With the help of the Internet, international commerce is moving toward a paperless world, which should save as much as 30% on shipping costs. As this trend continues, the inefficiencies inherent with proprietary EDI and non-standard paper documents will be a thing of the past. Today, a number of companies already offer paperless trade assistance over the Internet, and many businesses are using these services to expedite shipments and save money.

Digital Money

The banking industry is also moving toward this paperless world. TradeCard, for example, an online network which facilitates the fulfillment and settlement of international trade transactions, has formed an alliance with the Thomas Cook Group, Ltd. to provide secure business-to-business global-payment and foreign-exchange functions. Says Vice President Michael Klausner, "The new law on e-business signatures will give teeth to what companies are already doing, with the ability to transmit signed contracts online. Once buyers and sellers decide to transact, TradeCard provides a payment guarantee. We charge our customers only one-tenth of the average cost for a letter of credit." TradeCard, which offers a card with a smart chip similar to ATM cards, offers the facility of an open account with the security of a letter of credit Klausner says. Many banks, too, are expanding their on-line services, making letters of credit, for example, easier, cheaper and more timely.

Digital Security

The e-signature legislation referred to by Klausner-which was signed into law by President Clinton in July-has given shippers more confidence in using online services for transmitting confidential financial information. Production Finance International (PFI), based in Spokane, Washington, has already seen the effect of the legislation, although its full implementation is at least six months away. PFI is a provider of purchase order financing for the import and export of pre-sold merchandise. Says Sales Manager John Kubiak, "PFI's association with a trade portal has given shippers financing alternatives along with other services at one location." PFI's Internet features include the ability to download client business applications and other documents.

In some cases, however, electronic signatures for security are not always necessary. At RightFreight.com, a New York City-based platform for transportation services, the law will not have any significant effect on its business, says Lane Butler, vice president of marketing: "Since the participants in our service are registered IATA members, they have been pre-approved, in essence, so there is no need for electronic signatures."

Whatever the case, the security is there if one needs it.

All Under One Roof

The trend toward a single source for trade transactions is being instigated by trade portals, which maximize trade efficiency for shippers by providing a single-tent alternative for services such as banking, insurance, transportation, and customs clearance. Portals match buyers with sellers in specific markets and list choices in different service categories for business-to-business transactions.

A good example of one such trade portal is MeetChina.com, which has its US headquarters in San Francisco. MeetChina.com offers a system that enables buyers and sellers of Chinese merchandise to connect and find all the necessary components for international trade such as banking, finance, and freight forwarders under one roof.

"The focus is country-centric," says Len Cordiner, president and CEO, "and we hope to develop websites for other countries as well. For China, transaction integration has begun and will be available this fall. This service will reduce administrative time and costs for shippers, provide all transaction data in one location, and cut down on errors. We are integrating the back offices of shipping companies."

Ahead of the "Curve"

Of all the aspects of international trade, transportation providers are far ahead of other service providers in using the Internet to their customers' benefit. Some are taking the lead in providing comprehensive supply-chain services. The trend is toward total supply-chain management. Companies such as FedEx Logistics are at the forefront. Its subsidiary, FedEx Supply Chain Services, has created a new division called FedEx E-Logistics, which focuses on providing business end-to-end electronic commerce logistics solutions. The self-service program on the Internet minimizes customer service calls, lowering telecommunications costs and reducing the error rate. Another advantage of Internet services is that shippers do not need extensive IT capabilities.

Quick rate quotation is an important feature made possible by the Internet, especially for anyone who has ever called for a rate, only to wait a day or more to get it. One shipper, Celanese Corp., a US-based textile manufacturer, knows about using the Internet for transportation services. says Philip Rodriguez, lead logistics manager and buyer. "It is a re-education process, which can be difficult because it is impersona," he says. "You enter the information and wait. You are dealing with a machine, not a person." But Rodriguez praises its Internet-based transportation provider. "Another feature of transportation websites, in addition to their auction capabilities is that they are good for benchmarking costs", says Rodriguez. "You can see what other rates are being posted."

Digital Inertia

Some aspects of international trade are struggling with the Internet Age, however. As much as they'd like to be part of the movement, there are some hurdles that must yet be leaped.

"One-stop-shopping is difficult in freight forwarding," says Frederick Stromeyer, vice president, international for USCO Logistics, a Naugatuck, Connecticut-based 3PL provider. "Single source shipping is geared more toward business-to-consumer transactions, but USCO is an integrator, moving product as well as managing information."

Customs clearance is also underdeveloped, Internet-wise. "It's still in its infancy," says Wayne Burl, president and CEO of A.N. Deringer, Inc., a St. Albans, Vermont-based customs broker and international freight forwarder. "While EDI is still being used, it's evident why it never really caught on as a system: It's just not the way business is done. Customs brokerage over the Internet will be to facilitate the transfer of electronic information from the point of manufacture to the point of delivery. At this point Deringer has the capability to receive documents by e-mail and transfer files as attachments, and we are working on a new Internet based system," Burl says.

But the movement is gaining momentum and a number of companies are seizing upon the opportunities for customs clearance that the Internet offers. Omar Elshayal, manager of marketing and global trade at Ottawa-based Via Safe, Inc. says "There is a lot of pressure on customs brokers, as middlemen, to survive, as they are getting squeezed out for a variety of reasons. We provide services which facilitate customs clearance by sending brokers' information to customs."

Digital Collaboration

Just as in any other business, the market is determining what services should be offered and what people are willing to pay for them. Shippers are leaning toward the Internet sites that offer more than one service. Collaboration is a necessity on both ends. As Deringer's Burl says, "If companies are looking to build a proprietary system without sharing it with others, they are doomed to failure. Collaboration is important to the nature of this business."

One way this collaboration works is in insurance, as exemplified by Aon Insurance of San Francisco. Tom Pfister, Aon vice president, says "One of the advantages of Aon's association with a trade portal is that smaller shippers can compete with larger ones for better rates."

As an example, Pfister goes on, "Say that a shipper wanted to insure $1 million of merchandise. The rate may be 30 cents per $100 of value. But if they were to team up with other shippers under a trade portal's aegis, and the total was $100 million, the rate could be ten cents per $100 value. The shippers would have individual policies, but it would be under one master policy."

Seamless Transactions Are Inevitable

The Internet is facilitating the processes of international trade, and this decade will see further integration and simplification of the trade process. Paperless international trade is a reality, but it is not yet all-encompassing. There are still many areas for improvement; customs clearance, for example, will soon be more sophisticated and available on the Internet to brokers and shippers. But there is no doubt that the efficiency created has reduced the amount of paperwork and time spent on the traditional media of phone and fax. Seamless movement of goods is a reality and is growing more common every day.

Sidebar:OnLine Trasportation:More Thank Just Freight Auctions

One company that offers transportation services over the Internet is RightFreight.com, a New York City-based transportation services platform that includes a shippers' exchange designed to reduce the time and cost of sourcing transportation services. Says Lane Butler, vice president of marketing, "Our company reduces transportation search costs and accelerates the decision-making process by optimizing transportation needs and communication among all parties." Launched in the summer of 1999, it began offering a unique service of back-end integration into the ERPs of big companies, as well as a Web-based service with browser integration.

Sean Quinn, CEO of Wilmington, Massachusetts-based QSL Corporation, which ships ceramic products, says, "We don't move much freight by air, so when we do, it's difficult to get a good price. Using RightFreight has been the smoothest experience that we've ever had." Internet trade services should be user-friendly. He adds, "Carriers are usually so swamped that they do not have time for what they consider to be petty details. But RightFreight is willing to answer their questions in a timely manner."

Sidebar:Traching Shipments Online

USCO Logistics, a 3PL provider based in Naugatuck, Connecticut, offers a product called "Dashboard," which provides inventory-management capabilities. Says Ivan Avila, international systems manager, "Dashboard is bolted to warehouse-management systems in the US Anything moving is system independent." One of its customers is D-Link, Inc., a shipper of computer parts and accessories based in Santiago, Chile. Says Oscar Castelblanco, logistics manager, "The most important thing for us is the ability to check our inventory online. Our manufacturing plant is in Taipei, and we ship by ocean or air to Miami, from which it is shipped to Central and South America. The Internet presence is particularly important to us, because we don't have an office in Miami, so we rely on USCO's service." According to Avila, services such as booking on the Internet are not a top priority with shippers at this point, because they do not have the capabilities themselves yet, but it does lie in the future.

Al Rich, president of Solaroofs in Sacramento, California, which makes solar water-heating equipment, uses a similar service, FreightQuote.com. The company ships internationally as well as domestically. Perhaps most important, in his experience, Rich says the FreightQuote has saved him between 15% and 30% of any of his previous lowest quotes. Further, he says, "They give excellent service."