UNDERCURRENTS
The future of carrier portals
EMAD SAMWEL
W
hat is the future of ecommerce in the ocean shipping industry? Compared with what other industries have done during the last five years, one has to wonder. Somehow the ocean carriers have failed to take advantage of a new technological medium that could increase efficiency and reduce costs to everyone involved. Almost everyone agrees that e-commerce means that a company uses the Internet to do some kind of business with its customers. Beyond that, there’s no common agreement on what e-commerce is. For some, it is advertising the company on the Internet, even if it’s only the electronic equivalent of a brochure and is done merely because everyone else does it. Other companies view the Web as a channel to provide customers with information such as sailing schedules, published tariffs and tracking and tracing services. Others have gone a step further to interact with customers by providing a channel to take bookings, obtain rate requests and offering printable bills of lading. The most advanced group of ocean carriers provide proactive functionality to customers, offering services such as vessel- and cargo-tracking notifications, customer account statements and customized reports. Some carriers have chosen to develop their own e-commerce capabilities; others just joined one of the three carrier-supported portals — CargoSmart, GT Nexus and Inttra; and some have chosen a hybrid between their own systems and features provided by the portals. In either case, the e-commerce features available from a carrier’s own system or from the portals have been very
similar. They all focus on automating manual tasks but do not propose any change in the basic business interaction between shippers and carriers. In other industries, Web portals provided more complex business models that used the Internet to establish a new meeting place for dispersed parties. At the eBay auction site, the seller finds a wider market for his product, and the buyer can bid in hope of securing a reduced price for the item. Another example is to use a portal that links the shippers and carriers by providing a community where both can use the economy of scale in performing logistics-execution tasks. This is where the ocean shipping portals have fallen far short. So far, less than 1 percent of the total volume of shipments is being handled via ocean portals. The portals did not deliver the promised economies of scale because they failed to set common standards. The high cost of EDI shifted from the ocean carriers to the portals without real economic benefits to the shippers or carriers. The future of marine portals will be limited. In the airline industry, portals are considered a separate marketing channel that attracts customers who are interested in shopping for the best deal. These portals provide only a partial airline schedule covering the routes that have low participation rate by the passengers. The airlines have developed their own e-commerce capabilities where they offer full schedules, bookings and hotel and car rentals. Airlines also offer incentives to customers who deal directly with them by offering special discounts and extra frequent-flyer points. Similarly, the ocean portals are
attracting a specific kind of customer — the kind who likes to shop around. The majority of shippers, however, are still dealing directly with the ocean carriers for services that the portals provide. Some carriers are offering door-to-door shipments with special rates for those shippers who sign contracts with them. Ocean carriers’ own Web sites seem to have a more favorable future. Carriers, hoping to gain a competitive advantage, have developed their Web sites with e-commerce capabilities. This is quite possible, especially when you consider an issue such as security. If the government decides to implement electronic seal technology where containers are traced worldwide, carriers that have the tracking software will benefit. Today, only 55 percent of ocean carriers have track-and-trace capability at their own Web sites. Integrating electronic seal tracking capabilities with the carriers’ own track-and-trace capability will provide these carriers with a competitive advantage. For the ocean shipping sector to gain collective benefits from the Internet, shippers must be more actively involved in the development of business models. The Internet can provide improved efficiency and offer many new ways of doing business that can result in lower landed cost of cargo and efficient use of ship space. But none of these business models will become available until the shippers directly participate in the portals’ development effort. Capt. Emad Samwel is president and chief executive of Ethos Management. He can be reached at (905) 884-8272, or via e-mail at esamwel@ethosmanagementconsulting.com.
October 20-26, 2003
The Journal of Commerce 17