FRAMINGHAM (06/30/2000) - It's a fact: E-commerce is changing the way the transportation industry does business. The question, though, is how effective the industry will be in managing the change without losing sight of its primary function - to deliver goods to customers.
The change is a fundamental one, involving a shift from mainframe systems and the use of electronic data interchange (EDI) to a Web-enabled environment designed to be more customer-centric.
Industry decision-makers gathered at the E-commerce for Freight Transportation conference here this month to discuss how to take advantage of the Web and e-commerce-related technologies to deliver goods more efficiently.
"Moving things along is really the point of this conference," said John Meredith, group managing director at Hutchinson Port Holdings Ltd. in Hong Kong, a global port investor, developer and operator.
Meredith contends that the transportation industry has lagged behind in the e-commerce revolution. Part of the reason, he said, is fear of technology that could improve the way the industry does business and fear of losing control of proprietary information.
Charles Beard, managing director of transportation electronic solutions at KPMG Consulting LLC in McLean, Virginia, said he agreed, noting that the shift from mainframe-based systems to Internet-based ones isn't just a technology or a business problem.
"It's an emotional issue [for carriers] to go from an EDI-operated model to an Internet model, because opening up your operational system to the Internet is very scary," Beard said. "With EDI, you know who you're connected to. You make physical contact with your transportation partner off of dedicated circuits."
Execs See Web as Inevitable
But transportation industry executives acknowledge that the transition to Internet-based systems is inevitable.
Debbie Pullman, manager of e-business at Canadian National Railway Co. in Montreal, said the railroad has been using EDI for 20 years, and some of its customers have invested heavily in the technology.
But with the awareness that many of its customers are already doing business over the Internet, and the conviction that the rest will inevitably follow, Pullman said Canadian National has seized upon XML to define data elements in documents as a means of improving its interoperability with customers.
Middleware is another enabling technology that eases the pain and expense of switching to an Internet-enabled system, Beard noted.
"With middleware, you can leave the legacy system intact and code the business rules - how you deal with customers - in the middleware layer," Beard said.
"You don't have to rip out and rebuild the entire system."
Mark Davis, assistant vice president of e-business at Union Pacific Corp. in Omaha, said there's no one-step means of converting from a legacy system to a Web-based one. But middleware helps.
"One of the ways [we] did it was to put architecture in place built on BEA Systems Inc. Tuxedo software," he said.
San Jose-based BEA's Tuxedo transaction platform is the middleware that links Union Pacific's warehousing, sales and accounting systems, which reside on different hardware and operating system platforms.
"We used messaging [middleware] software to drive the information on the legacy system and put it on the Web front end," he said. "You don't have to change your legacy system; you can integrate it" into a web-enabled system, he said.
But although migrating from a mainframe system to an Internet-based one is essential to survive in the e-commerce economy, it's also important not to get too caught up in the Web-enabling technology, said Don Liedtke, CIO at APL Ltd., an ocean transportation company in Oakland, California.
"It's not about browsers, it's about information exchange," Liedtke said. "And it's not about Web-enabling traditional industry processes; it's about using technology to redefine the way business is done. The key is what's behind the interface." And behind the interface is the customer.
It's All in the Execution
According to Robert Obee, vice president and CIO at Roadway Express Inc. in Akron, Ohio, the main point behind the shift to Web-based systems is to provide customers with all the accurate information they could possibly want or need.
That includes service information and price quotations, pickup requests and confirmations, shipment tracking, delivery confirmations and postdelivery services such as document retrieval, billing and claims.
When carriers extend their applications onto the Web, they have to use the technology to make it easier for their customers to do business with them, said John Fontanella, an analyst at AMR Research Inc. in Boston. "Major carriers are already doing this," he said. "But midsize and small carriers should also be doing it."
KPMG analyst Scott Rosenberger had this advice for transportation providers:
Make it easier for customers to get the information they need, and they will keep coming back.
APL, for example, gives its customers access to instant help: It allows customers to chat live - 24 hours a day on weekdays - with APL customer-support representatives, giving customers real-time assistance with questions or problems, Liedtke said.
Bob Davidson, vice president of marketing and pricing at ABF Freight System Inc. in Fort Smith, Arkansas, said his company, which also offers live chat with service representatives, lets customers use its Web site to reroute a shipment in transit; request and schedule pickup; review the charges on a freight bill and request changes, if necessary; and file or review the status of loss and damage claims.
Keeping customers happy is the bottom line, transportation executives said.
Ken Chih, director and CIO at Orient Overseas Container Line (OOCL), a global container transportation company in Hong Kong, said that in the new economy, customers are in the driver's seat.
"This is a customer-driven market instead of vendor-driven," Chih said. "That's the difference between the industrial revolution and the information revolution."