E-Commerce Rumblings Forewarn Carriers To Meet Contemporary Logistic Demands
Jul 1, 2000 12:00 PM, Mary Davis
WHEN CSX TransFlo recently conducted a survey of its motor carriers to see how the rail transfer company could improve service to them, it came as no surprise to learn that the most requested new product offering was electronic commerce.
Furthermore, the general consensus in the transportation industry indicates the worldwide inevitability of e-commerce. For companies that aren't moving in that direction, the ground is beginning to tremble. Those who are in e-commerce denial are treading on the rim of a volcano about to erupt.
"Everyone has seen what is happening in the consumer market," says Leslie Michaelis, director of marketing for CSX TransFlo, Jacksonville, Florida. "Now, we see a huge industrial business in e-commerce. E-commerce is imperative. We see our shippers pushing to be more and more technology-focused. Before the introduction of e-commerce, they were faxing information and telephoning for updates, and so forth. Today, they want to move to Internet-enabled systems so that when they request a change, everyone can be updated automatically, right at that moment."
What CSX TransFlo learned from its motor carriers is a situation recognized by many companies everywhere.
Alert carriers pulled away from the pack several years ago by installing hardware and software that allowed them to move easily onto the Internet. Those who were behind in technological updates heard the mountain rumbling from the force of Y2K. Few waited to see if the signal was a false alarm. As a result, many companies, whether they are engaged in e-commerce or not, are technologically prepared.
Educational Efforts In addition to heads-up by individual companies are the educational efforts being conducted by various industry associations. A glance at various meeting agendas for 2000 reveals subjects on technology, particularly load-matching services. For example, at the National Tank Truck Carriers annual conference in May, Beat Schweizer, a Swiss native with an extensive career in logistics on the European continent, discussed Eastman Chemical Company's partnership with Global Logistics Technologies Inc, which will be taking over Eastman's distribution operations under the name of ShipChem.com. Also on the program to provide e-commerce information was Rob Shertz, former chairman of NTTC who now serves as director of sales and marketing for Bulknet.com, an online load-matching company, and Mark Bitting, Bulknet.com president.
Bulknet.com is a third-party company providing services to chemical shippers and carriers using Internet-based technology. It is one of several companies whose developers recognized an entirely new way of doing business by using the Internet (in the technology market now known as B2B for short). The company expects to generate at least $10 million in billed revenue within the first year of operation.
"We recognized the Internet is the future of communication between shippers and carriers," says Shertz.
And Shertz, like most managers, understands that before B2B became part of managers' vocabulary, carriers had eliminated just about as much logistic inefficiency as possible.
Now, with the application of e-commerce, companies have another method at hand to improve the bottom line through increased operation effectiveness.
"There is equipment located all around the country that meets carriers' specific needs, but the problem has been communicating the location of that equipment. Then, in comes the Internet to provide that communication," says Shertz. "We find that the majority of carriers are excited about the system. As one example, they are able to increase utilization of their drivers' hours and reduce downtime."
Unknown Factor Of course, there is still a great unknown factor lurking in the marketplace-what else will technology bring? Many of those in the know forecast significant changes. What has long been considered a supply chain linked across a straight line from shipper to carrier to customer is changing to a circle of the three with each having immediate input and monitoring of the other's actions.
"It's all about reducing costs, speeding up time, fulfilling customer demands in real time, and slashing the float time of money," says Chris Mahoney, a senior vice-president at United Parcel Service (UPS). The company has been a leader in technology-based logistics. He made the comments about e-commerce recently in an address at the Parcel Shipping & Distribution Expo in Chicago, Illinois.
Jim Schwab, vice-president of logistics for NextLinx, a Silver Springs, Maryland, commerce solutions provider, points out that by the year 2004, B2B e-commerce is expected to generate $4 trillion. "Comprehensive web-based logistics application provides organizations more knowledge and flexibility to meet the global challenges of B2B electronic commerce," he says.
In the tank truck industry, Gary Watt says, "It's all been unfolding fairly rapidly." Watt, senior vice-president at Superior Carriers Inc, Oak Brook, Illinois, adds that the carrier's subsidiaries, Central Transport Inc and Carry Transit, have individual web sites in addition to the parent company's web presence. Real-time load tracking is available to shippers and customers with the use of a password that guarantees security.
Hot links to customer web sites also are available so customers' customers can utilize various services. All of this is just the beginning for the tank truck carrier's e-commerce activity and includes efforts to enable customers to launch their own programs, he says.
At Transport Service Co in Hinsdale, Illinois, e-commerce has been on board for about a year. "Some of our shippers want to totally communicate through use of the Internet," says Bob Schurer, president. "Rate quotes and contracts can be moved through the Internet. We can get back to the customers quickly."
The company uses digital cameras to photograph equipment that is exhibiting problems, or other similar situations that might arise. If there is a problem with a valve, a photograph can be taken, moved over the Internet to the appropriate person, and the problem then discussed. To be able to actually see what has occurred is infinitely more helpful, says George Peirce, vice-president for marketing and sales. He notes that most of the Transport Service communication with large shippers today is through the Internet. "Using technology allows us to respond immediately. I think it is more accurate than using the telephone - and it's documented."
Instant Communication E-commerce means that orders for a product are moved through Internet-based programs and that shippers can communicate instantly with carriers and customers at the same time. And, all of them can track the progress. Customers can obtain information about vehicle specifications and material safety data sheets (MSDSs) in real time. Carriers can order parts from suppliers and incorporate that information into their own administrative programs so that inventory is kept in line. One of the supplementary advantages is that customer service and equipment performance can be monitored and evaluated so that the information can demonstrate a carrier's qualifications to a shipper and the shipper's customer.
While technology moves forward, not all concerns are erased. Living at the foot of an active volcano never quite lets the residents relax. Schurer notes that value-added services require specialization, particularly for chemical products. Many chemical shippers demand certain standards from their carriers that have to be demonstrated and documented, which may make it difficult for third-party load matching.
"E-commerce will grow. Everybody is taking a cautious look at this point to be sure it is used properly," Schurer says. "Everything is happening so quickly that it is still in the development stage."
Another problem in the e-commerce arena related to chemicals is the ability for third-party companies to comply with programs such as the Responsible Care initiative. It is administered by the Chemical Manufacturers Association and commits companies to bettering safety programs and addressing public concerns about the handling of hazardous materials. By its nature, the initiative requires an intimate relationship between shipper and carrier.
Watt points out other concerns with technology that moves too far and too fast - outdating newly applied programs before they have a chance to be put to use. Nevertheless, managers agree tomorrow is here today. To have a good view of the eruption that is bound to come, companies must have arranged a safe seat that protects them from the lava flow. If they aren't involved in implementing an e-commerce program that satisfies customer demand, they may be dissolved into ash.
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