In the United States, where electronic data interchange (EDI) is still a predominant, if clumsy, way to transmit batch or bulk shipping data, there is a quiet transition taking place to 21st century ways of handling shipments in all transportation modes.

As experts in e-commerce will attest, the easiest way by far for U.S. manufacturers, freight forwarders, shippers or 3Pls/4Pls to gain competitive advantage is to shave labor, transport and energy costs. And the most efficient and cost-effective way to join the 21st century shipping world is to bring their shipping needs to the Web, or to networked PCs if they lack high-speed Internet access.

In the last 15 years, a number of Web-based platforms have evolved to handle shipping needs in the ocean container and trucking industry, which naturally assist air cargo and intermodal shipments. The big guns for ocean include California-based companies FreightGate of Huntington Beach, GT Nexus of Alameda, and Cargosmart of San Jose, as well as New Jersey-based Management Dynamics of Rutherford and INTTRA of Parsippany. Meanwhile, Transplace of Plano, Texas serves the trucking industry as a collaborative shipping platform, while Descartes Systems, located just outside of Toronto, Canada, provides a wide range of global trade supply chain functions, including compliance and security clearance.

Jim Preuninger, Management Dynamics’ CEO, is finding that “the market for Global Trade Management (GTM) solutions is gaining momentum by helping companies to implement these new cost-cutting strategies that will ultimately allow them to exit this recession stronger than ever.” Touting his business as the “next generation of supply chain management, or SCM 2.0,” he says Management Dynamics’ (GTM) has over 300 customers with 14,000 users in 70 countries.

“We believe that the winners will have a ‘whole product’ comprised of GTM software, integrated global trade content, and enabled by connecting trading partners in a specialized supply chain network. This business model offers the fastest time to benefit, with the lowest implementation cost and risk. Today, we are seeing strong demand (even in a recession) for GTM as companies strive to get leaner and drive more value from their global operations,” he says.

However, “The adoption of e-business platforms is not only driven by economic reasons to reduce costs and be more efficient,” according to Andy Barrons, INTTRA Vice President of Marketing, who cites other drivers such as “the demand for more data that is accurate and can be easily used to improve operational effectiveness. More and more users are shifting from an analogue world of data kept on paper and in filing cabinets to using electronic networks that can store digital data for re-use and sharing with shipping partners to meet industry compliance and trade regulations and for managing the ocean supply chain more effectively.”

Weaning customers from EDI

But for the platforms to provide their American customers the benefits that Preuninger references, they must first wean customers “from their EDI marriage with major customers,” according to Gary Chisamore, Founder of OceanTender.com. Chisamore managed a now defunct electronic ocean tenders (lane negotiating process) product for INTTRA and as a result of customer requests, brought a transportation procurement product to market in 2008 and joined FreightGate earlier this year.

Based in West Windsor, N.J., he’s had the advantage of helping build two of the biggest ocean freight platforms in the world (see box on platform development) and has a vision for the platforms that stretch way beyond the very specific tender function. Executives like Preuninger, Chisamore, Barrons and FreightGate CEO Hubert Martin and Art Mescher, CEO of Descartes Systems have all worked assiduously over the years to transition customers to Web-based e-commerce shipping functions.

Barrons has long pointed out that the platforms often have an easier time of it in emerging markets that did not embed costly EDI equipment into their businesses and were able to move directly to shipping via the Web. Because of pressure from auto giants like General Motors, with its still enormous supplier base, and retailers like Wal-Mart with its nationwide and more recently global saturation, the U.S. market has depended on EDI for upwards of 20 years.

Originally called portals for their entry to the Web, the name ‘platforms’ has been introduced in recent years to represent the collaborative work functions that are taking place online. Imagine an atom with thousands of individual interlocking modes-often called an “ecosystem” by tech-savvy executives-and that’s a good representation of how platforms allow all parties to a global shipment work together just as they have for centuries starting with quills, parchment and horseback couriers to the clipper ships.

Although original portals “were formed with a very narrow North America bias,” Chisamore says, platforms like INTTRA have made widespread strides throughout Asia, thanks in part to funding since 2000 through 20-plus global carrier stakeholders. He says long-time INTTRA competitor GT Nexus, with its acquisition of Metaship AG “will widen its customer base in Europe” where INTTRA has deep penetration thanks to its major European carriers.

Software on demand making inroads

In recent years, INTTRA, Descartes and FreightGate have built up customer demand for software-as-a-service (SaaS), which is a fancy term for software on demand or hosted solutions, now sometimes referred to as cloud computing. Hubert says FreightGate, with roughly 10,000 users annually accessing the platform, is “the granddaddy” of SaaS-based software downloadables having offered SaaS since 1995. INTTRA started touting its SaaS capabilities, now all the rage, around 2007. Hubert explains that his company adopted Linux-based operating systems and best-of-breed open source Web-stacks a decade ago when open source was in its infancy.

FreightGate “covers all modes of transportation with modular solutions for the full logistics management life cycle for its stakeholders,” says Hubert. Like most of these platforms, FreightGate serves all parties to a global shipment with an emphasis on 3PLs and their manufacturer/shipper customers. FreightGate also offers services in tender and freight transport optimization solutions, global routing guides, contract management, supply chain collaboration, visibility and invoice audit payment, among others, says Hubert.

He says he’s “very excited about the prospect of tying up the loose ends on the procurement process and providing end-to-end solutions to our customers as users. We see great potential by offering new products and functionality in carbon footprint modeling and environmental initiatives,” which will be necessary to meet the requirements of both behemoths Wal-Mart and UPS, which in July announced they would be requiring all manufacturers and transport companies to meet their own carbon footprint standards, still to be outlined.

Evolving to meet global demand

Management Dynamics and GT Nexus both woo large, multinational corporations to implement complex supply chain solutions, as compared to INTTRA and Transplace who come to similar customers through ocean or truck carriers and their shipping partners. Preuninger said Management Dynamics’ “long-term strategy is to build on this solid enterprise positioning by working with our (major) accounts to deliver more sophisticated solutions to help manage export compliance, automate the import supply chain and to capture the duty savings from free trade agreements.”

INTTRA is also evolving in interesting ways from a cooperative-backed shipping platform where major carriers paid for electronic services for their customer base, to creating stand-alone businesses like OceanSchedules.com to drive revenue like any other corporation. For example, Barrons said INTTRA announced recently a partnership with Europe-based Deutsche Bank to provide a solution “to streamline and lower the cost of invoicing, dispute resolution and payment processes for carriers and their customers.” He said INTTRA executives estimated that $500 million in cost savings could be accrued per year based on streamlining the billing process for the 100,000-plus invoices the shipping industry generates annually.

“What does the future hold?” asks Chisamore rhetorically. “A more focused relationship between INTTRA and GT Nexus, for one, that compliments each other’s offering and avoids duplication.” As for FreightGate, since the platform already supports the full logistics management lifecycle for all transportation modes, the obvious is building up additional niches with targeted efforts like OceanTenders.com, as well as more focus on meeting demands to reduce fossil fuel emissions, adds Hubert.  wt 



Contributing writer Amy Zuckerman specializes in electronic commerce, supply chain management, international standards, and global communication.

Sidebar: Platform Evolution--a Brief Look Back

Platform Evolution-a Brief Look Back

Looking back to the mid-1990s when the global transport industry was starting to automate processes using advanced technology, Chisamore said there was a major push to standardize processes so that multiple parties to a shipment would not have to waste precious resources integrating all their technology. Around the same time, freight forwarders actively started challenging the carriers for business, due to their wider service offerings, huge volumes, and by offering their own carrier (NVOCC) brands. Meanwhile, banding together with carrier competitors allowed the ocean carriers to counter the threat from freight forwarders.

Most of the platforms, says Chisamore, “started as booking and shipping instruction platforms that provided global visibility and track and trace. They expanded into Bills of Lading and contract management to transportation and supply chain providers. Bills of Lading, however, have been hampered by the carriers’ inability, sometimes unwillingness, to allow remote printing of Bills of Lading due to legal and other reasons.”

Here is his take on the various major ocean trade platforms:



GT Nexus

“GT Nexus has a much wider footprint of the three catering to all modes. They provided hosted logistics solutions for a wider variety of logistics participants. They charge shippers and carriers for their services and functionality. With their revenue model, they have developed a much broader market strategy and wider product portfolio. GT Nexus, unfettered other than funding, has been able to address SCM market trends and needs. With their hosted application service they have a much broader revenue stream and are not as easily affected by the downturn in the container traffic.”



INTTRA   

“INTTRA was formed as a cost avoidance vehicle entirely funded by carriers. Major drivers were Maersk, P&O and Hapag Lloyd. Carriers shared in the cost savings generated by INTTRA efficiencies that focused on booking and shipping instructions, via EDI or through their Web site. They are evolving into a customer service center that can cater to the differing needs, technical capabilities and expectations of their customer base.

“INTTRA’s major customer base has evolved from using INTTRA functionality to require their data to be sent electronically, whether through in-house or third-party applications. Some say that INTTRA has been ‘carrier focused’ due to its ownership and therefore unable to develop into a complete solution provider. It is believed INTTRA’s 10 million-plus annual container volume is far greater than the others, though these transactions are INTTRA’s only major source of revenue.”

   

Cargosmart

“OOCL saw an opportunity to develop closer relationships with their customers and increase brand awareness with a portal, initially choosing not to join the original major portals, but launch their own with their advantage of being Asia-focused as opposed to the perceived North America or European bias of the others. The strategy, while offering better booking and shipping instructions processes, limited their transactions to OOCL-only bookings, Other smaller carriers have connectivity to Cargosmart, but earlier customers found frustration with the single connection.

“Cargosmart contract management and other products are used by some other carriers. As the portals evolved, shippers were faced with different connectivity requirements of portals (and carriers that were members of neither). Some think of the major portals or platforms as competitors, but they are not. They have different revenue models, product footprints and sales processes. All have adapted very well to accommodate the unique Asia combined booking/shipping instruction process.



FreightGate

FreightGate operates the FreightGate Portal, which is a comprehensive yet free information source for the entire logistics community, and serves as a carrier-independent platform that has taken a different tack and created connections to all of the above while maintaining several direct carrier connections as needed. FreightGate focuses on highly sophisticated computer aided rating and routing engines, visibility, and collaboration tools, which are offered on a subscription basis that forms the primary source of revenue.

Sidebar: Ways that Platforms Provide Supply Chain Efficiency

Jim Preuninger, Management Dynamics’ CEO, cites the following ways e-commerce transport platforms promote efficiency:

1.    Eliminating bottlenecks and reducing inventory at the port, at manufacturing sites and warehouses

2.    Reducing fines for holding carrier equipment too long (demurrage & detention)

3.    Identifying opportunities to shift modes, e.g. airfreight to ocean freight

4.    Using postponement strategies to divert inventory at an international gateway

5.    Becoming a self-filer to reduce the broker’s cost to make a U.S. Customs entry

6.    Using preferential trade agreements to lower (or eliminate) duties and total landed cost

7.    Rebalancing supply and fulfillment networks by determining tax efficient sourcing and distribution strategies