Shippers Want Better E-commerce from Carriers
- 16 March, 2000 12:01
FRAMINGHAM (03/16/2000) - If transportation companies want to stay competitive in the e-commerce arena, they'd better improve their business-to-business services and think differently about the way they use technology, according to a study released yesterday by New York-based KPMG Consulting LLC.
And even though most of the transportation companies said they thought they were satisfying shippers' e-commerce needs, shippers said that just wasn't the case, according to KPMG, which surveyed 22 major transportation companies, as well as selected Fortune 500 shippers and transportation analysts. The survey measured the progress the transportation carriers are making in moving from traditional business models to Internet-based ones.
One of the most significant aspects of the study was that shippers said they want to use the Internet to conduct all their business transactions. According to Kathy Capellini, senior vice president of the transportation practice at KPMG Consulting, that means that carriers must use technology to integrate back-office and front-office services and provide interactive services to their customers, including real-time shipment visibility, collaborative planning, just-in-time inventory management, communication and customer order management.
However, Capellini said, transportation companies are more focused on providing transactional services, such as online order placement, shipment tracking and bill payment, rather than moving to the more interactive services.
"What the shippers expect from the carriers measures differently from what the (carriers think they need to provide)," said Capellini. "Many carriers think they're doing enough for their customers, but 47 percent of shippers surveyed say they are dissatisfied with the way the carriers are using the Internet's capabilities. They want to use the Internet to manage the entire supply chain."
But, she said, even though 64 percent of the shippers surveyed indicated that the Internet is very important in establishing their critical strategies for the future, they are not pushing carriers to do more to improve their e-commerce business models.
"That's because shippers are even further behind (in their Internet capabilities) than the carriers," Capellini said. "And the majority of financial analysts surveyed said Internet capability was only somewhat important. Forty-one percent of the financial analysts said the Internet was very important."
Donald Broughton, a transportation analyst at A. G. Edwards & Sons Inc. in St.
Louis., said he thinks the value of the Internet in a company's electronic-business strategy depends on what goods a shipper is trying to move.
"If you're moving a low-value, high-density product like gravel or coal, who cares about (managing the supply chain)," he said. "But if its a high-value, low-density product like computer chips, then a lot of attention is going to be paid to (a carrier's) Internet capability."
Broughton said he agrees that on the whole, transportation companies are not providing the kind of services over the Web that high-density, low-volume shippers would like. But he believes that's changing.
Broughton pointed to the recent announcement by six trucking companies that are combining their logistics units to form Transplace.com, an Internet portal for transportation services.
One transportation company that understands the importance of the Internet is Jackson, Florida-based Landstar Systems Inc., according to company chairman, President and Chief Executive Officer Jeff Crowe. Crowe said that on Feb. 1, Landstar, a subsidiary of Signature Technology Services Inc., launched a new online freight information service, eFR8.com, that enables users to manage their own account information.
Crowe's claim that Landstar is driven by the creative use of technology is buoyed by the fact that it was recognized as a leading technology services provider in the transportation industry by Mile.com, a trucking portal site powered by Prophesy Transportation Software Inc.
According to KPMG's survey, if transportation companies don't make changes in their Internet strategies, they may lose future business to more Web-savvy dot-com market exchanges such as Transplace.com.
Capellini said these "infomediaries" are doing what all carriers should be doing -- using the Internet to meet customer needs.