The Internet has had enormous impact on the way you buy motor freight services, particularly in rationalizing demand for trucking services with supply. If the Internet helps keep empty trucks off the road, then — given the competitive nature of the market today — revenue-per-ton-mile goes up, and overall cost to transport buyers should go down. Using the Internet to buy motor freight based on cost alone is only part of the picture. "Total cost of ownership" of inventory argues for not treating trucking services as a commodity, but as an integral part of the supply chain. That's why the trucking industry has been moving quickly to offer a wide range of web-supported options and value-added services to transport buyers.

SETTING THE STAGES

Truckers and their customers are at varying levels of web sophistication, making comparisons and evaluations difficult. KPMG LLP, however, has established benchmarks — four stages that can be used to evaluate the degree of sophistication of a company's Internet usage, according to Kathy Capellini, KPMG senior vice president.

Stage 1 companies use the Internet as a billboard to broadcast basic company information such as name, services, and related information. They may use the site to recruit drivers. Many truckload carrier sites fall into this category.

Stage 2 companies use the Internet to boost efficiency by maintaining an online customer/vendor database, for the ability to place pickup requests via the Internet, and to produce reports built to show user-defined criteria.

Stage 3 companies offer transactional web sites where users can do business with the web site owner. The web site can offer varying levels of sophistication — from simple tracing and tracking functions to fully interactive shipment tendering and document retrieval.

Stage 4 is the interactive or process coordination level that lets users conduct a wide range of business functions via the Internet. This can include real-time shipment visibility, collaborative planning, and simultaneous shipper-carrier-consignee communication. Few, if any, carriers are at this stage, and only a few transport buyers are currently pushing for this level of support.

American Freightways fulfills the requirements of a Stage 3 company. The regional LTL trucker, based in Harrison, Ark., recently redesigned its web site. "Our customers helped us design our enhanced web site," says Frank Conner, CFO and executive vice president of accounting and finance. "The next step will be to use the site to enhance information flow among our partners and generate shared cost reductions."

One shipper using many of the features of AF's new site is Alro Specialty Metals, Tulsa, Okla. Billie Parker, assistant general manger for Alro, uses the site to look at inbound shipments 24 hours in advance so his receiving department knows what is en route. AF faxes the inbound report to Parker. He also gets a daily report on the status of outbound shipments that he consults when a customer calls looking for an order. "I also use the web site to generate reports that show freight expense. I can sort the data by various criteria including ZIP codes," says Parker. He has also used the site to file a claim.

INFORM, NOT IMPRESS

A-P-A Transport, North Bergen, N.J., recently won the American Trucking Associations' award for best carrier web site in the $50 million to $1 billion category. At the same time, this regional LTL carrier has deliberately kept its site simple, and limited the amount of graphics. This allows the site to load fast, but does not impact the functionality. "We sought to fulfill our customers' needs, not just impress someone," says Clarke Shaw, A-P-A's vice president of sales.

As part of A-P-A's mission to make its site more interactive, customers now have the ability to request pickups via the Internet. When the site receives the pickup request, it automatically routes it to the pickup terminal based on the origin ZIP code. A customer can also request documents, such as a proof of delivery, and receive the image via the Internet or by fax as desired. "We are trying to anticipate our customers' needs, and feel that the Internet will play a much greater role in the future," says Shaw. A-P-A also monitors its site to determine the areas receiving the greatest number of user hits. It then concentrates improvements in those areas.

ROADWAY WEIGHS IN

Leading LTL carrier Roadway Express, Akron, Ohio, aggressively uses the Internet to reach its customers, and help those customers keep track of their customers. As with other carriers, Roadway constantly reviews and enhances its site as required. It also relies on a customer advisory group to provide guidance and feedback.

The company recently added a feature called My Roadway. Users can log in and create a customized page that is unique to their own requirements. "About 15,000 customers have created their own sites within our web site," says Robert Obee, Roadway's vice president and chief information officer. "This gives them a variety of options, including the ability to create a list of shipments that can be downloaded to an Excel spreadsheet."

Customers mostly use Roadway's site to track and trace shipments, and retrieve proofs of delivery. "While some carriers may be more advanced than their customers in the use of the Internet, we are co-developing some new applications with our larger customers," says Obee. "We will also be working on smoothing the integration from rate quote to bill of lading to pickup request."

Obee expects that the Internet will impact EDI (Electronic Data Interchange) transmissions, leading to an increase in large-scale file exchanges. It is this type of interaction that will allow motor freight buyers and carriers to move to KPMG's fourth stage of Internet development.

New Penn Motor Express Inc., a regional LTL carrier based in Lebanon, Pa., uses advanced web technology to tie information generated through its web site into its operation. In some respects, New Penn is entering the Stage 4 level of Internet maturity. "New Penn customers can register and create their own profile, which is password-protected and linked to their customer code," says Steve Ginter, New Penn's vice president of marketing.

From that point, New Penn stores not only the profile, but a history file of consignees to whom that customer ships. This history includes consignee-unique requirements, such as appointments and types of freight. "When the customer enters a pickup request, the information is immediately passed to the dispatcher at the terminal that will actually handle the pickup," says Ginter. "Once the pickup is assigned, the system can display this information to the shipper."

Not only does the origin dispatcher receive this pickup information, but the same file is used by the load planners to build that night's trailer loading sequence. Shipment reports, which can act as an early warning system should the shipment not be moving as planned, are also available. "We have created the ability for our customers to communicate nearly all information required via our web site," says Ginter. Next up, New Penn plans to generate a fully rated bill of lading for the shipper by using customer-supplied information, and information already stored in the profile.

SAME WORK, HALF THE TIME

"Using New Penn's web site saves a great deal of time," says Keith Baddeley, traffic manager, Congoleum Corporation, a flooring products company headquartered in Mercerville, N.J. Baddeley used to spend 30 minutes on the telephone giving New Penn his pickup list. Now, he can accomplish the same task in half the time via the Internet. "I have also used the web site to receive online proofs of delivery, to look at the status of previously picked-up shipments, and to see that New Penn has made the required delivery appointments," says Baddeley.

Does Baddeley use any of the new trucking web portals or exchanges that seem to launch daily? "My carriers are like family," he says, "and I cannot see posting Congoleum's loads on a web site." Baddeley's opinion represents that of many motor freight buyers interviewed for this article. They say they will look at the portal and exchange sites in the future, but for now their primary use of the Internet is for managing LTL carriers.

So what of this new channel growing up independently of carrier web sites; these Internet "infomediaries" or web portals that offer to bring transport buyer and carrier together for the mutual benefit of both? Transport buyers say they are confused and bombarded by choices, as so many portals, exchanges and transportation related dot.coms are chasing the same business. In the course of researching this article, Inbound Logistics identified more than 50 such sites, and industry experts say the total may be well more than 300. That's not counting the B2B (business-to-business) and B2C (business-to-consumer) sites that have sprung up at the same time, some of which include transportation as part of their total offering.

Transportation web portals fall into three categories:

1) Basic "bulletin board" sites, with simple load postings that are updated as required.

2) Exchanges or online reverse auctions, where shippers and carriers can bid to either find a carrier at the desired price or dispose of excess capacity.

3) Sites that purport to add value to a transaction, and have real-time functionality.

BEST TRANSPORT

Best Transport.com is comprised of several web sites within its shell, each directed toward an end user -either shipper, carrier, or broker. The company was founded in November 1999, and went online during January 2000. "We offer users the ability to engage in a live, interactive exchange that is neutral to both shipper and carrier," says J. Vincent Ciroli Jr., president and CEO of Best Transport.com.

Best Transport.com charges a flat fee, regardless of the size or revenue of the shipment, or whether there is a match or not. This, according to Ciroli, deters users from coming in just to price shop. "We provide a report that shows the results of the tendering, so we feel that charging the fee keeps our site truly neutral," says Ciroli.

Best Transport.com screens both shippers and carriers. Shippers have access to the Department of Transportation Safety and Fitness Electronic Records (SAFER) system to inquire about any carrier. "We allow both shippers and carriers to build business rules under which the exchanges can be conducted, so they can customize their requirements," says Ciroli.

WILLAMETTE SEES THE FOREST

Willamette Industries, a forest products company based in Portland, Ore., soon will undertake a pilot project with Best Transport.com. The test involves Willamette's Southern region plants in Arkansas and Louisiana. The plants manufacture engineered materials for the building industry. "We looked at several portals and felt that Best Transport.com had the features we desired, particularly experience with flatbed carriers," says Michael Salvino, director of transportation for Willamette. Willamette will use the site's load posting service in connection with its own group of carriers, operating under the business rules that Willamette has constructed. "We will use Best Transport.com to work more efficiently on the dispatch of our truckload shipments," Salvino says. He already has rates in place with his carriers, so that aspect of the portal is not a significant factor. Salvino says he may expand to use other features of the portal to further streamline his procedures. He expects to use Best Transport.com to increase his carrier base and to look for additional availability when equipment is scarce. "Ultimately, we would like to link our computer system with Best Transport.com; in fact, our computer group has agreed to work on this task," Salvino says.

Nucor-Yamato Steel Co., a steel products company in Blytheville, Ark., has been using Best Transport.com since late May 2000, and found significant time savings when posting loads for its core carriers. "The other feature we have found useful is the ability for our carriers to confirm the appointment to pick up the tendered shipment," says Steve Southard, Nucor-Yamato's shipping manager.

Southard created his business rules with Best Transport.com, and, like Willamette, has rates in place already with his carriers. Nucor-Yamato has also used the web portal to expand its carrier base and find carriers for difficult loads. Southard praises the ability of Best Transport.com to work with his local group of carriers. "Some of our local carriers are mom-and-pop operations and, in some cases, did not even have a computer," he says. "The Best Transport.com staff helped these carriers get online, making our task much easier."

TRUCKING COMPANIES SPAWN WEB PORTALS

One online portal was spawned by a trucking company already recognized for its expertise in developing a web site. Yellow Freight System Inc., which recently was cited as one of the 100 best web sites by Chief Information Officer magazine, just launched Transportation.com as a stand-alone subsidiary.

The site has a number of unique features, including links to consulting assistance in a range of logistics functions, and an auction site for used transportation equipment. Transportation.com also provides the normal shipper-carrier related options, including load matching. "We wanted to offer a broad range of services, so we included not only load matching, but links for business information and related web sites, trucking equipment, and e-mail," says Jim Ritchie, president of Transportation.com.

Transportation.com operates in a real-time environment; as loads are offered and matched, they are removed from the site. This prevents carriers from wasting time seeking a shipment already spoken for.

Both shippers and carriers can customize their site within Transportation.com by using their own business rules to screen the companies with whom they would do business. Transportation.com also provides access to SAFER and Dun & Bradstreet so the user can develop additional background information about other shippers and carriers.

Ritchie has plans to expand Transportation.com's current LTL and truckload services by adding expedited, air and intermodal. "We want to offer a wide range of price and service options, regardless of whether a shipment is destined to Paris, Illinois, or Paris, France, so users can select services that fit their needs," say Ritchie. Revenue will be generated by both membership and transaction fees, as well as a percentage fee based on value for equipment sales. In addition, Ritchie is fielding a sales force to help get Transportation.com's message out more quickly.

Transportation.com announced one goal, which, if achieved, certainly sets it apart from most other transportation dot.coms. "We have positioned Transportation.com to be at a break-even point in 18 months and profitable thereafter," says Burt Trucksess, chief financial officer of Yellow Corporation.

READY, SET...

GoLogistics.com has been online since June 2000, and sports a business model it says makes it different from other portals. GoLogistics recently completed a 60-day test, and has been examined by a number of LTL carriers including Roadway Express and American Freightways. "We seek to fill LTL carriers' unused capacity by matching them with specific transport buyers," says Russ Aborn, president of GoLogistics.

GoLogistics seeks transport buyers with traffic weighing 5,000 pounds and more. Aborn feels this weight restriction allows LTL carriers to use space that would otherwise have been lost, while retaining business that might have been shifted to truckload carriers. GoLogistics offers to provide a match for a posting in one hour, and allows the transport buyer to define rules that pre-screen responding carriers. Once the match is made and accepted, further dealings are done directly between transport buyer and carrier.

One portal does not fit into any patterns previously described. Transportal.com started in June 2000, and is unique in that it does not seek shipper members. Transportal also recruited Lana Batts as executive vice president and chief development officer. Batts served as president of the Truckload Carrier Conference, and has strong ties to the very community Transportal seeks. "Transportal is not an auction site, nor does it solicit shippers. Our mission is to help truckload carriers operate more efficiently," says Batts. Transportal offers cross-optimization among member carriers, as well as decision-support tools. "The movement of 10 loads and 10 trucks could be optimized 3.6 million ways," say Batts. "The tools offered through Transportal.com help narrow the options."

Transportal provides carriers with volume purchasing power when buying trucks, trailers, tires, parts, and other goods. Members also have access to reduced-cost financial and insurance services. In addition, Transportal offers load optimization both within a single carrier and across carriers, fuel optimization, and yield management. The assistance is on a per-transaction basis, and there are no up-front membership fees for charter members. As with Transportation.com, Transportal expects to break even in 2001, in spite of a $50-million upfront investment by the end of 2000.

Some portals are trying to reach the Stage 4 level so they can add value to the transaction. Without such value-added features, some portals may just be reverse auctions. While reverse auctions have some value, many carriers and transport buyers are just not interested. An examination of how people buy transportation offline, however, shows many still buy it as a commodity, through brokers for example. That business model has thus far not been successful on the web, but someday it may be. "We screen the portals very carefully to see what value they bring to the table," says Roadway's Robert Obee. "We have found that some may be able to attract small customers and, by assuming some of the promotional aspects, help Roadway serve these transport buyers."

Roadway Express and other carriers interviewed for this article indicated that they had little interest in reducing transportation to a commodity buy, where price alone controls. These carriers feel that there are many other considerations and that the Internet offers a way to bring extra value to the shipper and consignee. Many transport buyers agree, particularly those looking for carriers to help them reduce inventory. While it's true the Internet can match supply with demand, cost alone is not the total transaction. "We consider our freight to be fine china, and will not put it out for auction," says Dan Fisher, a member of Ace Hardware's inbound freight department.

Other limited users of web portals are consumer goods companies that use these sources occasionally, for some inbound rail and LTL. Their truckload freight requires specialized equipment in some cases, and in other instances they feel that they have satisfactory partnerships with their carriers and see little advantage.

THE FATE OF DOT COMS

This may explain one problem many of the portals face: lack of participation. It's like a dating service without enough beautiful people and too many "lesser lights." "The jury is still out on these dot.coms and whether they will take hold. The growth of the B2B commodity exchanges will play a major role in this equation," says Capellini.

"While capital is still available for these types of startups, the venture capitalists are being more selective," says Peter V. Coleman, senior research analyst for Banc of America Securities LLC. Coleman expects to see the successful firms evolve into customer relationship managers and move toward a supply chain solution.

Ultimately, the end users will decide the fate of trucking dot.coms. Right now, it's just too early to say which dot.coms will be survivors, and which ones the marketplace will vote off the island.