KPMG: Shippers Want Better Service From Carriers

FRAMINGHAM (04/07/2000) - If transportation companies want to stay competitive in the e-commerce arena, they had better improve their business-to-business services and think differently about the way they use technology, according to a recently released study by New York-based KPMG Consulting Inc.

And even though most carriers, such as trucking companies and railroads, thought they were satisfying shippers' e-commerce needs, shippers said that just isn't the case, according to the study, which polled 22 major transportation companies, 14 Fortune 500 shippers and eight analysts.

The survey found that shippers want carriers to offer the following Internet capabilities: better shipment tracking, online invoicing/payment information and online ordering.

Shippers also want to be able to plan their routes online in conjunction with the carriers. However, according to Kathy Capellini, a transportation analyst at KPMG, carriers are more narrowly focused on providing transactional services such as order placement and bill payment.

Carriers Expect E-Commerce

Even so, the study found that carriers believe that, within the next six months, they will make great strides toward offering the shippers their desired level of Internet e-commerce.

Dan Bingeman, assistant vice president for supply-chain logistics at Canadian National Railway Co. in Montreal, said he agrees that, at least in the rail industry, carriers and shippers aren't always on the same track when it comes to supply-chain management.

"Railroads are from Mars, and shippers are from Venus,"Bingeman said at a recent freight conference in St. Louis that focused on how to make electronic business work for the customer as well as the railroads. Bingeman said Canadian National is developing a strategy to help customers manage their supply chains more efficiently.

At the conference, Marty Coalson, assistant vice president of pricing at Union Pacific Railroad in Omaha, said his line realizes it has to better manage the demand from shippers with its ability to supply railcars.

But while railroads say they recognize the need to improve customer service, some shippers say electronic business isn't working.

Chris Fernandez, logistics manager at KoSa Chemical, a polyester producer in Houston, said he wants to know how e-commerce will work for customers once it is more widespread in the rail industry.

"If there is any benefit from e-commerce, I hope the paradigm will shift so rail makes sure [our] products arrive on time," he said.

David Broughton, a transportation analyst at A. G. Edwards & Sons Inc. in St.

Louis, said the Internet's value to a company depends on what a shipper is trying to move.

"If you're moving a low-value, high-density product like gravel or coal, who cares about [managing the supply chain]?" he said. "But if it's a high-value, low-density product like computer chips, then a lot of attention is going to be paid to [a carrier's] ability to give the shipper the capability to know where his goods are at all times and whether they're going to get where they're supposed to be on time."

Capellini said that if transportation companies don't make changes and offer shippers more interactive Internet capabilities, they may lose future business to more Web-savvy dot-com market exchanges, such as Transplace.com, that can match customer needs to carrier capacity.

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