Look Out

The great dot-com meltdown of the past year unfortunately cast a pall over all sorts of Internet-based business ventures, including freight exchanges. Nevertheless, the days of employing the Internet as a powerful logistics tool are just beginning for truck fleets. Freight exchanges are still very much around. In fact, a major trend is toward private, as opposed to only public, exchanges. Setting

The great dot-com meltdown of the past year unfortunately cast a pall over all sorts of Internet-based business ventures, including freight exchanges.

Nevertheless, the days of employing the Internet as a powerful logistics tool are just beginning for truck fleets. Freight exchanges are still very much around. In fact, a major trend is toward private, as opposed to only public, exchanges.

Setting up such closed “communities” of shippers and carriers makes the exchange model very attractive to sophisticated shippers-and thereby makes participation by carriers that want their business imperative.

Carriers that don't look into joining private exchanges with logistics-oriented shippers risk finding themselves on the outside looking in at some valuable freight.

Likewise, carriers that ignore the benefits of the more familiar public exchanges continue to miss out on opportunities to sell their extra capacity.

“Carriers are in a tough spot,” points out Joe Wagner, senior vp-global sales for Burlington, MA-based Logistics.com (www.logistics.com). “One of the toughest things for them is spending money on technology. As a result, the shipper side often gets ahead of the truckers in implementation.

“We are on both sides of the fence,” he continues. “We want to empower shippers and carriers with logistics solutions. But both sides must be able to interact at the same speed.”

He points out that many early public freight exchanges weren't successful because they did not take into account that enough carriers didn't have the technology at hand to judge “in just minutes” whether a load would be profitable.

Wagner says EDI has not been the solution, either, as it requires each shipper to have a distinct connection with each carrier. “On the other hand,” he states, “if they use XML technology via the Internet, they can get down to one connection, made at a lower cost.”

XML (for Extensible Markup Language), it should be noted, is an emerging computer language that's well suited for exchanging electronic documents and for integrating applications running on different operating systems or hardware.

The most obvious use for XML in trucking is indeed to replace EDI. The cost and complexity of EDI has effectively limited its use to large shippers and the big carriers serving them.

While it has yet to become completely standardized, XML holds serious promise as a tool to minimize both the cost and complexity of electronically trading documents-a big aspect of making logistics work online. (For more on XML, see FO 8/01, pg. 78.)

“We hear ‘it's a technology problem’ to coordinate everyone's equipment and the loads,” says Logistics.com's Wagner. “The system you put in place has to be able to track all that. Our solutions help carriers know when they view freight — whether on a contractual bid or a single shipment — what the profitability will be by customer, region or facility. And we make available shipments simultaneously to various carriers. The Internet,” he adds, “isn't the second coming. It's simply a better delivery channel for logistics solutions.”

An example of a web-enabled logistics tool is Logistics.com's new Network Dashboard, an interface to the firm's OptiYield suite of decision-support solutions. According to Mitch Hixon, vp of transportation sales, combining Network dashboard with the OptiYield Profit Analyzer provides carriers with “instantaneous” profitability and forecasting information.

“Trucking companies face the ongoing challenge of having to make rapid decisions about whether or not to accept freight from shippers and how much to bid on the freight,” Hixon points out. “This combination of tools brings the information to the fingertips of the entire organization via a simple user interface.”

Another big fan of the Internet's power to drive logistics efficiency is National Transportation Exchange (NTE) of Downers Grove, IL (www.nte.net).

According to Tom Jendrowski, vp and COO, NTE uses the Internet to provide carriers “a window for participation” in the firm's transportation marketplace of shippers.

Not public in the dictionary sense of the word the NTE marketplace requires both shippers and carriers to become members. There's no cost to join, but carriers must meet the eligibility requirements and abide by the marketplace's governing rules, which include maintaining their commitment to pick up and deliver loads on time.

“Carrier members reach us via our web site or by phone or fax,” says Jendrowski. “The web site is preferred for its ease of use. Carriers not at their final destination can access a ‘continuous move’ feature. Once they enter where they are, the exchange will notify them of all loads available within 80 miles.”

He says another advantage for carriers is that NTE pays them directly for their freight movements within the marketplace.

“We are involved with all types of carriers — national, regional and local,” Jendrowski notes. “We probably deliver the most value to mid-size carriers by giving them visibility to many loads. So, a fleet doesn't have to be big to take advantage of what the marketplace offers.”

Jendrowski says NTE also sets up what he calls private communities or collaborative exchanges. “These are dedicated programs for individual shippers in which we oversee the carrier base,” he explains. “Typically, each community serves a single shipper with a large number of supplier and vendor locations. We manage the shipping for them and invite a carrier in to provide dedicated service.

“Growth in this private realm is very evident,” Jendrowski states. “The thing is, no one has the budget anymore for big in-house transportation management systems. But by using our private community, the shipper gives us their data and we execute their shipping while giving them the visibility they need. They pay a small monthly or transactional fee and the ROI comes back to them quickly.”

As for how all this relates to carriers, Jendrowski points out that carriers that grow with NTE via its public marketplace are the ones it will recommend to its private shippers.

Another incentive NTE offers carriers within either type of exchange that elect to electronically integrate with NTE is faster payment. “With electronic billing,” says Jendrowski, we will pay 10 days after receiving the invoice vs. 30 days for hard paper.”

At this point, NTE has some 1,200 carriers signed up to serve shippers on its public marketplace and about 100 carriers serving its various private communities.

Both types of exchanges, Jendrowski adds, are “geared toward helping carriers make use of their capacity, whether through establishing a dedicated service or by filling empty miles. Using the Internet for logistics is about putting dollars on their trucks.”

Yet another take on the exchange concept comes from Eden Prairie, MN-based Nistevo (www.nistevo.com).

Nistevo offers what it calls a web-based, Collaborative Logistics network. According to Dave Alampi, vp-strategic growth, the network is an Internet service that allows shippers and carriers to collaborate to improve both profitability and performance.

“Through real-time network visibility, it lets shippers and carriers create private and semi-private networks among trusted trading partners,” he explains. “They can then share capacity, reduce shipment cycle times and the cost of logistics services.”

He says the network enables the entire shipment process to be managed from a single, online application. According to Alampi, carriers on the network can increase utilization, gain revenue opportunities and cut out the cost of using manual systems.

“Our network lets shippers and carriers collaborate via our hosted site-we sit out on the Internet for them,” says Alampi. “We offer contract management online, rules — based tendering and event management — we capture all events from loading until delivery.”

He states that as a collaborative network what Nistivo offers is unique. “We allow movements to be coordinated in a such a way that carriers can take advantage of continuous moves and can convert easily to dedicated service.

“When it comes to dedicated service,” Alampi continues, “the shipper and carrier agree to an allocation of assets — trucks — with a guaranteed revenue stream. The shipper then takes on the risk of using those assets fully. Then we help the shipper to create routes with few deadhead miles.”

Alampi says collaboration over the Internet makes possible such feats as a three-way move involving one carrier and two shippers five days a week, cutting freight costs for the shippers by 5-7% each while guaranteeing utilization and revenue to the carrier.

Nistevo's network is subscription-based, but only shippers pay to be in it. Currently, over 240 carriers are active in the network, moving some 3,500 shipments accounting for about 45,000 transactions a day.

“It's a sizable network,” says Alampi. “Since launching the network this summer, we've found 25 million potential lane matches among members.”

Not surprisingly, Alampi views the public freight exchange model as “not very successful” compared to the private setup his firm offers.

“The problem with public exchanges,” he contends, “is that they take away control of the relationship between the carrier and shipper. The carrier winds up becoming a commodity, which ends up driving down both price and service levels.

“On the other hand,” Alampi adds, “we are putting existing shipper/carrier relationships on a collaborative network top crate a more efficient way to execute logistics.”

Whether to gain access to shippers seeking dedicated service or to just fill some empty miles on the fly, the Internet is clearly a road to follow for fleets wanting to link up with customers quickly and cheaply.

Confidence boosting

Technology makes life easier for everybody, including grifters.

According to the Truckload Carriers Assn. (TCA), con men are now taking advantage of Internet load-posting to nonviolently make off with trailers full of freight.

Running the scam, which TCA was alerted to by Alan Spear, president of MRC Investigations, requires little more than a cell phone, a truck and loads of nerve.

It goes like this: A caller contacts a freight broker who has posted a load on the Internet and represents himself as a legitimate trucking company.

The phony trucker gives phone/fax numbers different from those usually used by the fleet but explains away any discrepancies by stating he is in a new branch office. Should the broker call back to verify the number, a “receptionist” responding to a prepaid cell phone answers. If the broker faxes back, the fax goes through — but to a “mail drop” location such as a Mail Boxes Etc. or Kinko's store.

Once the broker's convinced he's dealing with a reputable company, he faxes the necessary paperwork and notifies the shipper.

Then a truck and driver with the proper documentation arrive, the shipper loads the truck, the truck drives away, and the shipment is never seen again — at least not by its rightful owners.

See this story and more online at www.fleetowner.com

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