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Booklet N° 10November 2001

The impactof a virtualforwardingenvironment

EUROPEANFREIGHT & LOGISTICSLEADERS CLUB

- HO BRUSSELS -

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The leading edge in total logistics

Road Air is the professional’s choice

when selecting a logistics management

organization.

We have earned recognition

around the world as the provider

of total transportation, warehousing,

and distribution services in Europe.

Head Office: Road Air, Snipweg 101, 1118 DP Schiphol South, P.O. Box 7567, 1118 ZH Schiphol Centre

Phone: +31 (0) 20-31 65 555, Fax: +31 (0) 20-31 65 451

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The impact

of a virtual forwarding

environment

F&L Working Group Members:

Gerhard Reisch - WGWorking Group Chairman

David Smith - DLG LOG

Mike Knechting - RodAir

Eric Both - RodAir

Martin Kvych - LKW WALTER

Vaino Solheim - LogIT

Jan T. Pedersen - LogIT

Gilbert Kruidenier - Student (RodAir)

Miklos Horvath - HUNGAROCAMION

Horst Stielow - SIEMENS

EUROPEANFREIGHT & LOGISTICS

LEADERS CLUB

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Contents1 Management Summary. . . . . . . . . . . . . . . . . . . . . . . 5

2 General Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 122.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.2 Scope and Goal . . . . . . . . . . . . . . . . . . . . . . . 142.3 List of Terms & Definitions. . . . . . . . . . . . . . . . . 15

3 New Formation of logistics provider . . . . . . . . . . . . . 163.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 163.2 Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . 163.3 Optimisation . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.4 Information and reporting services . . . . . . . . 183.5 Who is best suited to manage the

transportation process? . . . . . . . . . . . . . . . . . 193.5.1 Who is best suited for the role of

“Logistics Supermanager”? . . . . . . . . 203.5.2 What about the customer? . . . . . . . . 21

3.6 Rationalisation of @market places . . . . . . . . 21

4 Potential for Supply Chain optimisation . . . . . . . . . . 24

5 Who will be the user? . . . . . . . . . . . . . . . . . . . . . . . . . 275.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 275.2 Types of virtual environments . . . . . . . . . . . . . 275.3 What is driving a virtual environment? . . . . . 295.4 Virtual markets and their users . . . . . . . . . . . . 30

6 What are their needs? . . . . . . . . . . . . . . . . . . . . . . . . 326.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 326.2 Marketplace operator needs. . . . . . . . . . . . . 326.3 Buyer’s needs . . . . . . . . . . . . . . . . . . . . . . . . . . 336.4 Suppliers/Sellers needs . . . . . . . . . . . . . . . . . . 346.5 Summary of needs. . . . . . . . . . . . . . . . . . . . . . 34

7 What are the barriers? . . . . . . . . . . . . . . . . . . . . . . . . 367.1 Why hesitation to go virtual? . . . . . . . . . . . . . 367.2 So what are the barriers for potential users? 37

8 Virtual forwarders - drivers for success or failures . 408.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 408.2 Internet solutions implemented as a response

to a problem, rather then a solution . . . . . . . 40

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8.3 Freight exchanges were sold as a mean ofcreating price transparency for all buyers andsellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

8.4 E-marketplaces that follow and support thebusiness rules appear to be successful . . . . . 41

9 ICT in freight transport - major problems andchallenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439.1 ICT development . . . . . . . . . . . . . . . . . . . . . . . 439.2 An ICT system typology for the freight

transport sector . . . . . . . . . . . . . . . . . . . . . . . . 459.3 From EDI to XML: Interoperability and

standardisation . . . . . . . . . . . . . . . . . . . . . . . . 49

10 The online questionnaire from Members . . . . . . . . . 5110.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5110.2 Members Participating in the online

questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . 5110.3 Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5210.4 Questionnaire Format . . . . . . . . . . . . . . . . . . . 5210.5 Level of B2B activity: high for logistics . . . . . . 5310.6 Drivers for using e-commerce for logistics . . 5410.7 Enablers for using e-commerce for logistics . 5510.8 Statistical Analysis of those who responded

to the questionnaire . . . . . . . . . . . . . . . . . . . . 5510.9 Learnings from using an online questionnaire 5610.10 Potential for gathering future case studies,

internal and external . . . . . . . . . . . . . . . . . . . . 5610.11 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

11 Searching for the right virtual provider - an on-lineguide to F&L members . . . . . . . . . . . . . . . . . . . . . . . . 5711.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 5711.2 Building the matrix . . . . . . . . . . . . . . . . . . . . . . 5711.3 Result of findings - the on-line guideline . . . . 64

Appendix I The F&L matrix . . . . . . . . . . . . . . . . . . . . 65

Appendix II Not suitable logistic websites . . . . . . . 67

Appendix III Terms and definitions . . . . . . . . . . . . . . 72

Appendix IV Article on 4PL’s . . . . . . . . . . . . . . . . . . . 75

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Managing The Extended Supply Chain

Supply-chain management becomes the methods, sys-tems and leadership that continuously improve an organi-sation’s integrated processes for product and service de-sign, purchasing, inventory management, planning andscheduling, logistics, distribution and customer satisfaction.In a modern sense, most of these factors are being ac-complished in a collaborative manner across a network oflinked business partners. The more advanced supply-chainmanagement systems include extensive application of e-commerce features. (Source: Council of Logistics Manage-ment).

To achieve this lets start with what can be expected tocome: E-marketplaces and even META-Markets (portfolioof integrated supply chains, example TradeMatrix.com).Logistics marketplaces can provide service to both hori-zontal- and vertical marketplaces. Can you imagine thecomplexity of such a META-Market? Think of the require-ments in terms of data exchange and IT solutions neces-sary.Let us take it a bit closer to the next step after freight ex-changes, which will have an impact on logistics services,because of the integration needs to participate. Beside allthe fears and hesitation of some logistics service provider,there are also potentials.

E-marketplaces will provide a platform for the marketing oflogistics services to achieve process efficiency, supplychain integration and E-marketplaces will support the de-velopment of logistics buyers/supplier networks by creatingsynergy’s for both, buyers and sellers and 4PL’s.However, to get most optimised results of collaboration,mutual trust is needed as well as standardisation. This isprobably the most critical issue to be overcome.

1. ManagementSummary

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Figure 1.1: The efficiency model

Assuming that Virtual Forwarding Environment will be theapproach of the future, the working group has askedmembers - in a virtual approach to fill in a questionnairewith the aim to understand needs and barriers and getyour thoughts how you will perceive the usage of a virtualforwarding environment.

All following chapters have some references to the resultsand reflect your area of interest.

New Formation of Logistics Provider

With the development of 3PL’s, 4PL’s, E-Marketplacescaused by the increasing demand for more speed, trans-parency, transactional efficiency, information, economyof scale - IT systems and software to integrate that all is be-coming vital. That has brought new partners to the logisticsarena: Software vendors, especially the ones involved in

Source: Pan-European Logistics Service (PELS) - Yearbook 2001

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Commerce Optimisation

Execution CollaborationExecutionefficiency

Marketefficiency

• Shipment event mgt.• Status, track & trace• Pro-active alert

• Payment and claims mgt.• Domestic shiopment execution

(information flow, documentation, etc.)• International workflow (EDI>XML)

• Collaborative planningShipment- demand consolidationTransportation load optimisationTactical backhaule/cross-haul opportunities

• Performance reporting & analysisVendor preformancesMarketplace statistics

• Certification and qualification• Standardisation (incl. Contracts, documents)

• Contract management• (Sport/Contract)

• RFQ, Tendering• Contract optimisation

• Sport freight matching• Tariff mgt.• Auction

• End-to-end supply chain visibility• Flow mgt. and optimisation• Assets mgt. and optimisation• Landed cost analysis• Route scheduling

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SCM software. Information service becomes a differentmeaning. Development, running, maintaining of such sys-tems is costly. This is probably a major reason for success orfailure in the virtual environment. To achieve critical mass isessential, only few will be able to do so.One way to achieve critical mass is to build communitieswith service providers and shippers, and this will changethe world of the logistics provider too.The issue of who is best suited to own the process is alsolooked at in the report. Especially when it comes to losecontrol, supply chain optimisation over control will be putto the test.

Potential for Supply Chain optimisation

To establish a link between supply chain management in avirtual forwarding environment, complexity and reasons forslow progress in SCM are addressed. This might also serveas warnings in terms of expectation to reach for the opti-mum (integrated supply chain communities) too soon.

Types of Virtual Environments

This chapter focuses on different types available in the vir-tual environment.Since e-markets incorporate the virtual environment, spe-cial attention will be given to this phenomenon. E-marketscome in many different forms and variations, serving differ-ent goals and needs. To identify the various e-markets anumber of classification systems have been developed.This should help to understand the difference betweenvarious models and also what drives a virtual environment.

Virtual Environments and their users

Looking from a logistical point of view, all users of a virtualenvironment look for the same objectives - sharing infor-mation in order to optimise (their part of) the supply chain.As in the real environment in the virtual world we can cate-gorise the following users:

❖ Operators of the virtual marketplace or environment

❖ Buyers of goods and products

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❖ Suppliers/sellers of goods and products

❖ Companies with an advanced approach to systemsand IT Technology and understanding supply chain (op-timisation) principles

There are differences in expected benefits, but all are es-sential to utilise a virtual environment to the full potential.Different points of view are taken in this chapter.

NEEDS for using a virtual forwarding environment

Buyer’s needs - expected benefitsTo join a virtual environment - besides being forced to doso - added value has to be the motivator.Some of the expected benefits are:

❖ Lower price and negotiation costs

❖ Expanded supplier access

❖ Lower processing costs

❖ Reduced inventory costs

❖ Reduced lead times

❖ Faster competitive response

❖ Economies of Scale

❖ Control of expenses

❖ Increase marketing/sales area

❖ Optimisation of (logistics) capacity

❖ Increase speed/accuracy of information

❖ Visibility/transparency

In the process of analysing web portals of logistics serviceprovider, the offer is sheer frightening - because it is proba-bly more than a new user of the virtual environment actu-ally can. There are complex sites with all kind of services,e.g.: financial, reporting, routing & scheduling, order fulfil-ment. Not all of them deliver that what is promised, butsome do and this is simple stunning and shows where thelogistics world and its customer are heading to.

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Supplier’s needs

The supplier will only join the virtual environment, besidesbeing forced by their customers/shippers, if there is any-thing of added value for them too. Being bashed for re-ducing rates in a transparent environment will make ser-vice providers careful.But there are also benefits to be gained:

❖ Higher profile and volume

❖ Extended customer base

❖ Lower customer acquisition costs

❖ Lower processing costs

❖ Improved demand forecasting

❖ Improved, ongoing benchmarking

❖ Faster competitive response

But remember, probably most companies will not have achoice to participate or not, as it is stated at anotherplace “Logistics follows Trade”!Important will be to get your strategy right, even if it meansnot to use ‘Virtual Forwarding Environment’ at all.

E-marketplaces needs

The utmost need is to attract shippers and service provi-ders, they will be vital for success or failure.Listening to all the promises and expectations it soundsnearly to good to be achieved easily. And it will not beachieved that easy as some analysts already paint a bleakpicture onto the walls.However, E-Marketplaces will offer all the ingredients re-quired to optimise supply chains beyond any experiencedlevel yet through the opportunity of collaboration.

Barriers

The biggest barrier seem to be, that many things have tochange first within a company itself, before the wide func-tionality of a Virtual Forwarding Environment can be used.

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First barrier: Change, change of processesChange of IT SystemsChange of customer/supplier relationshipChange of the approach by a mental shiftOut-sourcing but being integrated

Second barrier: Human Resources and development ofskills and understanding.Most of the companies returning the ques-tionnaire stated this point as a main barrier,but qualification is growing fast.

Third barrier: Capital expenditureThe questions of finance or capital expen-diture seem not to be crucial. Still compa-nies will of course carefully check the Re-turn On Investment.

Fourth barrier: Service capabilityService capability, quality, safety andcommitment are the commonly most criti-cal points, and were highly ranked in thequestionnaire.

Contradicting are some expectations of users and require-ments to deliver. This might also influence the hesitation touse a virtual forwarding environment.And last but not least: a clear strategy is required to geteverything lined up to participate successful in a chosenenvironment

Drivers for success and failures

To understand why marketplaces fail or succeed, we focuson some drivers for success and failures. This chapter cov-ers subjects like Internet solutions, transparency and busi-ness rules.

ICT in Freight Transport - major problems and challenges

ICT is probably the most important factor to get supplychain optimisation really going. IT systems, technology andprocesses are featured in this chapter. Without the neces-sary system & IT support we could not talk about all thebenefits outlined in this study.

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On-line questionnaire

Results out of the replies were the backbone to the study. -Thanks to the participating companies. - Replies were inline with the public opinion but some were different andsurprising.Albeit not much time has passed since the survey, thingshave changed very rapidly. Asking the same questionsagain might bring already different answers, but the out-come remains interesting and valid.

Searching for the right virtual provider - an on-line guide toF&L members

Research has been done into the current offer of freightexchanges and logistics provider in the Internet.Results are confirming occasional statements concerningrationalisation of exchanges, E-Marketplaces. Nearly 70%of investigated sites were not operational and some haveclosed down operation in the course of this study. Initialthoughts were to provide F&L members with a guide foreasy selection, considering the pace of changes, the ma-trix developed has to be seen as a reference but with sup-port for easy selection according to criteria needed.The outcome of the research has grown into a referenceguide in terms of definition, processes and background in-formation to understand better how virtual forwarding en-vironment works.

Conclusion

A virtual environment will be part for most of our businesses,it will be the key to all the outlined benefits achieved bycollaboration. To which degree we can achieve it will beseen, it will not be easy as the process is complex and influ-enced by so many variables. Not at least by the humannature and us.The working group hopes to have created a documentthat will be of help to you and your decision to join or stayaway - THE IMPACT OF A VIRTUAL FORWARDING ENVIRON-MENT!

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LOGISTICS follows trade - The changing shape of Europeanlogistics - The e-logistics marketplaces as the challengefor logistics service providers - Facing the Forces ofChange, Who’s Who? Sorting out the e-logistics players!

These are the headlines currently featuring in the press, on-line and at seminars.Two previous F&L working group themes were

Impact of SCM-(R)Evolution on Shippers and LSP’sThe impact of electronic commerce

addressing the changes already evident which has lead tothe third theme as final chapter to the Trilogy:

The impact of a Virtual Forwarding Environment

Visibility, speed, information, data exchange, order fulfil-ment via net are becoming standard features.B2B has overtaken B2C and is by now the fastest develop-ment area as it gives supply chain optimisation new levelsof opportunities. The magic word “Collaboration” is onevery ones mind and in fact - theoretically - this will be thekey to eliminate wastage on capacity, time and costs.To release all these potentials, to create synergy, the us-age of virtual environments will be a must for most of thebusiness partners.This study covers barriers and needs using virtual forward-ing environment, IT requirements and developments, newformations of logistics service providers, freight exchanges,success and failures. Responses to the on-line question-naire were an important contribution to the findings.Because of the difficult task to sort out Who’s Who forfreight exchanges, a research was done on European of-ferings and....closings!Because it is such a wide field linking to a virtual environ-ment involving logistics issue, the study has had to be lim-ited to major and generic issues but overall gives a goodview about things to come and the need to be prepared.

Background ____________________________________________

In the last twenty years we have seen characteristicchanges in the general business environment. The impact

2. GeneralIntroduction

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was clearly recognised on the business models of the keyplayers on the market.The corporate science and corporate advisory serviceswere also focusing on changing areas of the company life.In the early 80`s the globalisation had not yet started and ahigh number of national production companies were op-erational. In this period a large variety of different productswere available on the markets and the level of productstandardisation was relatively low.Corporate management have just started to think in Sup-ply Chains but the structure of it was characterised as fol-lows:

❖ The traditional supply chain was fragmented and sev-eral middlemen were involved in to the process.

❖ Several stock hubs and distribution centres were in-volved in the sales process.

❖ The form of SCM was highly working capital intensive.

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IMPORTER

MANUFACTURER

WHOLESALER

RETAILER

CUSTOMER

In the 90s we were witness to a large number of M&A activ-ities. These deals were driven mainly by the intention of in-vestors to create larger economies of scale for their com-panies. These large corporations were able to operate

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globally. The IT and ICT technologies had a key supportiverole in this process. ERP systems as a standard frame be-come common at international companies. The SCMwould not be efficient without IT enabling tools.The SCM of today is much more different from the previousone. The method of “build to order”, the optimised numberof stocks and working capital could have been set as real-istic targets for the companies. New businesses emergedfrom this scenario, the suppliers were positioned as tier1and 2 and large companies were built on outsourcedcontract manufacturing. The 3PL service started to be anattractive core business area for the entrepreneurs. Theend of this development is not yet in sight but it has to besaid that the outcome was a sustainable growth of themarket. Given the present world market situation some ofthe previous achievements might have to be put under re-consideration again.

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LOGISTIC SERVICEPROVIDER 1

MANUFACTURER

LOGISTIC SERVICEPROVIDER 2

CUSTOMER

Scope and Goal ________________________________________

To review management and execution of physical trans-portation in Europe, information/data exchange with the

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use of @net and IT in the interest of shippers and serviceproviders and provide help to better understand virtual re-quirements and potentials.

Deliverables:

❖ To help F&L Members to understand the internet “mar-ket place” for transport

❖ To detail the business process implications

❖ To provide case studies

❖ To provide a document for the F&L Club Members

❖ To provide an on-line selection support for members

Approach:

❖ Working group meetings

❖ Establishment of manager’s job-allocation

❖ On-line questionnaire to F&L Members for initial inputconcerning barriers and needs, degree of a ‘Virtual For-warding Environment’ usage, expectations for the fu-ture

❖ Research into European freight exchanges and logisticsservice provider

❖ Analysis of Internet publications on LSP and market-place developments

List of Terms & Definitions ________________________________

For convenience of the reader a list of terms and defini-tions has been inserted. You can find this list in the form ofAppendix III on page ??.

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Introduction ____________________________________________

The picture below helps to understand the future supplychain, with regard to all involved parties.In the traditional situation, each piece of the chain tries toadd value by following each other’s steps in chronologicalorder. Nowadays organisations frequently use EnterpriseResource Planning (ERP) systems, which can increase sup-ply chain reliability and responsiveness, through connectiv-ity of systems. Connectivity and Internet can create thetransparency needed for efficient and effective supplynetwork execution. The transparency technology enablesimproved planning and scheduling of resources in the sup-ply network.

3. New formation of logistics provider

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3.1

ERP

Traditional Supply Chain

Customer

APS

Current Supply Chain

Customer

CustomerSupplier

Future Supply Chain

Figure 3.1

Collaboration __________________________________________

Already business leaders have acknowledged the needsand benefits of collaboration between business units along

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entire supply chains and across marketplaces, ever sincethe ‘just-in-time’ revolution came around in the mid-1980s.1

Concepts like lean manufacturing and total quality canonly be achieved if there is tight synchronisation betweenall supply chain participants.Collaboration can be structured or unstructured; Whentalking about structured collaboration, that means that acompany has a rigid transaction-focus that allows supplychain partners to share inventory forecasts and pricing in-formation. When the collaboration is unstructured, a com-pany is streamlining supply chain communications andprocesses through next-generation workflow tools. Throughnew information and communication technology, partiesare more easily connectable and will collaborate moreand more.The different parties, trying to focus on their core-businessand outsource the rest, cause this collaboration. The key-words regarding the subject of collaboration are connec-tivity and transparency. Transparency will allow betterplanning, and to do so an Advanced Planning and Sched-uling system (APS) can be of help. Ultimately collaborationis of course about more than just technology. Whileemerging tools can help companies share information andstreamline processes, collaboration is a mindset that mustbe adopted by all members of a trading community be-fore true benefits can be achieved.The Internet and its supportive technologies are openingup a far broader range of collaboration to virtually anyonewith a browser.(Example: www.cargonow.com)

Optimisation ___________________________________________

The most important opportunity regarding optimisation is toutilise the available capacity in a better way. Savingscould be made easily, by giving thought to route planningand optimisation. Try to keep the truck loaded to the high-est possible extent and keep an eye open for special holi-days, transit costs involved with transport and other exter-nal factors (e.g. toll fares, ferries).

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1 ‘Collaboration: Linking Partners Becomes Critical in Optimizing’ byPhilip Burgert, www.ecomworld.com, September 25, 2001

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Another possibility is for a company to take a look at, andmaybe re-improve, its service-levels. If a company canprofile itself through better services, this will pay off eventu-ally. Companies that provide more service and higherquality standards will see the customers coming to them.An accessible and transparent website can be of big helpin the service section of optimisation.When a company can make itself into an e-cargo hub forits own business area, it has found yet another way to opti-mise its logistics process. Through e-mail and other applica-tions truck drivers and planners can have a minute-to-minute update on possible loads. This way the chances ofan empty truck driving past a DC where a load has notruck will be diminished severely.Keeping stocks as accurately as possible is also a way tooptimise the supply chain process. E-logistics could be aconvenient tool for this purpose. Up to date figures canhelp realise accurate planning, which in turn will cut losseson empty return rides.

However, fear for sharing internal data, which is still consid-ered a competitive asset, frustrates the growth of thesedevelopments. Although sharing information seems to en-hance overall supply chain efficiency this barrier will not betaken down easily.Optimisation has a nice ring to it. It makes people start tothink about what they can change. But do they reallyneed to change? That’s another question a managershould ask himself before getting started, because optimi-sation often is expensive to develop. An enterprise shouldlook closely at what it is doing and if the results are to its lik-ing. If there is any reason to change a process or use ofequipment, this should be considered and reconsidereduntil an agreeable plan has come up. Never forget thatoptimisation often affects all layers of an organisation.

Information and reporting services _______________________

Companies have always been able to slice and dice inter-nal data to view processes more clearly and identify areasfor improvement. But in order to improve today’s supplychains that utilise the Internet and XML, companies mustbe able to view one another’s data to measure crucial

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things like order fulfilment rates, channel inventory levelsand transaction costs.2 The Internet and XML give a possi-bility to capture and process data instantaneously, evenfrom outside a company’s four walls. Customers are askingfor more and more information services.

Through connectivity and transparency, data becomesavailable to each connected party. Each party can filterits own information from the available data, which isplaced in relational database systems. Information cap-tured in a RDBMS gives unlimited opportunities for all kindof information services.Through data mining software, business intelligence isheightened with extensive data analysis. Knowledge dis-covery through data mining identifies market segmenta-tion, neural networks, and provides data visualisation foreffective risk management and much more. Data miningsoftware literally “mines” the truly useful information hiddenin raw data that you already have.Data mining software can be used to enhance your pro-ductivity by allowing you to upgrade data analysis capa-bilities, to educate users on best practices, and to deliverkey business information, all from a central location. In or-der to make your supply chain more efficient, informationavailability becomes a very valuable part of logistics. Whilesecurity and transaction integrity is important, one mustface a more fundamental challenge in the supply chainmarketplace, namely getting companies to entrust theirdata to a third party.

Who is best suited to manage the transportation process?

There is no straight answer to the question stated above.Sometimes a company will need the expertise of a 3PL,while in another case the overview capacities of a 4PL arerequired. A 3PL takes over a part of the companies supplychain while a 4PL is a person or company that takes careof all things logistic.Consultants and 3PLs don’t seem to agree on whether theterm 4PL is really something new or just a meaningless

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2 ‘Sharing Supply Chain Data Across the Internet’ by Michael Garr,www.ecomworld.com, 12 September 2000

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phrase. However, they do agree that there is a need for a“Supermanager” that runs a company’s logistics, knowl-edge base and It-systems.The job description would be: “Supervising the whole supplychain of a manufacturer or distributor and be a company’scontact-point for all things logistic.” In plain English, thiscomes down to the fact that a company appoints some-body to handle the companies that handle their logistics.

3.5.1 Who is best suited for the role of “Logistics Superman-ager”?

If you ask a logistics manager, he will say that 3PL is not thatmuch different from 4PL and it takes only a small shift in ap-proach to make a 3PL into a 4PL. Consultants on the otherhand say that they are best equipped to do so, becausethey have a lot of experience in guiding companies alongthe logistics path. The 3PLs as well as the consultants areboth defending their share of the market. One has an in-terest in keeping everything as it was and the other has alot to gain when the situation moves to 4PL integration. Soboth arguments have to be distrusted.When 3PL was introduced everybody saw it as THE solutionfor logistic problems. It now turns out not to be all that.Companies indicate a need for information that the 3PLsapparently have not given them, so the consulting firmsstep in. Adding a new layer of cost to the supply chain, butto what end?It is said that changes are taking place in supply chainpractices. Logistic managers can place value on threecompetencies:

❖ Managing activities of multiple 3PLs on strategic as wellas operational levels.

❖ Managing availability and utilisation of knowledge.

❖ Managing and integrating IT-systems.

These three are not the first things to pop up when 3PLs arediscussed, so maybe there is indeed a vacuum for 4PLs tofill up. Time and information are the keywords in logisticsmanagement nowadays. Some say that information issometimes more important than the physical logisticprocess.

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In addition to what was said earlier about the conflictinginterests of 3PLs and consulting firms, it’s very likely thatthey will need each other in the future. One has the opera-tional experience, the other has the managerial experi-ence. For 3PLs and consultants to work together would notbe out of the ordinary. If they keep fighting over a clientthey are likely to see someone else run of with it. If theygive each other space and both focus on what they aregood at, they will both make an agreeable profit.

3.5.2 What about the customer?

Most companies fear the possibility of handing over theirlogistics process to another company. They feel like theyare putting themselves at the mercy of the 4PL and fearthe possibility that they cannot get them out once they letthem take over their customer relation programs. They giveup the daily touch with their logistic partners and thatmakes them uncomfortable.

Customers will have future access to two logistic pack-ages. One package will be an integrated package of ser-vices in IT and know how supplemented with a wide rangeof logistic services, while another will be a package forcompanies operating in highly focused niche markets likewarehousing and transport.As long as the users do not choose between 3 and 4PLthey will be flooded with solutions to their problems from3PLs as well as consultants trying to get the biggest possiblemarket share available.

Rationalisation of @market places _______________________

For sure, the fever around e-commerce as a standaloneinitiative has wavered. A year or two ago it was: “How fastcan you make it happen.” Nowadays, the sentimentseems to be: “Show me the value.3

An e-marketplace should be a hub of collaboration by de-finition. A hub where buying and selling supply chains meet

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3 ‘Collaboration: Linking Partners Becomes Critical In Optimizing’ byPhilip Burgert, www.ecomworld.com, September 25, 2001

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to do more than just buy and sell products at the lowestprice. E-marketplaces are learning that getting companiesto sign up for an e-marketplace is the easy part. The hardpart is getting them to actively participate.

Among other collaborative features, e-marketplacesshould be able to support frictionless transactions fromchart-of-account synchronisation, purchase orders, salesorders, inventory availability, price checks, online bill pre-sentment and payment, returns, demand and materialplanning forecasts, logistics and order-tracking. The inte-gration with back-end processes and systems is the mostcomplex and time-consuming step.

Another thing e-marketplaces should clearly communi-cate are the benefits of participation. Examples of benefitsinclude a major increase in the number of potential buyersof a supplier’s product, the reduction of supply chain costsand the improvement of the supplier’s overall capital posi-tion due to reduced inventory.Do not mistake enrolment for participation. Being listed iscompletely different from being an active member. Beinglisted only looks good while being active can actually workto an advantage.

There are some articles available on the current state of e-marketplaces4. All of these articles stress the fact that cau-tion is still the way to operate when thinking about step-ping into the Internet.

Still, too often a marketplace is set up and left to wither awaybecause it does not meet the demand of managementwithin the timeframe they came up with. A good example ofthis is Cargoreservations.com that has been showing thesame numbers for the last three months on its website:

With over 297,630,108 lbs of Buyer Request and$77,917,042 worth of Quotes todate, the Freight

Exchange membership is increasing daily.The Cargo Reservation™ Freight Exchange has taken-off!

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4 Future of E-marketplaces August 1, 2000; Shake out looms for E-mar-ketplaces May 1 2001.

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A marketplace takes time, lots of time. In general, man-agement tends to oversee this in their eagerness for a fastsolution or fast profit. There is no guarantee for success increating a marketplace, but taking the time to think overthe different aspects of a marketplace surely is one of thethings to make the start up easier.The exchange business model requires liquidity to suc-ceed. But to do that it must first provide value to buyersand suppliers based on their particular needs. The movetowards collaboration and self-service will eventually pushup product quality, because companies can learn frommistakes other companies made and then develop newor existing strong points.For B2B e-commerce to be fully effective emerging sys-tems must integrate with established technologies. E-mar-ketplaces that thrive in the future will be those that inte-grate with a firm’s ‘back-end’ systems.The recent growth in e-marketplaces that operate withinan industry sector raises issues such as interoperability be-tween different electronic exchanges, so business can stillbe performed across sectors. Future development of openstandards will be a vital component to interoperable elec-tronic exchanges and in attracting supplier communities,especially small firms, to participate broadly in B2B e-com-merce.The main driver for e-commerce to reach its full potentialwill be collaborative enterprises that are developingwhole-of-industry solutions and delivering shared benefits.To achieve this, companies will need to share their under-standing of business information and workflow processesand agree on how they can best automate their inter-changes for efficiency. This will then free business resourcesto concentrate more on competitive issues such as prod-uct quality and price.

All those complexities mentioned above require most so-phisticated software. As this kind of software is expensive,development takes place in the direction of ASP (Applica-tion Systems Provider) and anyone acting in a more com-plex supply chain environment will need the support ofsuch vendors. For 4PL’s or marketplaces, software compa-nies are already a significant partner e.g. MANUGISTICSand I2.

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Supply Chain Management in a virtual forwarding environ-ment (VFE). Albeit this study will not cover in depth issuesaround SCM it is necessary to touch on possible influencesin both directions: impact on SCM by VFE but also impacton the success of a virtual forwarding environment.

As it was and still is, interpretation of LOGISTICS is varyingand the understanding of its meaning is very different. Sup-ply Chain Management is the even more complex andabstract philosophy. Of course there are also some varia-tions like Demand Chain Management and Customer Dri-ven Supply Chain. And to make it even more sophisti-cated, we talk now eSupply Chain, eLogistics andeBusiness(es) with all kind of variations.

We like to attempt to keep it simple and concentrate onSCM and its overall meaning, which is in principle valid forall siblings touching the process delivering a product, be-ginning with the customer request, product development,quality, procurement, production, storage and delivery tothe customer.

As SCM is a defined philosophy around for some time (20years) and lived by some companies even before it wascalled SCM, the real push came with the ability to ex-change data between the supplier and the customer inan easier and cheaper way than the more expensive orig-inal EDI solutions: eBusiness: THE WEB!

With this solution, it became suddenly possible to ex-change real time information and data for smaller compa-nies but also for top companies. Of course, logistics and itsimpact on a company’s performance are not completelyunderstood by some sales and marketing people.....andwe have seen the results of this as we followed the hype ofeBusiness development and failures.

However, it is beginning to be understood that B2B (busi-ness to business) and especially logistics and as part of itmainly transportation and warehousing and in future orderfulfilment via 3PL’s will be one of the largest segments inthe eBusiness environment.

4. Potential for SupplyChain optimisation

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Let’s recall the meaning of SCM in a simple way:

❖ Optimisation of the entire process from a customers re-quest to fulfilment

❖ Sharing of information to enable optimisation at all lev-els (supplier, customer)

Of course it is not that simple, maybe the following willmake it more understandable:

There are strategic objectives:

Profits improve Costs reduceMarket Share improve Sales Volume increaseGrowth Rate secure Time to Market reduceProduct Quality improve Customer Satisfaction achieve

Main operational targets to achieve strategic objectives:

Cost reduction

❖ Manufacturing

❖ Material

❖ Transportation (Distribution)

❖ Processes

Sales improvement

❖ New/different service offerings

❖ Avoid stock out losses

❖ Improve service levels

❖ New sales channels

Capital employed reduction

❖ Inventories

❖ Accounts receivable

❖ Fixed assets

❖ Working capital

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Despite trying to be simple, it begins to show why success-ful supply chain management is not that simple. All of theoperational targets are interrelated by processes to a highdegree and determine the degree of optimisation andtherefore the profit improvement a company canachieve.

How does this fit to our subject of Virtual Forwarding Envi-ronment?

To achieve the highest level of optimisation, the process ofTransport/Forwarding needs to be (seamless) integrated inparties involved, anything less than that will lead to addi-tional steps and sub-optimisation of the supply chain.

Some examples: Non-integrated systems require addi-tional manual data handlingRejected transport requests placed viawww.sitesNon-realistic planning assumptions leadsto capacity loss

There will be business on a more spot term basis using VFE,but the real target should be to get the huge potential ofB2B via VFE and get involved in the SCM process to con-tribute to optimisation. This would really release all thespare capacity to the benefit of shippers, transport/for-warding companies and also for the customer.

There are new words on the horizon:Internet FulfilmentSupply Chain Community

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Introduction ____________________________________________

User can be defined in many different ways. Following thegoal of this report we define the users form a logistics ser-vice provider point of view. Before it can be determinedwho will be the users, we define in paragraph 5.1 whattype of virtual environments can be used. In paragraph 5.2we will define what is driving a virtual environment andconsequently in paragraph 5.3 we define the users ofthese virtual environments.

Types of virtual environments ____________________________

Since e-markets incorporate the virtual environment, spe-cial attention will be given to this phenomenon. E-marketscome in many different forms and variations, serving differ-ent goals and needs. To identify the various e-markets anumber of classification systems have been developed.The first main classification is by means of process perspec-tive5:

❖ Horizontal markets. These e-markets have a process fo-cus and aim for supporting one specific businessprocess for all companies in one specific industrial sec-tor, e.g. purchasing of goods or services. To operatesuch a marketplace a great deal of process knowledgeis required.

❖ Vertical markets. These e-markets have an industrial fo-cus and there aim is to support the entire supply chainof a specific industrial chain from raw material supplierto end customer and return flow.

The second main classification is by means of ‘accessibili-ty’ of e-marketplaces6:

❖ Private markets. This type of e-market serves the ex-change of information between a limited number ofbusiness partners. It can be either a horizontal or a verti-cal marketplace. The marketplace can only be ac-cessed by the partners.

5. Who will be the user?

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5 AMRResearch 2000, Gartner 20006 AMRResearch May 2000

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❖ Public markets. This type of e-market can be accessedby everyone. It can be considered as a ‘many-to-many’relationship. Normally these markets are free of chargeor small fees apply when using it.

The third main classification is by means of market mecha-nism7 that is supported by the e-market.

❖ Auction model. In this model price is the main driver.One party is offering goods or services for sale to thehighest bidder. The transaction has to be settled within afixed time frame. There are two basic subsystems:• English auction. The price is increasing per bidding

round and finally the highest bid is accepted;• Dutch auction. The price is decreasing until the first

party makes his bid. This principle is e.g. used at theflower markets.

❖ Reversed auction model. In this model one buying partyissues a Request For Quotation (RFQ) to various suppliersof the required services. The buyer ensures himself of thelowest available price for that product/service.

❖ Exchange model. In this model there is a real-time ex-change of offering and request. The marketplace oper-ator acts as a broker between buyer and supplier. Pricesare determined by market dynamics and the model isapplicable to situations in which goods or products canare well specified.

❖ Catalogue model. In this model suppliers offer theirproducts against fixed catalogue prices to there cus-tomers. Many examples can be found in the area of of-fice supplies and home shopping concepts.

The first three models are so-called dynamic e-markets.The information and interaction between business partnersusing these models have a dynamic character. The cata-logue model on the contrary has a static character withonly limited to no interaction. The figure 5.1 shows the thirdclassification.

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7 AMRResearch May 2000, Cap Gemini Ernst & Young - Electronic mar-ketplaces - 2001

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Figure 5.1

Nowadays e-markets show a mix of the classifications asexplained above. The mixed and focus by the e-market-place operator determines its success, ... or failure.

What is driving a virtual environment? ____________________

Only when one expects to benefit from a certain servicehe will start using this service. Where logistic suppliers aregearing up with e-commerce solutions, the catalyst ischange in user needs8. Arguably, it is probably desirablethat the motivation for change comes from the users of lo-gistic services, as this will tend to keep the serviceproviders in touch with logistics needs in perspective clientmarkets.The change in user needs, which are ideally covered by avirtual solution, lies in three fundamental problems:

❖ Geographical reach. Trade is fragmented by geo-graphical limitations. A buyer only has limited choicewhen it comes to purchasing goods and/or services. In-corporate large groups of suppliers will lead to a com-plex and difficult to manage process.

❖ Information management. Complex and labour inten-sive exchange of data between business partners. Inthe traditional way of doing business data is exchangedin many different ways (e.g. telephone, fax, email, flat

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Dynamic

Static

Catalog ModelSupplier fixed pricing with product catalog

Buyer pics best price from catalogTransaction cost low

Source: Electronic Marketplaces,Cap Gemini Ernst & Young 2001

Reverse Auction ModelBuyer gives RFQ

Supplier competes for lowest priceBuyer gets lowest price

Auction ModelSupplier shows product to sell

Deadline for quotes setBuyers bid online and see highest price

Supplier gets highest price

Exchange ModelReal-time merge of capacity & demand

Price determinated by market mechanismeApplicable to well specified goods

Transactions cost higher than Catalog

8 TNO Reports 01-41 - E-commerce in the logistics sector - 6 august2001

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files, print-out, EDI, etc.) and in structure that is deter-mined between the business partners. Some efforts hasbeen made to define business rules that makes this ex-change more efficient and enhance its logistics (e.g. Ef-ficient Consumer Response concept).

❖ Controlling your supply chain. Often too many unneces-sary (buffer) stocks in the supply chain. To deal with un-certainties throughout the supply chain (e.g. transporttimes, sales forecast, etc.) stock is build up in variousplaces in the chain.

Summarizing these three fundamental problems the maindriver, and therefore the main added value to logistics, istransparency. This transparency is created when informa-tion about the logistics market is made available to a widegroup of logistics users, and these users adapt this trans-parency into their decisions.Transparency however also calls for collaboration and, inmany cases, leads to emotions. In the next chapters theneeds, barriers, success and failure are further explained.The availability of a universal and global ICT-infrastructurelike Internet, hence easily creating the necessary connec-tivity between all logistic partners, is the basic reason forexistence of the virtual logistic service provider.

Virtual markets and their users ___________________________

Looking from a logistical point of view, all users of a virtualenvironment look for the same objectives - sharing infor-mation in order to optimize (their part of) the supply chain.As in the real environment in the virtual world we can cate-gorize the users:

❖ Operators of the virtual marketplace or environment;This group can be compared with e.g. public or govern-mental organizations providing, maintaining and inno-vating infrastructure for their clients like Port of Rotter-dam Authorities or the providers of software tools likee-marketplaces. They provide the technique and tools,but do noting with the actual use of their tools.From origin the operators of marketplaces come fromthe area of ICT, consultancy, education and govern-ment.

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❖ Buyers of goods and products;This group of users tries to control their purchasing ex-penses by gaining access to a wider group of suppliers,or participating in a purchasing group. They use thetools provided by the operators.

❖ Suppliers/sellers of goods and products;One of the first commercial applications of the Internetwas on-line sales. This gave the commerce the term ‘e-commerce’. Where at first suppliers put their goods on-line via a catalogue-model ‘marketplace’, later on itbecame a truly interactive exchange.

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Introduction ____________________________________________

Before we give some points of view what we believe arethe most important needs that users of a virtual forwardingenvironment have, we would like to revert that question toyourselves;

What are your needs?Why would you use a virtual forwarder?

And when these questions are too difficult to answer, sim-ply reverse the question to;

Why will you not use a virtual forwarder?

With these questions in the back of our minds we will definesome general needs or drivers of users of virtual forwardingenvironments.In section 6.2 the needs from an operator point of view willbe described. In paragraph 6.3 the buyer’s needs are de-scribed and in paragraph 6.4 the supplier needs. In para-graph 6.5 finally a summary of the most import needs isgiven.

Marketplace operator needs ____________________________

As explained earlier on most marketplace operators origi-nate from the IT sector. They have learned from there yearsof experience with various logistical companies and devel-oped very complex systems. Their goal is obvious - improv-ing the efficiency of the entire supply chain. The best-known companies in this respect are i2 Technology, IBMand Ariba.Since it is the tool that they are trying to sell, there mainneed is content. Attract as many users as possible andgenerate as much trade and transactions via their market-places. Beside the functionality to support the businessprocesses, additional functionality was incorporated in themarketplace with the sole purpose of attracting as manycustomers as possible, e.g. by means of hyperlinks, marketspecific news, general information and additional servicesby service provider like finance, insurance, etc. Some op-erators originate directly from the logistics themselves. Insome cases it was formed out of a group of cooperatingcompanies, specialized in a particular mode of transport

6. What are theirneeds?

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and forming a new but independent partnership (e.g.transportation - National Transport Exchange NTE.com), orindividuals within logistic companies starting their own mar-ketplace.What all of these operators have in common isthat they need the traditional logistic service providers forthe execution of their services. The marketplace by itselfhas no value.

Figure 6.1

Buyer’s needs __________________________________________

Looking from this perspective the main goal is to do moreefficient purchasing by using a virtual environment thatsupports the business rules.Buyers in this respect can be e.g. a shipper buying trans-portation services from a logistic provider, or an airfreightforwarder buying capacity from carriers.As a buyer of logistic services it is very common that only afew logistic providers are being used for the whole rangeof logistics for all your products. Since each product has itown logistic characteristics you would like to have the op-portunity to chose from several providers that suit your

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1.1 What is Freight Matrix

FreightMatrix is a logistics industry marketplace where buyers and sellers of logistics services can negotiate forservices, transact shipments, and plan for their transportation needs. FreightMatrix provides logistics solutionsto TradeMatrix industry vertical markets, as well as other non -TradeMatrix business-to-business marketplaces.It does this by providing user interfaces that integrate commerce activities into a logistics delivery service ofFreightMatrix.

For example, FreightMatrix is available to a commercial purchaser of desktop computers subscribing toHightechMatrix™. As part of its purchasing and fulfillment services, subscribers can get transportation ratequotes from FreightMatrix and det ermine landed costs as part of the order - promising phase. In addition, he orshe can use FreightMatrix to execute the delivery of product through logistics screens on HightechMatrix.

FreightMatrix is also a vertical market providing logistics services to carriers, third-party management providers,forwarders, and brokers. These providers can transact shipments with their customers, as well as manageinternal workflows, control their financial management, improve customer service, and sell into companies participating in TradeMatrix. FreightMatrix planning services enable logistics providers to get the best utilization outof their equipment and operations.

TradeMatrix is an online marketplacemade up of tradingcommunities for specific industries, such as high tech, retail,steel, replacement supplies, food services, and automotive. Itsparticipants are leading companies, such as Hewlett Packard,Sun Microsystems, General Motors, IBM, Boise, and AlliantFoods. These companies use TradeMatrix to buy, sell, andcollaborate with their trading partners. Once purchases havebeen completed online, participants can use FreightMatrixservices through their own user interfaces. FreightMatrix is partof the TradeMatrix marketplace, so its subscribers also haveaccess to direct and indirect materials purchases availablefrom any of the TradeMatrix vertical marketplaces. Purchasescan then be tracked from PO to POD.

FreightMatrix connects the fragmented transportation industryinto a community through the Internet. FreightMatrix acts as acentral hub and provides workflow tools and valuable services for transacting logistics business. FreightMatrixalso provides an operating staff to assist in the management of shipment transactions and provide support fordelayed or l ost shipments.

With FreightMatrix, many of the inefficiencies in the logistics process can be eliminated because there isinformation available to make proactive decisions. This additional control provides shippers with the informationto make extended enterprise supply chain planning and integration effective.

CustomsBroker

De-consolidator

Consolidator

Seller

Carrier

HighTec

eServicesMatrix.com

Trucker

Trucker

Customer’sWarehouse

FreightForwarder

Customer

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needs best. Depending on the scope and scale of yourmarket doing this in a traditional way is too complex andtime consuming. However using a virtual environmentmight help to create the transparency you need. Your dri-ver then is finding the right provider against the best cost(not necessarily lowest cost).As a buyer of capacity, again depending on the scopeand scale of your operation, you already have establishedworking relations with all the carriers you require. You maindriver to use a virtual forwarding environment is to controlthe transactional cost and increase the speed of theprocess. Finding the right capacity against the right pricemight give you that advantage you need to win a logisti-cal tender or maximize your profit.

Suppliers/Sellers needs _________________________________

Where as a buyer would like to have sufficient choice sohe can obtain the lowest price, the supplier wants to reachas much buyers as possible to sell his goods or services.When focusing on the logistical product, suppliers can of-fer their services (e.g. warehouse capacity, transportationservices, cargo space) to shippers, distributors or selling or-ganizations, or to logistical parties horizontally or verticallyin the chain (e.g. LCL-capacity to forwarders or truck ca-pacity for return loads).

Summary of needs ______________________________________

The needs can be distillated from the drivers mentioned atsection 5.3, geographical reach, information manage-ment and control over the supply chain.Being just a user from one perspective is hardly ever thecase. One can be buyer in one case, but supplier or sellerin another. You can also be just the facilitator, without abuying or selling involvement. Another important issue totake in account when defining the needs is that somecompanies try to do it all. Whether this is the correct way ofdoing business, is a question that is answered later on in thisdocument. The figure below shows the needs in a nutshell.

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Figure 6.2: Source: modified from Cap Gemini Ernst & Young - ElectronicMarketplaces - 2000

All of this will only be successful when you use a virtual for-warding environment that:

❖ has sufficient investors;

❖ supports your business processes in a professional way;

❖ has sufficient number of buyers of a reasonable size;

❖ has sufficient number of suppliers/seller of a reasonablesize.

Revenu fromtrade

Revenuefrom content

Revenue from cooperation& services

Process redesign& automation

Marketplace operator

Improved controlspendings

Processredesign

& automation

Reduction transactioncosts & improved

profit per customer

Eliminatemaverick buying

Logistic costredution &

benefits of scale

Offer transport &distribution services

Improvecapacity

usage

Customer serviceand acquisition

Buy

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Supplier

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Why hesitation to go virtual? ____________________________

The changing shape of European logistics, driven by newtechnologies brought high expectations for new, revolu-tionary solutions. But the predicted “information revolu-tion” is yet to come. (See also chapter 8: Virtual forwarders- drivers for success or failures). There is no doubt, that newtechnologies will promote the development of logistic buy-ers/suppliers networks, because it might potentially benefitboth buyers and sellers. There are potential areas to gener-ate value with regard to:

Potential buyers benefit Potential sellers benefit

Purchasing Power

Lower price & Negotiation Higher profits & Volumescosts Extended customer access

Expanded supplier access Lower negotiation costs

Process Efficiency

Lower search costs Lower customer acquisitionLower processing costs costs

Lower processing costs

Supply-Chain-Integration

Reduced inventory costs Improved inventoryReduce time to market management

Improved demandforecasting

Aggregated Content & Community

Improved ongoing Improved ongoing benchmarking benchmarking

Cost-efficient research Cost efficient, ongoingFaster competitive response research

Market Efficiency

Price & Inventory More customer reachTransparency Reduced cost of sales

Reduced cost spot buying

Reality has shown that it was not possible to realise some ofthese potential benefits just by using “new technologies”.

7. What are thebarriers?

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Maybe the expectations created by the “hype” were toohigh or did not always match with reality (business-processesin place, expected service level, other requirements etc.).

New technologies are commonly considered as a valu-able, enabling tool, but without “real” companies behindthe systems, committed to integrate these tools in their e-business strategy no substantial progress will be made.(See section: “Who is best suited to manage the trans-portation process?”)

Business is still done by “real companies”, which have beendoing business successfully since many years, following stillthe same old, reliable and traditional business rules. Morevolumes - who cares? Does it really always bring a betterprice? Buyer Market or Seller Market - it was there alreadybefore the Internet. But it seems everything is now speed-ing up a little bit, calling for changes.

So what are the barriers for potential users? ______________

The biggest barrier seem to be, that many things have tochange first within a company itself, before the wide func-tionality of a Virtual Forwarding Environment can be used.

First barrier: Change

❖ Change of the Business Process

Figure 7.1

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E-Business-Strategy

VF...Barriers for potential Users of @-marketse-Business Strategy & Approach

E-Business-Strategy =Supply-Chain-Strategy =

Logistic-Strateg =Business-Strategy =

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Logistic-Strategy must become an integrated part of theSupply-Chain-Strategy, which again must become an inte-grated part of the overall e-business strategy.

❖ Change of the IT-Systems

If we wish to share data, we have to have them available!Do we? And if so, do we have an appropriate interface toshare our companies information openly with our presentbusiness partners and potential unknown business part-ners?

❖ Change of the traditional customer / supplier relation-ship

Transparency and Business Integration is a must.

❖ Change of the approach by a mental shift

This point seems to be the most difficult to overcome. LSPand the industry are aware, that it will no longer be possi-ble to do “business as usual”. To ignore new businessprocesses, enabled by powerful @-tools. To ignore thatboth - manufacturers and LSP’s are impacted directly bythe “new economy focus”, which brought many changesalready.The “New Economy Focus” requires de-integration insteadof centralisation.It requires transparency instead of “four walls mentality”- itrequires a new, open approach.

Are all parties ready and well prepared for all thesechanges? If yes, it seems, that it will also be possible toovercome the other barriers stated below:

Second barrier: Human Resources and development ofskills and understanding

Although most of the companies returning the question-naire stated this point as a main barrier, it is most likely thatthis problem will fade shortly. There is already more IT-staffavailable, then a year ago. On top of that, even users thatare not trained to higher levels get more and more familiarwith new technologies. What remains is the difficulty to findthe best system - and there are many to choose - for yourown organisation.

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Third barrier: Capital Expenditure

As it is most likely, that “new economy”-companies will bepredominantly be the same companies we have seen inthe “old economy”, the question of finance or capital ex-penditure seems not to be crucial. Still companies will ofcourse carefully check the Return On Investment.

Fourth barrier: Service Capability

Service capability, quality, safety and commitment are thecommonly most critical points, and were highly ranked inthe questionnaire. These fears are clearly focused on “newentrants”, who have not proven themselves; many of thempopped up and disappeared, most of them with no stablefinancial background. But supposed that mainly the play-ers of the old economy will use the @- technologies of the“new economy” and form the “next economy” as pre-dicted by scientists, it is most likely, that the same compa-nies still will be doing business in the future. May be muchquicker, more efficient, may be “many to many” instead of“one to one”.

Try to make sure that you are not left behind!

Figure 7.2

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VF...Barriers for potential Users of @-markets@-espectations ..... ?? Contradicting ?? ..... requirements

Full Service PackageFTL+LTL, packed, bulk, liquid

ADR, harmless,rail, road, etc.

Global(Europaen) Solutions

Process &SC Optimisation

Transparency

“Lowest Bid”Auction based tendering

Process - OwnershipCompetences/Skills/

Understanding

Quality, HSE“keep control”

Relationship vs Anonymity

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Introduction ____________________________________________

With the previous chapters we hoped to clear the dynam-ics around e-marketplaces and virtual forwarding environ-ments. We are well aware that it is more complex than de-scribed. Evaluating the past few years it is possible toidentify some drivers for failure and success.In the 80’s and 90’s many theories around Supply ChainManagement were developed, but their concepts couldonly evolve partially. Main reason for this was that the nec-essary systems for the exchange of information and shar-ing processes were limited to mainframes and EDI-ex-change. Internet would give a breakthrough.Martin Christopher stated that the Internet provides a per-fect vehicle for the establishment of the virtual supplychain. Not only does it enable vast global markets to beaccessed at minimal cost and allow customers to reducedramatically research time and transaction cost, but alsoenables different organisations to share information witheach other in a highly cost-effective way9.With the internet-hype of 1999 and 2000 many ICT compa-nies working on individual logistical improvement projects,saw the opportunity to combine the need for supply chainoptimisation and Internet technology. They have build sys-tems that promised the world to their users. The year 2000became the booming year for e-markets, virtual for-warders and 4PL’s. “If you do not start e-business now, youare out of business” was the slogan. The media was drivingeverybody crazy.Although the ideas behind this innovation are right, theyear 2001 is the year of the shakeout and opponents seemto be right. What went wrong and what went right?

Internet solutions implemented as response to a problem,rather then a solution ___________________________________

The first perception was that Internet was the answer toconnectivity and co-operation. “Electronic interaction is amean, not a goal; the goal is to enable close, effective re-lationships between people and their organisations thatopen new opportunities for mutual profit” stated Preiss,

8. Virtual forwarders - driversfor success or failures

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9 Prof Martin Christopher - Logistics and Supply Chain Management -2nd edition 1998

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Goldman and Nagel10. Implementing or starting an e-mar-ketplace does not automatically makes money. From amarket study performed by TNO11 few of the interviewedcompanies could quantify any effect of e-commerce, andnone made the claim that e-commerce has increasedrevenues by increasing the customer base.

Freight exchanges were sold as a mean of creating pricetransparency for all buyers and sellers ___________________

Although in principle the idea is right, the builders and op-erator of these marketplaces went passed one of the mostfundamental business rules. Rates, cost and hence profitmargins are never revealed to the public. From a shipperpoint of view you would like to have easy access to variousrates to compare, as a provider point of view this is the ut-most threat. All public e-marketplaces that embraced theidea of price transparency have either disappeared or aredoomed to disappear.

Creating transparency is creating emotion

E-marketplaces that follow and support the business rulesappear to be successful ________________________________

Following the business rules are found within partnershipsbetween the larger companies with their suppliers orproviders by means of private environment in which theyexchange information, supporting only a specific part ofthe supply chain through a public environment.This statement is best illustrated by some business cases.Teleroute.com is market leader in the area of on-line ex-change of cargo and truck capacity. The services are ac-cessible through the websites of Teleroute. More than35.000 trucking companies and freight forwarders in 13 Eu-ropean companies daily place more than 40.000 (!) ship-ment orders. What makes this freight exchange so success-ful are determined by the following, most importantfactors:

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10 Preiss, Goldman and Nagel - Cooperate to Compete - 1st edition1996

11 TNO Reports 01-41 - E-commerce in the logistics sector - 6 august 200

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❖ The exchange of information is based upon establishedbusiness rules. The business partners can build upon along lasting relationship. They are the investors in theirown exchange;

❖ The business partners have the same mutual goal, effi-cient use of ground transport capacity. The partnersbring in (part of) their volume and hence create thenecessary content;

❖ The e-marketplace is limited to a part of the supplychain process, ground transportation;

❖ The exchange is used to manage the process and thefirst phase of the commercial process - establishing thecontact. The actual commercial negotiation will be per-formed in the traditional way outside of the exchange.When business partners require they have the option touse Teleroute as well;

❖ The participants in the exchange are trucking compa-nies and forwarders. Shippers have no access to the ex-change.

These conditions appear to be the red line through suc-cessful public marketplaces.

The same type of conditions more or less apply to the pri-vate marketplaces. Eventually, the dominant parties de-fine the business rules in the supply chain. In many casesthe marketplaces are driven by shippers (e.g.: GeneralElectric, Siemens).They have a mutual goal, working together in an efficientway. In most cases the commercial aspect has alreadybeen established and the rates applicable can be ob-tained on-line.One distinctive aspect however is that private market-places are more designed to manage the supply chain asa whole, then only a specific supply chain for a specificproduct or market.

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ICT development _______________________________________

Information and communication technologies (ICT) arecrucial for improving the efficiency and quality of freighttransport. Due to general economic trends such as just-in-time production, made-to-order manufacturing and awide network of outsourcing relationships, tighter and evermore flexible planning schemes, which heavily rely on ICTsystems, are implemented.

❖ Intelligent Transport/Traffic Systems (ITS)

An area of particular interest within ICT are IntelligentTransport Systems (ITS) that integrate data from a varietyof sources such as onboard GPS tags, static roadside ortrack side tags, and various sources such as informationon infrastructure maintenance, weather, unusual trafficpatterns, accidents, etc. In the following, the moregeneric term ICT is meant to include ITS systems as wellas other classes of transport-related IT systems.

❖ Reliable Estimated Time of Arrival (ETA)

Transport ICT systems can provide benefits both for thetransport operator increasing service efficiency as wellas for the customer / shipper. They can allow the track-ing-and tracing of shipments at any time and the com-puting of a reliable estimated time of arrival (ETA). Cus-tomers can learn early about delays or unforeseencircumstances and take appropriate action such as re-scheduling or re-routing.

❖ Reduced Lead Times

ICT systems can also improve transport efficiency andspeed and thereby reduce cycle time. Transport infor-mation can be tightly integrated into a company’s in-house Enterprise Resource Planning (ERP), Supply ChainManagement (SCM) or Inventory Control systems. Suchintegration can help automating or facilitating complexordering and booking tasks, moving the necessary pa-per work online, speeding up the pre-transport phase.This in turn responds to demands for ever more flexibleand speedy supply chain management and provides

9. ICT in freighttransport - major

problems andchallenges

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the basis for the growth sector of e-fulfilment, the physi-cal side of the booming e-business activity. E-fulfilmentusually deals with small, high-value, and highly time-sen-sitive shipments, especially via air and road. Here, thetimeliness, transparency and reliability harnessed by ICTsystems are especially important.

Figure 9.1: Lead reduction over time

❖ Increased efficiency

For the transport operators, ICT systems hold the promiseof increased efficiency since they enable better plan-ning, for example through more accurate and timely re-source utilisation, optimised schedules and adaptivenavigation and routing. For multi modal transport oper-ators, ICT can facilitate the integration of diverse trans-port providers in the transport chain operating in differ-ent modes.

❖ Problem solving

There are many problems faced by freight transportcustomers that can be addressed by better ICT systems.Problems include, for example: The difficulty of compar-ing transport costs via different modes of transportation(including sunk costs), he frequent lack of full in-transitvisibility of shipments across the entire transport chain,the frequency of delays in the delivery of freight, oftenpartly due to lack of integration of actors’ IT systems.

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Source: A.T.Kearney/ELA: “Insight to Impact. Results of the Fourth Quinquennial European Logistics Study 1999”

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An ICT system typology for the freight transport sector ____

In order to structure what is available in terms of ICT forfreight transport, it might be useful to divide systems into afew broad categories. Overlaps between these categoriesare not only inevitable, they should be welcomed as a signof improving integration of ICT within the sector.

❖ E-Business-oriented and customer-focused ICT systems

E-Business-oriented and customer-focused ICT systemsare the latest systems historically, and owe their exis-tence to a large extent to the growing popularity andubiquity of the Internet that has now taken over from EDIas the dominant platform for e-business. Internet-basedtransport exchanges implementing a variety of businessmodals (from mere brokerage to full transport responsi-bility) and sometimes including various interfaces(web/internet, mobile phone/handheld, roadsidekiosks, etc) are examples of this trend.

Customer-focused ICT systems help shippers find appro-priate transports and modes, simplify transport-relatedtasks (such as getting quotes or comparing prices acrossdiverse operators and modes), or, during transport, trackbookings and shipments. Many of these functions areavailable through independent service providers. Theyare taking responsibility for shippers’ transport needs un-der specific service level agreements. Many shippersare now outsourcing parts or all of their logistics opera-tions to 3PL (third party logistics) providers.There are also service providers for a range of ancillarytransport functions such as customs brokerage, insur-ance, financing or warehousing.

❖ Operational ICT systems (individual actors)

These systems are the traditional logistics systems oper-ating on the level of one large and usually globally op-erating forwarder or integrator. They can cover a widerange of functions such resource allocation / fleet man-agement (load units, schedules, transport services),consolidation and sorting of shipments, positioning andnavigation, automatic vehicle or load unit identificationvia RF tags, barcodes, or freight management functions

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including re-routing and re-scheduling. Freight transportoperators have their own proprietary logistics systems forthe various transport functions, before, during and aftertransport, for example:

• Before transport (e.g., route planning, resource alloca-tion, or documentation for customs clearance or dan-gerous goods information).

• During transport (tracking and tracing of shipmentsand bookings, delay and problems, notification ofchanges to ETA).

• After transport (proof of delivery, administration and fi-nancial clearing, benchmarking and statistics)

In general, such systems may be divided into onboard systemsand home base systems. To the extent that these systems areintegrated this distinction will get increasingly blurred.Onboard ICT systems can fulfil functions as collecting infor-mation about the vehicle or the load, e.g. temperature ofcargo or engine parameters, fuel consumption or safety-related aspects, relating the vehicle to the environment,linking the vehicle to the home base (see below).

❖ Fulfil the functions of a mobile office, e.g. send outquotes, confirm bookings or delivery, send electronicdocuments via EDIFACT or XML standards, communicatewith shipper or other actors via voice, email, SMS etc.

Figure 9.2: Position reporting of a vehicle

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MobileGPS Unit

Base StationSoftware

CommunicationsNetwork

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Home base systems can cover functions such as:

Route planning, possibly making use of traffic information

❖ Fleet management

❖ Communication to vehicles: send information regardingdelays or changes, instructions for re-routing or addi-tional transport tasks, or transmit electronic documents

❖ Communication from vehicle: receive vehicle parame-ters such as position, speed, load or vehicle status to befed into the transport management system.

Home base systems can then use vehicle data to improvefleet utilisation, inform operational planning, or aggregatestatistical data for strategic planning. They may also sup-port the marketing of certain types of data, such as float-ing car data to Travel Information Centres or NavigationSystem Providers.

Operational systems spanning a variety of actorsOne sector with particular information and therefore com-munication requirements is multimodal transport. Currentlymajor efforts are undertaken to overcome the break of theinformation chain whenever the mode is changed, e.g.from road to rail. This also brings rail back into the picturewith otherwise too specialised equipment in comparablysmall numbers.Multimodal transport chain management systems (TCMS)12

are one attempt to link together individual freight opera-tors’ logistic systems by using a standard data model andstandard message exchange formats to integrate trans-port functions across various actors and modes in thetransport chain.

Proprietary logistics systems that aim at integrating subcon-tractors and fulfil functions such as messaging and finan-cial clearing may also belong here.Also into this category belong systems run by transport net-work operators that employ roadside or railside tags to

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12 See the INFOLOG project. http://www.tfk-hamburg.com/infologor the commercialised version: http://www.logit-systems.com

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measure traffic flows or provide vehicle or rolling stock po-sitioning information. Although operated by network oper-ator other actors can also use the data.

Figure 9.3: Issues related to multimodal transport

Site-specific ICT systemsSuch systems will usually be operated at terminal gates, indistribution centres, or at borders.Possible functions are automatic vehicle or driver identifi-cation, e.g. via barcodes, RF tags, or video-based patternrecognition systems. Some ports (Rotterdam) also use bio-metric techniques for driver identification. In warehouses,ICT systems can link freight scanning (usually barcodes)with other transport related tasks such as sorting, inventorysystems, or invoicing and deduction.

Public or private infrastructure / administration systemsThis includes systems that implement safety, security or rev-enue mechanisms and are run by public administrationssuch as customs or port authorities. They may also be out-sourced to private operators or PPPs (Public-Private-Part-nerships). Examples dangerous goods declaration or cus-toms clearance systems, electronic fee collection systemsfor toll roads, or smart-card based functions such has theelectronic tacho.

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• Messages• Rules and regulations

• Declarations• Segregation• Language

• Code values• Reporting• Load units

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Some customs clearance systems are geared to interfacewith freight operators (such as Road Air at Schiphol Airportin The Netherlands). Traffic information services offered viapublic bodies or private public partnerships (such as theVerkehrsmanagementzentrale in Berlin) would also belonghere to the extent that they contribute data that can beused by freight transport management.In the aviation sector, the CDM (Collaborative Decision-Making) approach aims at pooling flight data and makethem available also to air cargo operators as well as oper-ators in other transport modes connecting to air transport.

From EDI to XML: Interoperability and standardisation _____

EDI (Electronic Data Interchange) has been the technol-ogy that held the promise of better interoperability be-tween trade- and transport-related ICT systems.UN/EDIFACT (EDI for Administration, Commerce & Transport)is the only recognised multisectorial international EDI stan-dard and is predominantly used in Western Europe. It de-scribes a range of standard message formats, includingthose for documents related to transport (e.g. shippingcontract, consignment, bill of lading, proof of delivery, etc.)

Although it is faster, more efficient and more accuratethan paper documents systems the main problem associ-ated with EDI and EDIFACT is that electronic documentsraise authentication, integrity and confidentiality con-cerns. The use of digital signatures and digital certificatesin fulfilling authentication and identification functions willmake electronic documents as legally binding and en-forceable as paper documents. Encryption can addressconfidentiality concerns, although there is still intense de-bate regarding the right of public authorities to access en-crypted documents.

The use of the Internet for trade facilitation is likely to re-place EDI in the medium term. An important facilitatingrole was played by the rapid rise of the XML (eXtensibleMarkup Language) standard as a means to encode se-mantic structures pertinent to a domain in a shape that isboth machine-readable (well-formed) and human-read-able (marked up with meaningful tags). XML has become

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the most important data interchange format for e-busi-ness. An XML document can be displayed by software (forexample, by a standard Internet browser) but it can alsobe processed by domain-specific applications in the sameway as EDIFACT messages. There are now conversion toolssuch as XML-EDIFACT offers an open path for migration be-tween XML and UN/EDIFACT, turning the complex EDIFACTmessages into a human-readable format.

XML has become the basis for the definition of new proto-cols for platform-neutral interoperability as the widely sup-ported SOAP (Simple Object Access Protocol) that allowsremote procedure calls between applications in a distrib-uted environment. Another originally competing standard,ebXML, which also supports more complex aspects suchas digital signatures and no-repudiation, will integrateSOAP Into its Messaging Services Specification13.

Figure 9.4: Syntax and area of utilisation (source: Per Myrseth/Norwegian

Computing Center “introduksjon til xml/edi”)

XML/EDI

EDIFACT

HTML

Privatconsumers

Business toBusiness

# og $

13 ebXML Integrates SOAP Into Messaging Services Specification (2001)http://www.ebxml.org/news/pr_20010222.htm

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Summary _______________________________________________

The online questionnaire from Members revealed not onlya range of views but also some consistency in certain as-pects. This section will start with the main conclusions andthen go into the different aspects in greater detail. All thecomments and statistics quoted here reflect the views ofthose Members who completed the questionnaire.The first point is the involvement in e-commerce: In generalthere was a low level of Business to Business [B2B] e-com-merce activity. However, in contrast to this, there was ahigher level of involvement in e-commerce for logistic ac-tivities than expected.The second point is the factors in which e-commerce forlogistics activities are important to businesses: the most im-portant are those dealing with the supply chain and pro-curement. Least important are its use for contracts. Most in-terestingly, the cost benefit driver is less than expected.The third point is that the biggest influence is service capa-bility and the least influence is the capital expenditure.

Members Participating in the online questionnaire: 29 _____

There was an excellent response to the questionnaire. Thefirst response was within two hours of the e-mail going outto Members, the final responses were within a week of thepresentation at Gothenburg (may 18th, 2001).List of Members Participating:

Diakinisis SA GreeceDSMEka Chemicals ABExxonEwals Cargo CareF&LFinnish RailwaysGeest North Sea LineG A AutologisticsHungarocamionImerys MineralsJohnson & JohnsonLKW WalterLloyd Fraser GroupLogIT systems

10. The onlinequestionnairefrom Members

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Marks & Spencer PlcPolimeri Europa SRLRoad AirRohm and HaasSCA Transforest ABSchenker AGSJ Green Cargo ABSNCB B-CARGOSNCF ParticipationsStora EnsoTransfesaVeitsch Radex GmbHVolkswagen TransportVos Silo Logistics Oss bv

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Quotations _____________________________________________

There was an interesting range of quotations expressinggood points of views. Selected Comments from Members:

Comment on Virtual Forwarding

“For me it is a market place where exchange of de-mand and availability of transport resource becomevisible and where ordering and execution of trans-port takes place”

Contrasting Views

“Our company has defined and is developing pilotcases for reasons of learning. I personally foreseerapid deployment in 2-3 years from now”.

“There is a lot of “hot air” in that kind of business...many markets have already failed; we are still check-ing the alternatives”.

Core Driver

“Better service to the customer”

Questionnaire Format ___________________________________

Members were able to access the questionnaire directlyon the Internet by clicking on the link.

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choice options, yes / no options, score rating together withfree text space for comments and observations.

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Level of B2B activity: high for logistics ____________________

This section of the questionnaire investigated the involve-ment of companies in e-commerce over a three-year period(1999 to 2001). In general there was a low level of Business toBusiness [B2B] e-commerce activity. However, in contrast tothis, there was a higher level of involvement in e-commercefor logistic activities than expected. The table below showsthat the involvement in logistics grows faster and to a higherlevel [5-10% in 2001] than for purchasing or sales [5% in 2001].

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Drivers for using e-commerce for logistics ________________

The questionnaire examined the drivers that influencedwhy e-commerce for logistics activities are important tobusinesses: The most important are those dealing with thesupply chain and procurement, with average scores of 4.0and 3.8. The least important are its use for contracts, score2.9. Most interestingly, the cost benefit driver is less than ex-pected, score 3.6.

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Enablers for using e-commerce for logistics ______________

The responses demonstrated that the biggest influence isservice capability, [score 4.0] and the least influence is thecapital expenditure of becoming involved in a logistics e-commerce activity, [score 2.6].

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Statistical Analysis of those who responded to the question-naire ___________________________________________________

The logistics data of those who completed the question-naire covered a range of business sectors and a balancebetween shippers [12] and carriers [11]. {Note: The twenty-two companies in the other category of item 5.1 weremostly third party contractors.

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Learnings from using an online questionnaire _____________

There were very good points of key learning from using anonline questionnaire.

❖ It is easy to e-mail, access and return with a copy sent tothe respondent.

❖ There is the flexibility to acquire quantitative data along-side comments and feedback.

❖ The comments were included in the report back to themembers at Gothenburg.

❖ There was a general approval of the online methodfrom the members and management.

❖ A high number of those who responded were also will-ing to take part in a telephone survey.

Potential for gathering future case studies, internal andexternal ________________________________________________

The members and management recognized the potentialfor increasing the depth and widening the scope of com-panies completing the questionnaire, including those out-side the F&L club. The willingness of member to take part ina telephone survey opens up the opportunity to gain agreater insight into their particular case studies. Membershave contacts with other companies outside the F&L clubwhom they could recommend to participate in the ques-tionnaire survey. However given the time and resourceconstraints of the working group these aspects could notbe gathered and incorporated into this report. They re-main an opportunity for the future.

Conclusions ____________________________________________

The results of the questionnaire provided factual evidencefor the working group. There was a good quality of consis-tency across the range of views and options.

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Introduction ____________________________________________

The developments in the sector of e-business are followingrapidly, almost to fast to keep up with. Let’s take sometime to take a closer look at E-marketplaces and their use-fulness for European logistic companies. In assignment ofthe Working Group “Impact Of A Virtual Forwarding Envi-ronment”, a research project has been conducted to in-vestigate the possibilities of freight exchanges for themembers of the European Freight and Logistics LeadersClub.The guidelines for this project were described in a numberof main tasks14:

❖ Analyse and list logistic E-marketplaces by indicating us-age, ownership, functionality, etc

❖ Categorise logistic E-marketplaces by a set of predeter-mined properties

❖ Describe the logistical process of a specific logistic E-marketplace.

Provide an online selection support guide for shippersthat enables easy selection of best purpose suited Elec-tronic Transport Platforms (E-marketplaces)

The first part offers an explanation to the F&L Matrix. Thesecond and final part gives a conclusion on the investiga-tion of the E-marketplace possibilities for shippers.In chapter 5 a detailed explanation is given about theterms e-marketplace. The definitions in that chapter areused again to streamline the investigation of current oper-ational freight exchanges.

Building the Matrix ______________________________________

❖ Finding information on the InternetAll the information used to build the F&L-Matrix has beentaken from web pages.To get lists of websites I’ve used search-engines as:

11. Searching for the right virtual

provider - an on-lineguide to F&L members

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14 Tasks as described in the “Briefing for Student”

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Altavista Google E-search Excite MagellanDMOZ Hotbot Netsearch Webcrawler National DirectoryEuroseek Lycos Searchalot Yahoo

The search engines mentioned above were selected be-cause they are among the largest engines available onthe Internet. Because of the enormous networks that theywere built upon they are most likely to produce functionallinks. It would probably be too extensive to mention all thesearch-entries that were inserted into the search-enginesto get the final list of websites, because practically all refe-rences have been tried. Furthermore, the F&L Matrix as it isnow, gives only a limited view of what can be found whensearching on the Internet.A limited view, because this matrix was developed with alot of fixed requirements. If you set no requirements thepossible results of a search for a marketplace via a searchengine will be more numerous. Nevertheless, extensiveand thorough search efforts have been made to create apiece of documented information.

Only when you start to set requirements to narrow thesearch area the number of hits diminishes.The enormously overflowing amount of information on theInternet could be an advantage as well as a problem. Thelarge number of possibilities could be an advantage,because by using the Internet a user has the possibility toaccess a lot of potentially good e-marketplaces in a shortperiod of time, when the user knows what he is looking for.On the other hand it could be difficult to make a distinc-tion between the sites that meet the user’s demand andthe ones that do not, because a search-engine that givesonly the specific requested information that a user desireshas yet to be launched.

Selection Criteria

In accordance with the managers of the Virtual Forward-ing Working Group the most relevant features for the F&LMatrix had to be determined. These criteria put togethermake up the interface of the F&L Matrix. These criteria willnow be listed and discussed. Whenever you find a “Notmentioned” reference, this means that there was no dataavailable at that time.

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Most website links coming out of a search-engine searchare practically just a name and a telephone number thatget you nowhere eventually.The difference between a company that is available onthe Internet and a company that is available and accessi-ble in a virtual way could not be clearer.The first tells you something about the company and that isjust what you get, some information on the company anda telephone number or an e-mail address.The other possibility for every organisation is to do businessin a transparent way, so that business will be easy and fast.Bringing in the virtual aspect enables an organisation tocut costs and reshape the business model for future devel-opment.

Website

All the websites mentioned in the Matrix are functional andready for doing business. The websites are mentioned inblue hyperlinks in the Matrix. Using the hyperlinks will takeyou directly to the website.

Process

The basic processes of e-marketplaces have been ex-plained in chapter 5. Up until now four options for market-process have been selected:

❖ Auction

❖ Catalogue

❖ Exchange

❖ Reverse Auction

Most commonly found in the Matrix is the private ex-change. Although there are some Auctions mentioned, itseems that the transparent structure of the Exchange is be-ing favoured, because the prices are believed to be lowerfor buyers and reasonable for forwarders.

Ownership

The ownership-column tells the user who, or what type ofcompany, owns or maintains the website. Sometimes a

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name is mentioned but mostly you see one of the optionslisted below.Options given in this section of the Matrix:

❖ Bank This website is funded/operatedby a bank

❖ Business conglomerate This website is owned by a gro-up of companies

❖ Co-operation This website is owned by agroup of companies that donot operate within each othersbranch of business

❖ Foundation This website is not a commercialenterprise

❖ Private company This site is operated by 1 com-mercial company

❖ Other All of the options not listed above

However, private companies seem to be most frequentlymentioned. This is caused by the fact that most e-market-places were started up by privately owned IT-consultingcompanies with logistic backgrounds. Other cases of privatecompanies occur when a company already in businessstarts up its own website. Yet another option is “Informationsite”. Although these websites are not E-marketplaces, theyprovide a lot of valuable information on logistic subjects

Type of Load

In this section you can find the different kind of goods/loadsthe listed companies specialise in.Abbreviations used in this section of the MatrixTL TruckloadLTL Less than TruckloadCL Container loadLCL Less than Container load

Options given in this section of the Matrix:All goods Website trades all goodsBulk Website specialised in bulk transportChemicals Website has specialised in chemical

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FCL/LCL Website trades a combination of bothFCL Website trades Full Container LoadsLCL Website trades Less than Container loadsContainer 20ft When a website specialises in handling

20ft containersContainer 40ft Website specialised in 40ft containersContainer 40fthc Website specialised in 40ft high cube

containersHazardous goods Website trades especially in hazardous

goodsHeavy transport Website specialises in heavy transportLoose goods Website specialises in loose goodsPallets Website specialises in handling pallet

loadsPart load Website specialises in consolidationReefer goods Website specialises in refrigerated goodsSpace/Freight Website offering freight or space inter-

mediationTank container Website specialised in Tank containersFTL/LTL Website trades combination of bothFTL Website that trades full truckloadsLTL Website that trades less than truckloads

Mode of transport

A number of websites feature all modalities or more thanone in an intermodal way of working. Naturally, this doesnot always have to be an advantage, because sometimesit may be better to focus on one modality and deliverpeak performance, than spread your attention over twoor more ways of transport and perform poorly. Road trans-port appears to be the best represented modality in theEuropean transport market. Which is comprehensiblewhen you look at statistics discussing the percentage ofroad-transport as a part of total transport per country.

Options given in this section of the Matrix:All Website has contacts for all modalitiesAir Website provides business for airfreightRail Website provides business for rail-freightRoad Website provides business for road-

freightSea Website provides business for sea-freight

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62

Global Areas

Here you can find the different possibilities for the area acompany can be active in.Abbreviations used in this section:EU European UnionUS United States of America

Options given in this section of the Matrix:EU Website is strictly focused on EuropeEU/US Website is strictly focused on Europe

and United StatesEU/ASIA Website is strictly focused on Europe

and AsiaEU/US/ASIA Website is strictly focused on Europe,

United States and AsiaWorld-wide Website has no limitations to areaNot mentioned Website does not specify area

Language

The more languages are available the more internationala site can be deemed to be. Although we stated that aEuropean marketplace should at least have English lan-guage as a possibility, there are some sites that are Ger-man only, but still worthwhile.Abbreviations used in this section:ENG EnglishDEU GermanFRA French

Options given in this section of the Matrix:ENG only Website does not support any language

but EnglishGerman only Website supports German onlyENG, DEU Website supports English as well as Ger-

manENG, DEU, FRA Website supports English, German and

FrenchENG, FRA Website supports English as well as

FrenchENG, others Website supports English and any lan-

guage not being French or German

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environment

63

Track & Trace

Although not all sites feature this option right now, I am surethat they will in the future, because it’s starting to turn intoone of the basic elements for each marketplace.

Options given in this section of the Matrix:Yes Website has Track & Trace capabilitiesNo Website has no Track & Trace capabili-

tiesUnknown Track & trace is either not mentioned or

not available (yet)

Fee

There are four general options available in the Matrix un-der Fee right now:Fixed PercentageVariable PercentageSubscriptionNone

❖ Fixed PercentageSome sites have chosen to make their money by charging1-3 % of the total value traded. The fee one pays totallydepends on the website owner. There can be a minimumor maximum charge per month or year. The minimumcharge often occurs in the form of a monthly/annuallysubscription. The maximum charge is often related to aminimum amount. For example: After having spent 25,000Euros on the same website you don’t have to pay yoursubscription for the next year. There are a lot of otherbonus opportunities, all depending on the personal likingof the website owner

❖ Variable PercentageWebsites that feature this way of payment work accordingto the following principle:A shipper or carrier starts out at point 0, he pays the fullprice for everything. The more he trades, the more dis-count he receives, but the fee never gets reduced to zero.Another way for variable percentages to be charged is onbasis of the nature of the goods. Percentages tend to behigh for dangerous goods and lower for standard run of

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64

the mill goods. This difference is not in the physical aspectsof the goods, but in the availability of a carrier of shipper.

❖ SubscriptionThe word says it all. Companies subscribe for a certainamount and that buys them a certain range of services.Often there are multiple possibilities for the subscriptionfees. The higher the price, the higher the service-level.Worth mentioning is the fact that subscriptions often comein combination with fees per shipment. Websites that fea-ture this method proclaim that their service levels are bet-ter.

❖ NoneAlthough some sites state that they are for free, this is oftennot the case. The list does not contain any foundations ornon-profit organisations and therefore you must expect topay a certain amount to use the marketplace. Some sitesare listed as ‘none’ in the matrix. That does not automati-cally mean that they are free of charge, but mostly thatthey do not mention cost in any way.However, there is a tendency going on in the US werecompanies indeed step off fees for the marketplace.These companies charge their members for value addedservices that can be provided by the same company thatprovides the marketplace.

❖ FoundedThe year of creation gives you an indication of when a sitewas set up. There are a lot of conclusions you could drawfrom the year of founding; every one of them as good oras bad as the other. It completely depends on the per-spective of the reader what is a good year of constructionand what is not. Most articles on E-marketplaces draw thesafety line at 1997, but again, safety lies in the eye of thebeholder.

Result of findings - the on-line guideline __________________

The web search’s results are illustrated in Appendices I andII.

11.3

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Sorry. We said worldwide.

Logistics. Worldwide.

www.danzas.com

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environment

65

Ap

pen

dix

IF

&L

Ma

trix

F&L

list f

or T

rans

po

rt &

Fre

ight

site

s

Web

site

Proc

ess

Owne

rshi

pTy

pe L

oad

Mod

ality

Regi

onLa

ngua

geTr

ack

& tr

ace

Fee

Foun

ded

ww

w.c

arg

o4y

ou.

co

mex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsAi

rEU

Ger

man

onl

yYe

sSu

bscr

iptio

n+fe

e20

00

ww

w.c

arg

ore

serv

atio

ns.c

om

exch

ange

priv

ate

com

pany

Spac

e / f

reig

htAi

rW

orld

wid

eEn

g on

lyYe

sFi

xed

perc

enta

ge19

98

ww

w.g

f-x.

co

mex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LAi

rEU

/USA

/Asi

aEn

g on

lyYe

sN

ot a

vaila

ble

1999

ww

w.fr

eig

htg

ate

.co

mex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsAi

r / S

eaEU

Eng

only

Yes

Not

ava

ilabl

e20

01

ww

w.a

irca

rgo

wo

rld.c

om

xxxx

xxxx

xin

form

atio

nsite

All G

oods

All

Wor

ldw

ide

Eng

only

Unkn

own

Non

e20

00

ww

w.c

arg

ex.

de

exch

ange

Met

is G

mbH

FTL/

LTL

All

EUEn

g, o

ther

sYe

sSu

bscr

iptio

nN

ot a

vaila

ble

ww

w.c

arg

oc

lix.c

om

exch

ange

Osk

ar S

chun

k KG

All G

oods

All

EUEn

g, o

ther

sUn

know

nN

ot a

vaila

ble

Not

ava

ilabl

e

ww

w.c

arg

ohu

b.c

om

xxxx

xxxx

xin

form

atio

nsite

All G

oods

All

EUEn

g, o

ther

sUn

know

nN

one

1997

ww

w.c

arg

ono

w.c

om

exch

ange

LSXS

All G

oods

All

Wor

ldw

ide

Eng,

oth

ers

Yes

Subs

crip

tion

1995

ww

w.c

arg

ow

eb

.nl

xxxx

xxxx

xin

form

atio

nsite

All G

oods

All

EUEn

g, o

ther

sUn

know

nN

one

2001

ww

w.c

ont

ing

ate

.de

xxxx

xxxx

xUn

der c

onst

ruct

ion

All G

oods

All

EUEn

g, o

ther

sUn

know

nN

one

2000

ww

w.d

em

otra

ns.c

om

exch

ange

Logi

net

All G

oods

All

EUEn

g on

lyYe

sN

ot a

vaila

ble

2000

ww

w.e

log

istic

sglo

ba

l.co

mau

ctio

npr

ivat

e co

mpa

nySp

ace

/ fre

ight

All

EUEn

g on

lyUn

know

nN

ot a

vaila

ble

2000

ww

w.fr

ac

hne

tz.c

om

exch

ange

priv

ate

com

pany

Spac

e / f

reig

htAl

lEU

Ger

man

onl

yUn

know

nN

ot a

vaila

ble

1997

ww

w.fr

eig

htm

ark

et.c

om

exch

ange

priv

ate

com

pany

All G

oods

All

EU/U

SA/A

sia

Eng

only

Yes

Not

ava

ilabl

e19

99

ww

w.fr

eig

htst

ats

.co

mex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsAl

lEU

Eng

only

Yes

Not

ava

ilabl

e20

00

ww

w.fr

eig

ht-t

rad

ers

.co

mau

ctio

npr

ivat

e co

mpa

nyAl

l Goo

dsAl

lEU

Eng

only

Unkn

own

Varia

ble

perc

enta

ge20

00

ww

w.lo

gis

tikm

ark

t-o

nlin

e.d

ein

form

atio

nsite

priv

ate

com

pany

All G

oods

All

EUG

erm

an o

nly

Unkn

own

Not

ava

ilabl

e19

99

ww

w.s

hip

ahe

ad

.co

mxx

xxxx

xxx

info

rmat

ions

iteAl

l Goo

dsAl

lW

orld

wid

eEn

g on

lyN

oSu

bscr

iptio

n20

00

ww

w.tr

ans

p.ro

auct

ion

priv

ate

com

pany

Spac

e / f

reig

htAl

lEU

Eng

only

Yes

Subs

crip

tion

2000

ww

w.c

arg

osp

here

.co

mex

chan

gepr

ivat

e co

mpa

nySp

ace

/ fre

ight

R/S/

AEU

/USA

Eng

only

Unkn

own

Fixe

d %

/ am

ount

1999

ww

w.3

t-c

arg

o.c

om

exch

ange

GH

P G

mbH

FCL

Road

EUEn

g, o

ther

sN

oN

ot a

vaila

ble

2001

ww

w.a

ktue

ll300

0.d

eex

chan

geJo

han

Hac

klAl

l Goo

dsRo

adEU

Ger

man

onl

yUn

know

nN

ot a

vaila

ble

2001

ww

w.b

ene

log

.co

mex

chan

geDa

imle

r Chr

ysle

r a.o

.Al

l Goo

dsRo

adEU

Eng

only

Unkn

own

Fixe

d pe

rcen

tage

2001

ww

w.b

est

rad

o.d

eau

ctio

npr

ivat

e co

mpa

nyPa

llets

Road

EUG

erm

an o

nly

Unkn

own

Varia

ble

perc

enta

ge20

00

ww

w.b

lote

c.c

om

exch

ange

priv

ate

com

pany

FTL/

LTL

Road

EUG

erm

an o

nly

Unkn

own

Subs

crip

tion

2000

ww

w.b

ox2

4.d

eex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng,

oth

ers

No

Not

ava

ilabl

e20

00

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66

Web

site

Proc

ess

Owne

rshi

pTy

pe L

oad

Mod

ality

Regi

onLa

ngua

geTr

ack

& tr

ace

Fee

Foun

ded

ww

w.c

arg

o4u

.co

mex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Ger

man

onl

yUn

know

nSu

bscr

iptio

n20

00

ww

w.c

arg

od

irec

t.de

exch

ange

priv

ate

com

pany

Spac

e / f

reig

htRo

adEU

Eng,

ger

man

Yes

Subs

crip

tion

Not

ava

ilabl

e

ww

w.c

arg

om

ast

er.d

eex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng,

ger

man

Unkn

own

Subs

crip

tion

2001

ww

w.c

arg

om

ile.c

om

exch

ange

priv

ate

com

pany

Spac

e / f

reig

htRo

adEU

Eng

only

Yes

Subs

crip

tion

2000

ww

w.c

arg

op

oo

l.de

exch

ange

Karl

Fixe

mer

gm

bhFT

L/LT

LRo

adEU

Ger

man

onl

yYe

sVa

riabl

e pe

rcen

tage

2001

ww

w.c

arg

ore

nt.d

eex

chan

geSA

LT A

GFT

L/LT

LRo

adEU

Eng,

oth

ers

Yes

Not

ava

ilabl

e20

01

ww

w.d

ele

go

.co

mex

chan

gepr

ivat

e co

mpa

nySp

ace

/ fre

ight

Road

EUEn

g, o

ther

sYe

sVa

riabl

e pe

rcen

tage

2000

ww

w.d

igita

lfre

ight

.co

mex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng

only

Yes

Not

ava

ilabl

e20

01

ww

w.d

rive

.to/f

rac

htb

oe

rse

exch

ange

othe

rFT

L/LT

LRo

adEU

Ger

man

onl

yN

oN

ot a

vaila

ble

2000

ww

w.e

uro

da

t-se

rvic

es.

co

mex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng,

oth

ers

Yes

Not

ava

ilabl

e20

01

ww

w.e

uro

trans

.co

mex

chan

geFi

scal

c In

c.FT

L/LT

LRo

adEU

Eng,

oth

ers

Yes

Not

ava

ilabl

e19

96

ww

w.fr

ac

htm

ark

t.de

exch

ange

priv

ate

com

pany

FTL/

LTL

Road

EUG

erm

an o

nly

Yes

Fixe

d pe

rcen

tage

Not

ava

ilabl

e

ww

w.fr

ee

ca

rgo

.co

mex

chan

geLo

gine

tAl

l Goo

dsRo

adW

orld

wid

eEn

g on

lyYe

sFi

xed

perc

enta

ge19

97

ww

w.fr

eig

ht-o

nlin

e.c

om

exch

ange

priv

ate

com

pany

FTL/

LTL

Road

EUEn

g, o

ther

sUn

know

nN

ot a

vaila

ble

Not

ava

ilabl

e

ww

w.h

aul

ag

e-l

inks

.ieex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng,

oth

ers

Unkn

own

Not

ava

ilabl

e19

98

ww

w.in

ters

pe

ed

.de

exch

ange

Dien

stle

istu

ngsb

örse

FTL/

LTL

Road

EUG

erm

an o

nly

Unkn

own

Non

e19

98

ww

w.le

erto

ur.d

eex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsRo

adEU

Ger

man

onl

yN

oN

ot a

vaila

ble

2000

ww

w.lk

wo

nlin

e.d

eex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng,

oth

ers

No

Not

ava

ilabl

e19

98

ww

w.s

pe

di.d

eex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng

only

No

Varia

ble

pric

ing

2000

ww

w.s

vg-f

rac

hte

n.d

eex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Ger

man

onl

yN

oN

ot a

vaila

ble

2001

ww

w.te

lero

ute

.co

mex

chan

gepr

ivat

e co

mpa

nyFT

L/LT

LRo

adEU

Eng

only

Unkn

own

Subs

crip

tion

2000

ww

w.ti

mo

co

m.d

eex

chan

geW

olte

rs K

luw

erAl

l Goo

dsRo

adEU

Eng,

oth

ers

Yes

Not

ava

ilabl

e19

98

ww

w.a

uctio

nca

rgo

.co

mau

ctio

npr

ivat

e co

mpa

nyAl

l Goo

dsSe

aEU

/Asi

aEn

g, o

ther

sUn

know

nN

ot a

vaila

ble

1999

ww

w.c

yvo

yag

e.c

om

exch

ange

priv

ate

com

pany

Not

ava

ilabl

eSe

aNo

t men

tione

dEn

g, o

ther

sUn

know

nN

ot a

vaila

ble

1999

ww

w.fr

eig

ht-o

n-lin

e.n

lex

chan

geSh

ortS

ea s

hipp

ing

FCL

Sea

EUEn

g, o

ther

sYe

sN

ot a

vaila

ble

Not

ava

ilabl

e

ww

w.g

lom

ap

.co

mex

chan

gepr

ivat

e co

mpa

nyFC

LSe

aW

orld

wid

eEn

g, o

ther

sYe

sN

ot a

vaila

ble

2000

ww

w.le

vels

ea

s.c

om

exch

ange

priv

ate

com

pany

Bulk

Sea

Wor

ldw

ide

Eng

only

Unkn

own

Not

ava

ilabl

e20

00

ww

w.n

ets

hip

bro

kers

.co

mex

chan

geP.

Nom

ikos

& C

oAl

l Goo

dsSe

aW

orld

wid

eEn

g on

lyYe

sSu

bscr

iptio

n19

97

ww

w.s

hip

be

stw

ay.

co

mex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsSe

aW

orld

wid

eEn

g on

lyYe

sSu

bscr

iptio

n19

99

ww

w.q

l-ne

t.co

mex

chan

geM

edia

way

FCL

Air /

Sea

Wor

ldw

ide

Eng,

oth

ers

No

Not

ava

ilabl

e20

01

ww

w.n

ed

ca

rgo

.co

mex

chan

gepr

ivat

e co

mpa

nyBu

lkAi

r / S

eaEU

/Asi

aEn

g, o

ther

sYe

sFi

xed

perc

enta

ge20

00

ww

w.o

nlin

ec

arg

o.c

oex

chan

gepr

ivat

e co

mpa

nyAl

l Goo

dsAi

r / S

eaW

orld

wid

eEn

g on

lyN

oFi

xed

perc

enta

ge20

00

ww

w.o

ge

net.c

om

exch

ange

priv

ate

com

pany

FCL

Road

/ Se

aW

orld

wid

eEn

g on

lyUn

know

nN

ot a

vaila

ble

2000

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environment

67

Not Suitable Logistic Websites

List of websites that are not marketplaces3PF.COM / ComAlliance Not a marketplaceAgfreight.com Not a marketplaceAir Menzies International Not a marketplaceAirbill.com Not a marketplaceAirfreight Quotes - Online Not a marketplaceArnold Logistics Not a marketplaceASD Systems (ASDS, news, profile) Not a marketplaceAuction Broker Not a marketplaceBender Warehouse Company Not a marketplaceCargosave Not a marketplaceCelarix Not a marketplaceCyber Freight Not a marketplaceCyntric Not a marketplaceDebra-Hughes Not a marketplaceDitan Company Not a marketplaceDSC Logistics Not a marketplacedVault.net Not a marketplaceeFr8 Freight Matching Service Not a marketplaceElbeeNet Not a marketplacee-NITED Business Solutions Not a marketplaceeTrac.net Not a marketplaceFreight Dynamics Inc. Not a marketplaceFreight Manager Not a marketplaceFreight Savers Express Not a marketplaceFreightDesk.com Not a marketplaceFreightGate Not a marketplaceFreightMatrix.com Not a marketplacefreightPro.com Not a marketplaceFreightquote, LLC Not a marketplaceFreight Vision Not a marketplaceFrom2.com Not a marketplaceIntermail Same Day Shipping Not a marketplaceLast Minute Air Not a marketplaceLOG.NET Not a marketplaceNowDocs Not a marketplaceQuoteship.com Not a marketplaceRoadrunner Not a marketplaceRomanian Logistics Stock Market Not a marketplacesealink globle logistics net Not a marketplaceShip Net Not a marketplace

Appendix IINot Suitable Logistic

Websites

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68

Ships for Sale Not a marketplaceShip-search.com Not a marketplaceThe Web-Editors freight page Webex Not a marketplaceTransportation Management Not a marketplaceTransportation Services and Logistics Consulting Not a marketplaceTransportation.com Not a marketplaceTranspoWap Free Freight Exchange Not a marketplaceUSF Worldwide Logistics Not a marketplaceWebfreight Not a marketplaceWebShipper Not a marketplacewww.cargo-agent.com Not a marketplacewww.delego.com Not a marketplacewww.loginet.nl/freecargo Not a marketplacewww.logisped.com Not a marketplacewww.logistikinfo.de Not a marketplacewww.logistiksoft.com Not a marketplacewww.lv-sachsen.de Not a marketplacewww.nolis.com Not a marketplacewww.nordtrans.com Not a marketplacewww.pkaimex.de Not a marketplacewww.removal.com Not a marketplacewww.spedition.de Not a marketplacewww.stoffstrom.de Not a marketplacewww.trans-net.de/cargoroute Not a marketplace

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List of Non-European websitesAmerican Airlines Priority Parcel Service Non-European areaAmerican Delivery Service Non-European areaBid Freight Non-European areaCarriers’ Co-Op Non-European areaCopera Non-European areaDirect Freight Non-European areaDirectsite Corporation Non-European areaDownRiver Logistics Group Non-European areaeDigital.com Non-European areae-fulfillment.com Non-European areaExpedite Loads.com Non-European areaFreight Search Australia Non-European areaFreightLand.com Non-European areaFreight-Online Non-European areaFreight-Search (Australia) Non-European areaHub Group Inc. Non-European areaInternet Truckstop Non-European areaPacific Coast Tariff Bureau Non-European areaPostOnce.Net Non-European areaShipping-Auction.com Non-European areaShippingFinder Non-European areaShippingFreight.com Non-European areaTeamsters Trucking Non-European areaTrans Modal Inc. Non-European areaUbidfreight.com Non-European areaUQuote Freight.com Non-European areaUrgentFreight Non-European areaUS Transportation Services Non-European area

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List of websites that are no longer availableAction Transport Inc. Website no longer availableAFC Shipping Company Website no longer availableAFC Trucking & Freight Services Website no longer availableBrennan International Transport Website no longer availableMercer Available Freight Website no longer availableNeoModal.com (NeoModal) Website no longer availableEuropean Freight Exchange Website no longer availableFree Translog Website no longer availableRoutes Transport Website no longer availableTarros Website no longer availablewww.drive.to/Frachtboerse Website no longer availablewww.fracht-24.de Website no longer availablewww.wevegotfreight.com Website no longer available

List of Non-English websiteswww.aktuell300.de Non-English websitewww.bwv.de Non-English websitewww.computerfrachtenboerse.de Non-English websitewww.dbstv.de Non-English websitewww.eulox.net Non-English websitewww.eurofracht.com Non-English websitewww.frachtboerse.de Non-English websitewww.frachten.com Non-English websitewww.frachten24.de Non-English websitewww.intercargoline.de Non-English websitewww.intercourier.de Non-English websitewww.interspeed.de Non-English websitewww.kaufgasse.de Non-English websitewww.kurier.com Non-English websitewww.ladex.de Non-English websitewww.transp.ro Non-English websitewww.transport2010.de Non-English websitewww.transportbetz.de Non-English websitewww.transport-logistik.com Non-English website

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List of websites that are out of business/can’t be openedBidToShip.net Inc Out of businessConnextions.net Out of business2000Logistics Unable to open3Plex.com Unable to openCargo4less.com Unable to openCargoNet.com Unable to openElectronic Freight Exchange Unable to openeShip.com Unable to openGeotrans (also in Russian and Rumanian) Unable to openiLink Global Unable to openLone Star Freight Unable to openOnline_Freight Unable to openSea Freight Auction Unable to openTrans-Logistic Unable to openwww.cargoservice.sk Unable to openwww.cargoswitch.nl Unable to openwww.fas-web.de Unable to openwww.stutensee.com/rwr Unable to open

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Terms and definitions are partially adopted from the docu-ment “The impact of electronic commerce on managingthe supply chain” of the F&L working group.The working group “The Impact of Virtual Forwarding” hastaken a closer look at the marketplace environment andre-defined some of the definitions concerning this area.Others remain unchanged.To have general understanding of the concepts used inthis report, this list will state the definitions of these con-cepts in alphabetic order:

3PL Third party Logistics - Logistic Serviceprovider for one or multiple tasks in thelogistic chain.

4PL Fourth Party Logistics - Service Providerthat integrates all logistic processes.

APS Application Systems Provider - managesand distributes software-based servicesand solutions to customers across awide area network from a central datacenter.

C-Commerce Collaborative Commerce - Software thataggregates fragmented buyers and/orsellers to increase a market’s efficienciesbeyond the exchange of goods.

CDM Collaborative Decision Making - initia-tive aimed at improving traffic man-agement through increased informa-tion exchange among the variousparties in a community and improvedautomated decision support tools.

CRM Customer Relation Management.- Busi-ness model that places the customer atthe center of all corporate initiatives.The adoption of CRM necessitates there-engineering of systems, data andprocesses to ensure all customer infor-mation is being used to the customer’sbest advantage.

E-Business Electronic Business - Sharing business in-formation, maintaining business rela-tions and conducting business transac-tions electronically.

Appendix IIITerms and Definitions

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E-commerce Electronic Commerce - The applicationof advanced information technologiesto improve efficiency and effectivenesswithin the business process.

EDI Electronic Data Interchange - Systemthat enables inter-organisational, com-puter-to-computer exchange of largeamounts of sensitive information in a se-cured environment.

EDIFACT Electronic Data Interchange for Admin-istration, Commerce & Transport - A sys-tem that could enable the paperless of-fice

E-markets Electronic marketplaces - Online inter-mediaries that bring together severalbuying and selling parties and facilitatethe transactions of goods and servicesbetween those parties.

E-marketplace See e-markets.E-Procurement Electronic Procurement - Used to ex-

change information, to automate trans-actions and to link information systems.It allows every employee to directly par-ticipate in the purchasing process.

ERP Enterprise Resource Planning - Systemthat allows large companies to man-age inventory and integrate back-endprocesses.

ETA Estimated Time of Arrival.Freight exchange Marketplace strictly used for trading

freight.GPS Global Positioning System.ICT Information & Communication Technol-

ogy.IT Information Technology.ITCMS Intermodal Transport Chain Manage-

ment System.ITS Intelligent Transport System.LSP Logistics Service Provider.M-Commerce Mobile commerce - The next frontier for

B2B. Building the tools and infrastructureto stay in touch constantly with cus-tomers and employees through wireless

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devices such as cell-phones and per-sonal digital assistants.

Portal Web ports that serve as front ends bycreating, installing and hosting person-alised applications for customers or em-ployees and aggregating links to rele-vant content and websites.A classic example is Yahoo!.

PPP Public-Private Partnership.PRM Partner Relation Management.RDBMS Relational Database Management Sys-

temRFQ Request For Quotation.RF tags Radio Frequency tags - wireless com-

munication devices that have excep-tionally long range, vary in size, and canbe designed to identify and locate ormonitor items for inventory and assettracking.

SCM Supply Chain Management - Systemthat effectively co-ordinates and man-ages supply chain processes, as quicklyas possible and at the lowest costs with-out deteriorating product quality or cus-tomer satisfaction.

SMS Short Message Service - Service provideby telephone companies.

SOAP Short Object Access Protocol.TNO Research bureau in the Netherlands.WAP Wireless Application Protocol.XML eXtensible Markup Language - a meta-

language that allows businesses to talkto each other over the web. The mostimportant factor in XML’s success is thatit includes standards that allow back-end systems integration.

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Just What Is a 4PL Anyway?By Kurt C. Hoffman - August, 2000, Global Logistics & Sup-ply Chain Strategies

Consultants and 3PLs differ on whether the trademarkedterm is a distinction without a difference, but they agreethat there is a real need for a “supermanager” to run acompany’s logistics, knowledge base and IT systems.

You will get no argument that the increasing complexity oflogistics management coupled with the explosion of infor-mation technology has created fertile ground for a “super-manager” of sorts for intricate supply chains. Moreover,academicians, consultants and third-party logisticsproviders, not to mention customers, say that the need forsuch an entity is growing all the time. Its job: to supervise allaspects of the supply chain of a manufacturer or distribu-tor and to be the sole point of contact between that com-pany and its array of logistics and information serviceproviders.

What gets the hairs bristling on the necks of the 3PLs andconsultants is when you start to narrow down who is moreperfectly suited for the supermanager’s role. And there aresensitivities at work here. For example, using the term “4PL”- for fourth-party logistics provider - instead of the morepalatable handles of “logistics integrator” and “lead logis-tics provider” rankles the 3PLs to no end. That is particularlyso when the 4PL concept is presented as a product from,and the holy ground of, the consulting firms. It certainly de-rives from that community; 4PL was coined and trade-marked by Andersen Consulting. On the other hand, con-sultants take umbrage to the charge that they haveattempted to manufacture a market by coining, trade-marking, and then relentlessly flogging the future of the4PL. An old-fashioned turf battle is brewing. And you don’thave to scratch too far below the surface to get a reac-tion, particularly from the 3PLs that have invested in tech-nology, human resources and alliances in order to presenta single point of contact for operation of a customer’s sup-ply chain. Those leading firms include Menlo Logistics, Ry-der System, Federal Express, UPS Logistics, GATX Logistics,Exel and Schneider Logistics.

Appendix IVArticle on 4PLs

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But first, here’s the deal from the Andersen side of theequation, according to James W. Moore, an associatepartner with Andersen Consulting.

“The pace of change has been accelerating, the com-plexity has been accelerating, and our sensation - andwe’re not alone in this - is that there’s a role emerging for acomplexity manager,” says Moore. This complexity man-ager - call it a 4PL or logistics integrator or lead logisticsprovider or supermanager - would be, in Moore’s words, an“on-purpose entity with shared risk/reward and would havemulti-function management responsibility, including supply-chain planning, some information technology capabilities,the more traditional transportation and distribution disci-plines, and a multi-provider management function.”

That’s what Andersen is doing in the United Kingdom,Moore says, where it is serving as a 4PL for Thames Water.“That’s a cooperative venture where we perform their sup-ply-chain operations for them. They are the largest waterutility in the U.K.”

Expanding into the 4PL role constitutes an interesting shiftfor Andersen, as the consultancy’s general position hasbeen on the front end of a logistics solution: The troops typ-ically go in to a customer location, collect information,perform due diligence and provide a white paper solution.A logistics firm usually then manages the business.

The leading 3PLs have a different take on the 4PL phenom-enon. “The 4PL to me is nothing more than the lead logis-tics provider, and that name has been around for quitesome time,” says Rodger Mullen, vice president and gen-eral manager of Schneider Logistics.

The root of the issue, says Mullen, is that whenever serviceproviders go into a logistics outsourcing project, the cus-tomer these days essentially wants one company and onepoint of contact to do it all. “However, given the way logis-tics organizations exist today, there isn’t really one com-pany that has all the core competencies to do everythingthat a truly global customer wants to do. In order to get tothat total end-to-end solution, the lead logistics provider or

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4PL in essence contracts with different providers, assem-bles those end-to-end solutions, manages them and servesas the single point of contact to the shipper.” Schneiderhas been providing that comprehensive, single-point-of-contact service for GM’s Service Parts Division and has sev-eral other irons in the fire, Mullen says.

“There’s a lot of talk about how the concept of the 4PL de-veloped, but one theory is that the consulting firms reallywanted to figure out a way to create an ongoing revenuestream to supplement their project work, and thereforethey coined the phrase 4PL, which basically meant thatthey were going to manage the 3PLs on a continuous basisfor a client such as a manufacturer or distributing com-pany,” offers Todd Carter of GATX. “That’s maybe themore cynical theory. The more optimistic theory is that be-cause of the growing criticality of information in managingthe supply chain, it was a natural progression.”

Jim Fields, director of business development for Menlo Lo-gistics, sees it this way. “The 4PL terminology has grown outof the consulting industry in what I think was really an at-tempt to create a market and position the company asthe logical party between customer and the 3PLs,” saysFields. As that go-between, the 4PL would be in position tomanage what many consider is the most important aspectof the operation - the customer relationship.On the practical front, however, Fields questions the needfor an additional player here. “I don’t think the 4PL role ref-erences anything more than what 3PLs and some of thelargest integrators have been doing - being the singlepoint of integration of information flow and operational re-sponsibility for an entire enterprise or a defined portion ofthat enterprise,” he says. Menlo provides re-engineeringservices, performs systems integration and subcontractswith and manages third- party service providers for a num-ber of customers, he says. “And if the scope of your out-sourcing contract is such that you will be acting as the soleconduit or the sole responsible party for the outsourcing ofthis scope of work and are the sole point of responsibilityback to the customer ... well, if you want to call that 4PL or5PL or systems integrator, the principle is the same, the re-sponsibility is the same, and the operation is the same.”

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Bringing another company into the mix as a “superman-ager” of sorts raises the cost-versus-value question, saysFields. “This puts another layer of cost into the supply chain,and the challenge is to understand what kind of value iscreated by having this other group aside from the 3PLs.Does this company bring enough value to justify itself? Idon’t think it does.”

Emerging Competencies

Prof. John H. Langley, Dove Distinguished Professor of Lo-gistics at the University of Tennessee, understands the fric-tion between the 3PLs and consultants, but he sees a newdemand developing in the logistics arena as changes insupply-chain practices cause supply-chain managers toplace value on three emerging competencies. One com-petency is in managing the activities of more than onethird-party logistics provider, and there are both opera-tional and strategic elements to this, he says.

A second competency is managing the availability andutilization of knowledge. “The natural reaction of mostpeople is to say, ‘I can be responsible for my own knowl-edge, thank you,’ but I think, given how quickly things arechanging today, that it’s not unreasonable to actually hirean expert to manage the knowledge - to process informa-tion, utilize it and make it available - in the same way youmight have legal counsel to make you aware of the latestdevelopments of a legal nature that impact your busi-ness.”The third competency focuses on information technology.“Things are changing so quickly today in the IT sector thatyou really have to have not only a capable party but onethat has core competency in knowing what systems areavailable and how to utilize and integrate those systemswith other capabilities.”

These three competencies clearly exceed what might nor-mally be expected from a 3PL, the professor explains. “Thatin my mind would justify the business case for a fourth-partyprovider,” says Langley. “The question that comes up is -and it’s a valid question from a customer firm or a 3PL - amI suggesting they cannot do these things themselves? I’m

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not suggesting that, but I’m suggesting that certain com-petencies are needed. If you are a 3PL and you havethem, great, you should be going full speed ahead.” Headds that no reason exists why a 3PL could not bring thesecompetencies into its service portfolio by subcontracting.Andersen clearly hopes to see a fruitful market for consul-tancies in the 4PL arena - at least for their consultancy - butbacks off from confrontational language and talk about aturf war.

“I don’t see it as a struggle between the consultants andthe 3PLs, and we certainly don’t view ourselves as com-petitors to 3PLs,” says Moore. “With a new role like the 4PL,a role that is mostly global, information technology rich, as-set-free ..... I don’t think that puts us in conflict with 3PLs.We’re consultants.”

The key thing that is happening in the supply chain is thattime now is often more important than geography, he ex-plains. “The management of time and the associated opti-mization of the use of time throughout a supply chain is of-tentimes a skill set provided by information technologypeople and consultants, more so than the third-party logis-tics firms have in past,” he points out. “Certainly the 3PLsare catching up, but the primary role we see for the 4PL isthe management of complexity and time.”

“We all agree in this business that information has becomeas important and sometimes more important than the ac-tual physical movement of the product,” says Todd Carterof GATX. “Information on orders, on inbound material, onshipment accuracy, inventory control ... all of this is highlycritical information. And as that information becomes evenmore critical, the reliance on information itself and the sys-tems to manage it has become increasingly more impor-tant, which has really led to this role of a logistics integrator.”

Carter acknowledges that a 4PL/logistics integrator couldbe either a consultant or the lead logistics provider, de-pending on the customer’s most pressing needs. “The roleof the lead logistics provider is knitting together for a man-ufacturer or distributing company the services of varioustransportation and warehousing companies and third-

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party service providers,” he says. “The first question wehave to ask is whether there is potential value in a com-pany acting in the role of a lead logistics provider or 4PL.”

If one thinks that the answer to that question is yes, asCarter does, the next consideration is who might be bestpositioned to be of value to particular manufacturers anddistributors. “Certainly 3PLs bring the advantage of operat-ing experience: We’ve lifted the boxes and kicked thetires, we know how things are supposed to operate andwe know what to do if operations break down. But, typi-cally, compared to the consulting firms we may be weakon management talent, organizational talent or processre-engineering. So depending on what you’re after from a4PL, you might look one way or the other.”

Clearly the first and foremost mission of a 4PL would be tointegrate the information and operations, he says.“Whether the second mission is to provide some manage-ment organizational talent or really hit on productivity andquality within the operation probably would drive whowould do a better job as a 4PL, the former being a man-agement consultancy, the latter being one of the top 3PLsthat is entering the 4PL market.”

Menlo’s Fields responds to suggestions that the consultan-cies are better positioned to handle the information flowand to oversee system re-engineering by pointing out thathis company and the leading 3PLs have brought new tal-ent into the equation through hiring and via alliances. “Wehave some of the best consultants in the world ... engi-neers and Ph.D.s and MBAs ... and these people are justlike the people who work for the consulting firms. And con-sulting firms have engineers who are very competent peo-ple,” says Fields. “The difference between us and a bigconsulting company is that whenever we are asked toconsult, we generally are asked to operate. And that’s akey differentiation. I’m not out there arguing that weshould be hired ahead of consulting companies, becausewe work directly with consulting companies. I will say thatwe have this added advantage: When we consult for ourcustomers, we also have to operate and manage the solu-tions, so our solutions have to be very credible.”

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Schneider also has brought more consulting talent in-house, according to Mullen. “We’ve really beefed up ourrengineering staff, so when we get a proposal, we are ableto go to the possible customer’s site and collect data andinformation and really come up with what we call our ownsolution and one that we feel has integrity on the opera-tion front,” he says. “And we’ve grown our engineeringstaff to be consultative in nature, not only on the front end.As you start managing the business, there are other oppor-tunities as well.”Langley doesn’t foresee a single provider type emerging asthe only or even the best kind of provider of 4PL/logistics in-tegrator services. It will be a mix of 3PL-type firms and con-sulting firms, he says, and he would not rule out the technol-ogy sector itself as becoming the provider of 4PL services.“Think about it: When you have the Ernst & Youngs, the An-dersens and the Deloittes positioning themselves as poten-tial 4PLs alongside the operating companies like Ryder andExel, there’s no reason why you couldn’t have Manugisticsor i2 Technologies emerge in a 4PL role,” he says. “We alsohave some of the e-commerce type of companies that arebordering on providing those kinds of services as well. Theleadership could come from a number of directions, andprobably over the long term, we will see the direction es-tablished by multiple types of providers.”

Fields agrees. “This is a huge market, and the projects aregoing to take all different kinds of shapes and forms andstructures,” he says.

Moore indirectly acknowledges that the movement fromdesigning solutions to managing programs constitutes asignificant shift within Andersen. “The lines between a lot ofproviders are blurring, and I think many consultants are try-ing to take a longer operating role in the supply chain,”says Moore. However, he points out that the leading 3PLshaven’t exactly been passive in the current logistics envi-ronment when it comes to forging new alliances and busi-ness relationships and might well be qualified for the 4PLrole in certain logistics operations.

“In logistics today there are a lot of relationships amongcompetitors where they have come together in alliances to

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work for a particular customer,” says Moore. “You end uppartnering with a variety of people in this space now. Thesupply-chain space with the addition of the e-economy isgetting very complex, so you have a classic cohabitation.”

Logistics outsourcing is becoming analogous to the infor-mation technology sector of the economy, he explains. Al-liances and joint ventures are more prevalent in the IT sec-tor, but as the supply-chain sector becomes moreinformation-rich and thus more akin to the IT world, it’s nat-ural to expect a progression of alliances and joint efforts,says Moore. And while alliances often are difficult to workwith (and ownership of client relationships remains an is-sue), he says, they are a necessary evil, a faster way to getcapability on board an enterprise.

“In IT outsourcing, there’s a concept that has been devel-oped over the past 10 years related to best of breed,” saysMoore. “Depending on the supply-chain situation and theweight and importance of the discipline you bring to theparty, the overall manager serving the role of the 4PL in abest-of-breed contract could be a consultancy or it couldbe an asset-free associate of a 3PL. Some of the very large3PLs are developing some pretty strong capabilities.”The most successful high-tech firms are rich with alliancerelationships that include companies that often are directcompetitors with each other, Moore points out. “And if youlook at the 3PL landscape, they are developing a largesuite of alliance relationships as well. There’s an increasingmaturity in the entire industry.”

Several of the leading 3PL firms have achieved 4PL/logis-tics integrator relationships with a select customer or two,but the concept remains largely theoretical in nature.

“It’s a tough sale,” admits GATX’s Carter. “One of thethings that a 4PL’s client gives up when they enlist the ser-vices of a 4PL is the day-to-day touching of providers, soit’s really a leap of faith for somebody to go to a systems in-tegrator and basically relinquish control and contact withthe logistics service providers - the transportation compa-nies, warehouse companies, freight payment service firms,packaging specialists - that make the supply chain work. In

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a true systems integrator environment, that contact goesaway and is managed through the integrator/4PL.”

From the more candid customers, 3PLs hear about otherconsiderations. “The natural business argument from themanufacturer’s perspective is that the 4PL scenario cancreate tremendous exit barriers,” Carter says. “These cus-tomers ask, ‘How can you get rid of an integrator or 4PLwhen they basically own the commercial relationship withthe service providers?’ There are some important decisionsinvolved here.”Looking into the future, Langley sees two things happening.“We will see the emergence of some relatively comprehen-sive providers that have the ability to provide the neededinformation technology and knowledge as well as accessto a wide range of logistics services, and these comprehen-sive providers will give customers truly integrated packages.

“There also will be a continued market for highly focusedniche kinds of operations of all types, particularly in trans-portation and warehousing. If you look at the marketplacein one respect you might think that if the larger companieshave their way, there won’t be room for anyone else. But Ithink just the opposite will be true. As the large companiesimprove their capabilities, that will actually do two things:improve the market position of those companies, and cre-ate a lot of identifiable niches where more specialized ser-vices are needed.”

This might develop along the lines of the tier system in the au-tomotive industry, he suggests. “You might find some of theTier II and III companies providing valuable services to the3PLs directly and may have customer bases of their own.”

The logistics business is ripe for change, Langley adds. “Fiveor 10 years ago, we thought there were some identifiabledirections for the logistics business. But right now the logisticsarena is such an exciting environment, and there are somany different types of opportunities. If you look at the ex-tent of the investment capital being ploughed into some ofthe large firms - Federal Express, Ryder, UPS, Menlo, Exel - alot of companies are trying to take a huge position in themarketplace.”

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