision-making in capital-constrained supply chains.