Shippers, third-party logistics providers and carriers transition to new forms of connectivity to cut costs and improve visibility.
Fleet executives with an eye for technology see phones and fax machines as the last resort for conducting routine business.
Like many carriers, Cargo Transporters automates routine transactions with customers through electronic data interchange (EDI). Those transactions include load tenders (204s), shipment status updates (214s) and freight invoices (210s).
Even with EDI systems in place, personnel for the Claremont, N.C.-based carrier frequently also use several customers’ Web portals to improve efficiency. For example, one portal allows personnel to schedule appointments and see trailer status – loaded or empty – at each facility.
“A lot of what we see through the Web portal is information back out of our customer’s business system,” says John Pope, president of the 420-truck carrier.
To further automate communications, Cargo Transporters developed its own Web-based applications that customers – typically those that lack EDI – can use to request rates, track shipments and view delivery documents. Recently, some customers have become interested in linking their business systems with Cargo Transporters’ system directly through the Internet by using XML, a data structuring format similar to HTML.
Although carriers have many options for connecting electronically with customers, doing so with all or even most of your customers may still be challenging because each has different preferences and standards. To thrive in the digital world, one carrier’s strategy is to work with customers one-on-one and be willing to adapt and build new applications “on demand.”
Moving online
EDI remains the standard protocol for large shippers. For carriers to comply with customers’ EDI requirements, they traditionally have bought specialized software and paid third-party value-added networks (VANs) to transmit data to and from customers. This model has changed, however, as trading partners have found a less costly and complex protocol – the Internet.
“While EDI remains relevant, the industry is definitely moving toward more Internet-enabled systems that allow trading partners to connect, communicate and collaborate instantly and simultaneously,” says Ron Lazo, senior director of professional services for Manhattan Associates, a company that offers supply chain planning and execution solutions for shippers and carriers.
Today, the primary strategy for shippers to expand connectivity with carriers is via Web portals, according to an August 2005 survey of 38 leading shippers and logistics service providers conducted by analyst firm ARC Advisory Group.
Most large shippers – those with revenues of more than $250 million – either use or are in the process of developing Web portals that enable carriers to manually enter data online and exchange EDI transactions. For large shippers, the connectivity protocols of EDI and Web portals account for 53 percent of communication with carriers, while the phone is 14 percent.
Small and mid-size carriers typically prefer using Web portals, whereas large carriers prefer using automated EDI systems, says Jerry vonFeldt, senior director of the North American transportation division of Menlo Worldwide, a major third-party logistics provider owned by CNF. “We would prefer more EDI, but we can’t lose the ability to work with smaller carriers that don’t have that capability,” vonFeldt says. “I think we have to have multiple ways to communicate.”
By comparison, for shippers with less than $250 million in revenues, the phone accounts for 33 percent of communications with carriers, whereas EDI and Web portals account for 12.3 percent of transportation transactions – less than fax and e-mail, according to the ArcGroup.
Carriers of all sizes also have made significant investments in their own Web portals to connect with customers. But the phone and e-mail still account for the majority of customer communications, even at the largest and most sophisticated carriers, according to the ARC Group. Shippers that visit carrier Web portals typically are smaller businesses that lack EDI, many of which use the phone the majority of the time.
Leveling the field
In many cases, shippers are not the architects of Web portals and other connectivity applications. Many logistics and transportation providers across all modes – ocean, air, rail or highway – still rely on VANs to provide these Web portals and other means to exchange data.
Contrary to Bill Gates’ prediction, the Internet has not eliminated the middleman – the VAN, in this case – that provides trading partners a common platform to exchange data, regardless of each partner’s preference. Even with minimal technology – a browser, e-mail or cell phone – small carriers can be equal, in terms of connectivity, with larger carriers that have EDI systems.
For example, Descartes has one of the widest used networks in the transportation industry – the Global Logistics Network (GLN), says Ryan Green, general manager of Descartes’ GLN. Through a Descartes product called Local Haulage, shippers can e-mail an automated EDI transaction to carriers through the GLN. A carrier receives a load tender (204) in an e-mail that contains a link to accept the load. The carrier also can reply to an e-mail requesting a shipment status (214) and e-mail a completed freight invoice (210).
Descartes also recently developed a software product fleets can use to automatically send shipment status updates to shippers through drivers’ cell phones. When picking up or delivering a shipment, the driver simply selects a shipment number from a list loaded to his phone, and enters it as picked up or delivered. The update is sent through the network to the shipper or other party as an EDI shipment status message (214), Green says.
In addition to using VANs, shippers and logistics providers also are using new tools developed by their transportation management software (TMS) providers to offer carriers new, cost-effective connectivity options. For example, BestTransport offers a new Web-based service that shippers and 3PLs use to automate transportation management and execution, including creating loads, selecting carriers, tracking shipments and consolidating freight bills.
Through a new product called BestTracker, the shipper and carrier have complete visibility of loads using drivers’ cell phones, says Trisha McLain, a spokesperson for BestTransport. When a carrier receives and accepts a load offer from shippers or 3PLs that use the system, a dispatcher at a carrier goes online to assign a driver to the load. The shipment details are sent automatically to a driver’s GPS-enabled phone, whereupon the driver accepts and updates the shipment status and reports current status to his dispatcher and shipper through the Web.
Transparent operations
As previously mentioned, a growing number of shippers offer Web portals – many of which are provided by the shipper’s VAN – for carriers to enter EDI transactions. Some shippers are building Web portals that go beyond connectivity, offering new tools for visibility that EDI alone cannot provide.
For example, Cargo Transporters exchanges EDI transactions with Owens Corning, a manufacturer of glass fiber and building materials. Fleet managers also visit Owens Corning’s Carrier Web Portal to schedule appointments, check on trailer pool status – loaded or unloaded – and quickly resolve any invoice disputes. “For our folks, it is easier to log on to the website than attempt to make contact with a scheduler who is handling 100 shipments that day,” Pope says.
After a carrier logs in to the Carrier Web Portal, the homepage provides a standard view of important metrics, such as on-time performance, and important tasks that the carrier needs to complete, such as submit a past-due invoice or a freight claim. “The carrier can never be surprised,” says John Gentle, Owens Corning’s global leader of transportation affairs and processes. “He has to look at the homepage before he goes anywhere else.”
If an Owens Corning customer – or consignee – complains a load was delivered late, that information is presented to the carrier. The carrier can contest it by presenting data within 10 days; otherwise it stays in the permanent record, Gentle says. Similarly, carriers can see and correct data they believe is wrong, such as trailer numbers, proof-of-delivery documents, rates, invoice amounts, etc.
For the next release of Carrier Web Portal, Owens Corning plans to include a dwell time monitoring application to show carriers what time a driver arrived and left a loading facility. “We are giving carriers the tools they need to better manage their business,” Gentle says.
Engaging customers
Carriers also have invested significantly in Web portals to increase visibility for customers and automate routine business transactions. But sometimes these projects meet with mixed success, due to the cost to build and maintain these sites and to build the number of customers who handle all of their needs online.
If customers cannot conduct all of their business online – from getting a rate quote to receiving an invoice or a custom report – they typically pick up the phone and call, says Scott Sullivan, vice president of information technology services for Pitt Ohio Express, a 1,200-truck LTL and truckload carrier based in Pittsburgh.
From the initial launch of the company’s Web portal (www.mypittohio.com), management intended the site to be a one-stop-shopping experience for customers. Initially, sales representatives were given the task of working with customers to increase the number of electronic transactions. As the Web portal grew in complexity and customers’ needs evolved, salespeople couldn’t keep up with the technical details, Sullivan says.
“The electronic world goes beyond the Web now,” he says. “We use XML and numerous different ways to communicate electronically. It is too difficult for sales to understand all avenues.” The company recently created a technical position called “e-business representative” to help customers increase efficiency by converting to electronic communications.
Through research, Pitt Ohio Express management identified customers that didn’t use some or all of the company’s connectivity options. For example, a recent survey at one terminal identified 46 customers that call in to get freight charges, freight status and PRO numbers. The carrier’s e-business representative contacted each customer to help convert them to electronic communications – whether through EDI, the website or XML.
All but one of the 46 customers converted immediately. “One didn’t convert because they had no Internet access,” Sullivan says.
Management also recently created an e-advisory group to stay ahead of changing customer information needs; the group consists of eight different customers that represent 10 to 15 percent of company revenue. One recent suggestion by the e-advisory group was that Pitt Ohio Express take its next-day service to “the next step” by providing real-time shipment tracking and estimated times of arrival through EDI, the Web, XML or any other format the customer prefers.
“It used to be good enough to know that if we pick it up today, we will deliver it tomorrow,” Sullivan says. The company is finalizing development of such an application, using onboard computers in its trucks, to provide real-time shipment status, he says.
As trading partners adopt new technologies for connectivity – and increase their visibility and efficiency as a result – no one can hide behind the excuse “I didn’t know.” Now everything is transparent – with no busy signals or delays.
Capacity crunch
With no signs of capacity growth, due mostly to a chronic driver shortage, carriers are struggling to meet growing demand from shippers. That’s certainly the case at Springfield, Mo.-based O&S Trucking, says Rick Johnson, chief operating officer. How tight is capacity? In the fourth quarter of 2005, some O&S Trucking customers paid to deadhead refrigerated equipment 1,100 miles away to pick up loads, Johnson says.
Because of these conditions, management at the 355-truck carrier decided to develop a proactive system that offers any excess fleet capacity on a daily basis only to its preferred customers. O&S Trucking recently developed a tool to send daily e-mails out to customers to show available equipment and give them the opportunity to secure equipment automatically to meet their needs during the following 24 to 48 hours, Johnson says.
The tool uses a real-time connection between the carrier’s operating system and its Web server to generate the e-mails. Using filters to find equipment by location and type – reefer or dry van – the system pulls available equipment from its dispatch system and sends it directly to the key individuals – the load planners – at preferred customers. The e-mail also shows the per-mile rate for fuel surcharge and empty miles. With this information, customers quickly can calculate their total cost to schedule a load, Johnson says.
The first e-mail blast is sent out at 5 a.m. Central time, which gives load planners a chance to secure equipment the instant they turn on their computer, Johnson says. The e-mail goes out again at 1 p.m., updated to show available equipment. Customers can reply to the e-mail at anytime up to 9:30 p.m., if equipment is still available. Upon reply, the e-mail routes back to the system for the operations department at O&S Trucking to schedule a pickup.
In addition to replying to the daily e-mail, core customers can go to O&S Trucking’s website to secure capacity. For example, by clicking on a graph of the Southeast, a customer can see all equipment available to pick up a load, along with the associated cost information.
“It gives them all the factors – how far the trucks are out, and how bad do they want the equipment?” Johnson says.
The ultimate objective for O&S Trucking, Johnson says, is to use this tool to take inside sales people off the phone, as its core customers – who already use EDI – will secure all of the fleet’s available capacity in advance.
“We want to go totally proactive,” Johnson says. “If you’re calling asking for a truck, that means you’re not a preferred customer. If we’re not desperate, we’re not going to answer the phone.”
