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Although Internet-based freight exchanges have been around since the mid-1990s, offering shippers opportunities for competitive rates and convenient service, many have gone by the wayside, especially since the Dot-Com debacle of 2000.
Surviving freight exchange companies realize manufacturing executives desire the benefits of better service from carriers in private exchanges as well as the low rates from public exchanges. These business leaders also want more comprehensive services, including additional transportation modes as well as the ability to rent these services without a major investment in infrastructure.
While no freight exchange seems to offer everything, some are taking the lead in helping shippers to better manage their international transportation needs.
Expanded International Services
Traditional freight exchanges have added services in a variety of areas. Freightquote.com, based in Lenexa, Kan., whose core offerings were in domestic ground transportation, offers North American LTL and international airfreight to 80 destinations."We recently added international services for LTL and air, and are working on establishing systems and providers for ocean cargo, hopefully by June," says Freightquote.com president Tim Barton. The company provides on-line documentation for international airfreight, such as the airway bill including the Shipper's Export Declaration. In addition to providing rates and booking shipments, Freightquote.com offers denied party and product screening, harmonized tariff lookup capabilities, and landed cost calculation.
BAM Marine of Florida, Inc., in Fort Lauderdale has been using Freightquote.com to ship engines parts and transmission from the U.S. to Europe since last September.
"We were having some bad experiences with freight forwarders and didn't have time to continually shop around for the right one," says spokeswoman Heather Wolfe. "The main problem was that they weren't doing what we paid them to do. So when Freightquote.com began offering international services, we tried it because we had already used them for domestic shipments."
Wolfe says the main advantage of Freightquote.com is its ease of use. "We don't need to hire a person who knows shipping because Freightquote.com is so easy to use," she says. "It provides reliable service, including customer service, and offers competitive rates. We save 50 percent on our transportation costs over our freight forwarder's rates."
Combining Public and Private Exchanges
In addition to air transportation, more freight exchanges are offering international ocean transportation. BridgePoint, Inc., based in Cary, N.C., offers Navipact, a Web-based application that creates and manages global carrier contracts."Navipact eliminates the black hole of information by providing access to competitive rates for less technologically advanced mom and pop operations or companies that don't use EDI," says marketing manager Ken Pikulik. "Previously, shippers would request individual bids from carriers for each shipping lane, using Excel spreadsheets to calculate the best options. The process would be time-consuming and wouldn't yield the most efficient results. Navipact offers a private exchange that benefits companies which ship from multiple locations worldwide by evaluating the shipping needs as a whole."
He says a group of shippers within an industry may use it as a semi-private exchange to leverage the amount of freight that they ship, allowing greater opportunities for competitive rates.
A well-established company offering on-line freight exchanges is the National Transportation Exchange, based in Downers Grove, Ill. Founded in 1994, NTE is known the original public freight exchange. The company provides a variety of transportation and logistics service packages as an application service provider, which enables international shippers to benefit from outsourced logistics expertise while retaining in-house control to a large extent. The company offers both public and private freight exchanges.
"The real core of a shipper's business--75 to 85 percent--is with carriers with whom it has established relationships," says NTE vice president of solutions and product strategy John Murphy. "We maintain the flexibility of public exchanges but are transitioning to private ones which continue these trusted relationships."
One of the products NTE offers is called TransTrade, an automated routing guide and execution tool, which has been available since January. For North American shipments, TransTrade takes customers' paper-based routing guides and systematizes or stores them. If the system doesn't find a match it will automatically default to the public exchange.
The shipper may choose how many tiers that the system will go through in order to find the best rates. These tiers include the shipper's core carriers, secondary carriers, NTE carriers, and the NTE public exchange.
"Shippers may also choose to begin with the public exchange first, if they have overflow freight or freight that isn't mission critical," Murphy says. "They can try to get a lower rate with the public exchange first, but if they are unable to, the system will automatically default to the shipper's core carriers."
Freight exchanges have moved forward in keeping up with the demands of international shippers by offering multiple modes of transportation, which enables one- stop shopping as well the ability to obtain the best rate and service combination. By using services such as those offered by ASPs, shippers gain the benefits of third party hosted applications that do not require substantial investments in infrastructure. Internet-based freight connections are continuing to evolve, offering more extensive services to facilitate efficient transportation.
Sidebar: One-Stop Shopping
Other U.S. exporters are using Freightquote.com because they're looking for one-stop shopping. Orchard Park, NY's Burgess-Manning Inc., exports heat exchangers and pressure vessels from its three plants in Texas to Canada. It has been using Freightquote.com's international LTL service and flatbed service for about six months."The main benefit is that freightquote.com combines our trucking needs within one company," says contract administrator Paul Randall. "That makes it easier to track our shipments, and we are willing to pay a bit more for this service."
Burgess-Manning moves about 80 percent of its international shipments with Freight quote.com and the remainder with contract carriers. Randall estimates that his company saves between 5 and 10 percent on its total shipping costs. "Although the freight costs are about equal, we save between 10 and 15 percent on administrative costs since it's so easy to use. There is less typing, and we receive one invoice per week from Freightquote.com instead of multiple invoices from different carriers. We don't need to send an additional invoice for freight to our customers because we know the price ahead of time."
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