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Putting e-business on 18 wheels
(IDG) -- Blame it on business-to-consumer e-commerce, but companies expect to know exactly when their inventory is going to show up. That means coordinating freight carriers with manufacturers and suppliers to determine arrival dates for product shipments -- whether they travel by train, plane, ship, or truck. And that is no easy task. In the nick of time, e-business has arrived in the shipping industry. Shipping companies such as FedEx are spending billions on logistics systems to meet trading partners' demands for integrated data. Logistics companies are Web-enabling operations. Rising e-ventures such as National Transportation Exchange (NTE), Transplace, GoCargo.com, and CargoReservations.com are offering shippers and carriers a more efficient -- and cheaper -- way to coordinate shipments via digital exchanges.
FedEx leads the pack, having spent the past 25 years perfecting end-to-end visibility for customers to track packages to locations globally. In the Internet economy, customers have come to expect even more. "There's a high expectation of integration, and a huge demand for real-time information and sharing," says Kevin Humphries, senior vice president of IT at FedEx, in Memphis, Tenn. "And there's a desire to take cost out of each and every transaction." The shipping business has changed, with more emphasis on direct selling from warehouses to customers. The Internet is helping tremendously by establishing de facto standards in the freight industry that allow customers to exchange data with companies. And the Web is making cost-effective integration of disparate systems possible -- laying the groundwork for customer relationship and supply-chain management. We do the workThe challenges to CTOs in this environment are daunting. For some, it's the issue of integrating existing data with new technologies. For others, it's evangelizing the new technologies to a market that wants better, faster, cheaper transportation services without a blip on the reliability front. New ventures such as trucking marketplace NTE are just waiting for the world to catch up, evangelizing how their Web-based exchange might make a difference to owners of small shipping businesses, including mom-and-pop trucking companies that may not even have a PC connected to the Internet. "Preaching and educating are now part of the CTO's job description," says Jim Davidson, president and CEO of NTE, in Downers Grove, Ill. "They become an industry spokesperson speaking on behalf of new enabling technologies." If upstart exchanges such as NTE succeed in marketing their services to such a wide constituency, they'll be in a position to expand revenues by selling fuel, tires, insurance, and other services. NTE hopes to eventually move on to include other modes of transport, forming a single hub for transportation services. Transplace, on the other hand, is keeping its sights squarely on the trucking industry. A joint venture of six major trucking companies, Transplace is using its expertise in logistics to attract users and is in the process of rolling out an e-procurement system to connect carriers to suppliers. "What we're doing on the logistics side is marrying shippers and carriers," says Dave Haeusler, CIO of Transplace, in Plano, Texas. "Procurement is marrying carriers with suppliers." Most of Transplace's business comes from the trucking companies that founded it: J.B. Hunt, Covenant Transport, M.S. Carriers, Swift Transportation, U.S. Xpress Enterprises, and Werner Enterprises all outsource their logistics operations to the new hub. The site also hopes to attract small trucking outfits with mass buying benefits. Tapping unused spaceBeyond the trucking industry, other shipment channels are using Web-based logistics hubs to tap an added source of revenue in a high-overhead business. "People are desperate to achieve some incremental revenues from resources not used efficiently," says Ian Craig, COO of CargoReservations.com, a hub for air charter carriers, in Orlando, Fla. "One way is to sell dead legs." Dead legs are return trips: An estimated 80 percent of the 700 charter flights made in North America each day return home empty. CargoReservations.com allows companies to post and advertise their capacity and communicate in real time. "These are no-brainer sells. If you talk to the CFO of any airline, they know that they've got assets running underutilized," Craig says. "It's our goal to improve that." Load-matching is a huge issue in the shipping industry. Many have used load-matching bulletin boards online to post a load or empty capacity, but now Web sites such as GoCargo.com automate that process, saving time and hassle for all parties. "The challenge is to figure out all the different alternatives," says Jim Galley, CTO of GoCargo.com, in New York. "What we provide is a single view of what all the offerings are and what components they include. But shipping exchanges will not be for everyone. The evolving services from GoCargo, CargoReservations, and others will score points with small players", says Larry Clopp, research director at Gartner, in Pleasanton, Calif. But for the time being, large shipping companies such as FedEx and large carriers will press ahead unfazed by Web-based logistics hubs, he explains. RELATED STORIES:
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