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title : New Age Logistics |
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New Age Logistics
By Aaron Karp
Forwarders say high-tech web-enabled tracking
and processing are becoming essential
ill Reichman oversees a staff of 27 at forwarder AIT Worldwide Logistics but not one of them moves, handles or sells an ounce of freight. Instead, all are software developers and web-design experts who create and fine-tune Internet-based tracking and processing applications used by the company and an increasingly demanding and tech-savvy group of customers.
Only a few years ago, most forwarders counted only a handful of people in technology divisions that were mainly focused on maintaining computers.
Now, some forwarders have enough technology power to make up a company in its own right. In the decade since the Internet grew up, the world has seen countless web-based businesses implode, but forwarders say the technology demands of shippers - and competition - haven't slowed down, driving the biggest forwarders to staff large in-house technology divisions to keep up with their own special needs.
But many forwarders insist that technology is not what they and their shippers are focused on; it is the information the technology puts at their fingertips.
"Technology is not important to the shipper at all," says Reichman, information technology director for AIT. "It's the information that the technology is providing. When something goes wrong with a shipment, the customer wants to know about it as soon as possible. Technology allows for the relaying of information much faster and more accurately than it was ever done before."
he services at integrated express carriers FedEx and UPS have established a technology standard that is so high, say Reichman and other forwarders, that fast web-based access to precise information about a shipment is now largely expected by anyone shipping cargo.
The trouble is, the same shippers that expect forwarders to be much more technologically capable don't expect to pay more for forwarders' services.
One of the most ambitious technology offerings in air freight in the past couple of years has come from a seemingly unlikely source. The thick book of schedules from the Official Airline Guide is one of the airline industry's most familiar brands, but the separate OAG Cargo business is selling souped-up software for the Internet age that looks nothing like the OAG of previous generations.
In fact, OAG Cargo chief Richard Savage brought the technology to OAG and has set up a distinctive air freight technology that takes the OAG's foundation offering of scheduling information and tailored it to today's shipping and logistics requirements. The result is a flexible and dynamic tool to bend worldwide airline schedules to the requirements of forwarders, allowing for easier shipping around the globe.
"We've integrated 1,000 airline schedules that are updated nightly," said Savage. "The user can pick any two points and we can construct all the possible routings, including relevant restrictions such as dangerous goods, embargoes and ULD compatibility. We can add filters for non-stops, for directs, then connections. You can specify only freighters, only widebodies and select your preferred carriers and so on."
Scheduling
OAG Cargo
OAG Cargo is also integrating trucking Road Feeder Services, including the major American truckers and the top truckers in Europe. "We're in the process of putting in the top 10 truckers in Europe. We're hoping to add ocean soon. That would make us the single largest source of integrating schedules and services," Savage said.
The basic service does not include rates or booking functions but a forwarder's rate tables can be integrated into the system. And Savage says the carrier-based portals - Ezycargo, CPS and GF-X - can be integrated into the system. "We see ourselves as a value-add to portals," said Savage.
Even with the proverbial bells and whistles, however, OAG Cargo has a problem that the technology startups do not face. "The biggest challenge we have is getting people to understand we are not what they think of as the OAG. We are not books and guides alone," said Savage.
"The shippers and customers are willing to pay additional money for certain aspects of the new technology, but we have to take care of most of the cost," says David Quin, president and chief executive officer of critical shipment specialist Menlo Expedite!
Many forwarders have concluded that they must bite the bullet and foot the bill for rapid technology advancement or risk being unable to compete in an increasingly automated world.
"With the old legacy systems, you tracked two events - when something is picked up and when it's delivered. A major change is necessary," says SEKO Worldwide President William Wascher. "Five to 10 years down the road every [forwarder] is going to be on a true web-based system or they won't survive.
"The industry is coming to the realization that the old technology is not going to cut it. You have to have an accessible, web-based system. The marketplace is going to demand it. [Unless they adapt] forwarders risk becoming just niche players."
SEKO "went live" Aug. 1, 2003 with a web-based domestic tracking and processing system produced by forwarding software applications specialist Trans-Soft.
"Since August 1, business has been a lot different," says Wascher. "The company has leaped 20 years in the technology arena. We're able to process the same shipping transaction a lot more efficiently and more effectively."
But SEKO has not passed the cost of the new technology on to customers. "This was an investment that we made on our own," says Wascher. "The software, while it may carry a large price tag, provides benefits that are a factor of 10 over what you would pay for the software."
Some forwarders say the improvements to a company's own internal operations are the real benefit of the expensive investment.
Technology "has become vitally important," says Quinn. "It automates all the manual processes and allows us to quickly communicate with customers and others in the supply chain. Communication is everything in our business."
he technology world is continuing to change, with new companies from software specialists to air carriers offering an array of new tools aimed at streamlining business processes and helping the small look big and the big look bigger.
It's a far cry from the realities of forwarding in the 1990s, when shipments were tracked over the phone if at all and nearly all processing was done by paper.
"I feel like 10 years ago we were fighting a battle with pitchforks. Now we're competing against each other using laser-guided missile systems," says Quinn.
Getting information to customers quickly is the most visible example of the new logistics software, but the newer innovations are aimed at allowing forwarders to determine the best means of shipping. That is a use driven by new needs.
"After September 11, our business changed quite a bit," says Quinn. "All airports used to have 30-minute cutoff times for shipments. Some now require two hours, and it can vary. Technology has helped us with this problem. We can punch all the data into the system and it gives us all the options we have for shipping. We'll look at all flights leaving from different locations and the security required at each airport and pick one to accommodate our freight."
Once the freight is moving, Menlo can provide seven updates over the course of the nine hours its average shipment is in transit.
That is the kind of information that FedEx and UPS used to consider a competitive advantage. But not everyone believes up-to-the-minute information is necessary in the industrial shipping arena.
"Does looking at a blinking dot on a map give you any additional information about when the container will actually arrive?" Expeditors International Chairman and Chief Executive Officer Peter Rose said in a recent written response to investor questions.
As long as shipments are on time and all is well, shippers are not that interested in the exact details of where their freight is at a given time, admit forwarders. But, says Quinn, "most of them want to be notified immediately if there is any kind of delay. This is a very time-definite business. The least little thing happens and we're behind the curve."
When a delay occurs, new technology allows forwarders to provide information as quickly as possible to all interested parties. Back in the old days of, say, 1995, a delay resulted in a series of phone calls between cargo carriers, trucking companies, forwarders and shippers. Now, forwarders get alerts almost instantly when there is a delay and can immediately and simultaneously send out multiple e-mails explaining the situation to any interested parties.
"Say an airline is forwarding us information notifying us that they have a mechanical problem and a flight is delayed," says Reichman. "That information goes into our system. And then we can send text to a pager or a cell phone telling a customer that there's a problem with a shipment.
"The customer also gets an e-mail or he can find out what's going on by using our web-based tracking page. The information also goes to our sales representatives, who then can make necessary phone calls."
Says AIT President Steve Leturno: "We can literally do anything we want to distribute information as quickly as we want."
lthough shippers are demanding new, easy-to-access web-enabled technology from forwarders, they have different ideas about what system works best and what kinds of information they need. This has led a number of forwarders to establish an in-house technology division that can custom-tailor software to shippers' requirements.
"One customer to the next has a slightly different twist on how they want their information," says Leturno. "We can do our own prioritizing. [Developing forwarding technology] is a constantly evolving process. A generic system [from a software company] doesn't give you flexibility. We're capable of adapting our system to fit the needs of customers."
Adds Reichman: "It's very expensive for a forwarder to develop their own technology, but those that can afford it have the advantage when changes are needed. It's a lot more difficult dealing with a third party when you need to make changes to the system. Developing technology in-house gives you a lot more control over functionality."
And forwarders complain that traditional software companies often don't understand how the logistics industry operates. "You've got a lot of technology-related companies that have not made it in the transportation business," says Quinn. "They just didn't understand the business and weren't able to develop applicable technology. Our operations people have worked hand-in-hand with our IT people to develop the software that we use. Transportation companies developing technology rather than vice-versa is the way things seem to be going."
But Scottsdale, Ariz.-based Trans-Soft believes it is different from other software companies that have developed forwarding technology. Founder and President David Hockersmith spent 30 years in forwarding before making the jump to technology. He co-founded forwarder Consolidated Air Services in 1983 and managed it for 13 years.
Since 1999, Trans-Soft has been developing its TS2000 Plus freight forwarding software, the latest version of which was rolled out by SEKO last summer.
The TS2000 aims to automate all aspects of the forwarding business, from tracking shipments to keeping abreast of customers to handling billing and collections.
"Freight forwarding has always been highly labor and paper intensive," says Hockersmith. "But technology is changing that. Our system became web-enabled about two years ago. It allows customers to log onto a secure web site, where they can track shipments or even look at the last payment they made to the freight forwarder.
"There's really been a large surge of interest in this kind of technology in just the last four or five months."
ockersmith doesn't think the trend of in-house forwarder technology divisions will significantly soften demand for his company's software.
"Some forwarders have done a very good job developing technology, but some don't have the technical expertise," he says. "Our program, or any program, is not the magic bullet. It's just a tool. We see the market continuing to grow. There will always be some forwarders building their own systems, but we think our future is brighter than ever."
Sophisticated software may not move freight faster and many shippers may use only select aspects of the technology forwarders are offering. But forwarders fear shippers will dismiss them as behind the times if they lack new technology.
Advanced technological capability, says AIT's Leturno, gives a forwarder a "leg up on the competition."
Shippers are "always trying to determine which forwarders to use and often reevaluate," he says. "We're constantly told that when they see our full suite of IT offerings, they're very comforted."
Adds Hockersmith: "Some shippers say it is absolutely necessary that the forwarder has these kinds of tools and technology because they need immediate access to information. Some don't need it, but they get a warm and fuzzy confidence in a forwarder because the technology is there."
New technology gives off the impression that a forwarder will be "easier, faster and more economical" to use, says Leturno. "It's not necessarily Star Wars, but what we've got now is a huge advance over where the industry was 10 years ago."
Even those a bit skeptical of the absolute necessity of the modern forwarding software are prepared to deploy it.
"If [up-to-the-minute tracking] becomes a de riguer requirement for providing logistics services, we're confident that our technological base and capabilities are adequate to develop and deploy this feature for those customers that see value in implementing it," says Rose.
"It's just been a tremendous change from 10 years ago," says Hockersmith. "This business used to be set up as a manual process with dispatch callers keeping track of drivers manifest sheets. Now everyone has immediate access to information from just about anywhere."
http://www.aircargoworld.com/features/0204_3.htm
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