E-commerce: Does anyone care?

E-commerce: Does anyone care?

More than five years have passed since several ocean carriers formed three Internet portals and other lines established their own portals, yet shipper acceptance of the technology has been limited at best.

Today, it is the norm to go online to perform day-to-day activities such as booking, shipping instructions, remote printing of bills of lading and cargo tracking. For shippers and carriers alike, carrying out these functions online increases efficiencies, expands automation and reduces operating costs. No one denies the economic benefits of e-commerce.

However, many shippers still describe ocean carriers' e-commerce functionality as limited, unreliable and untimely. Indeed, e-commerce offerings of various ocean lines do not seem to affect shippers' choice of carriers. Last year, 42 percent of U.S. import and export containers shipped by ocean carriers were not associated with any carrier-sponsored portals. With shippers' ongoing demand for increased online applications and high reliability of information, how can we explain the shippers' behavior? Does e-commerce really matter to shippers?

To understand the carriers' side of the story, my company has been producing an annual report since 2003 that measures the progress of e-commerce offerings of the top 55 ocean lines' own portals with the three carrier-sponsored portals. The report is based on an E-Commerce Capabilities Index that establishes a common ground for the comparisons. Tracking the progress of e-commerce among ocean carriers since 2003 reveals significant trends among the carriers that indicate that carriers don't seem to care about e-commerce either.

For example, over the last three years, the majority of carriers did not offer any more than basic cargo tracking and booking functionality. Many portals still depend on expensive EDI links, unfriendly user interface and poor training of staff. Carriers also do not seem to be focused on data quality. As a result, the Web portals are unreliable, untimely and inaccurate. One of the leading carrier-sponsored portals indicated that data quality has improved from 17 to 50 percent over the last three years. This still means that only half of the information offered online is trustworthy. Does e-commerce really matter to carriers?

Although the benefits of e-commerce are well-known to shippers and carriers, there still seems to be a large gap between what shippers need and how carriers address those needs.

Shippers' logistics managers need to manage in-transit inventory, comply with changing customs and security regulations, and meet volatile customer demand. In short, shippers need to manage the whole supply chain as one unit. But carriers have offered little to support such need. For example, although the majority of carriers offer cargo tracking, only a handful offer exception reports that highlight problem areas to shippers. Automatic alerts for various events are only offered by about 25 percent of carriers. Bill-of-lading printing is only offered by 40 percent of the carriers, and original bill-of-lading printing is offered by less than one-third of carriers. Most carriers do not offer robust security of online data.

Carriers also need an incentive to invest further in e-commerce. A key complaint of carriers is that there seems to be no return on e-commerce investment. Our findings confirm this. When the results of this year's e-commerce status report were correlated to ocean lines' market share of U.S. imports and exports for 2005, we reached some puzzling conclusions.

The most important is that the low-rate carriers that had the fastest growth in market share offer very limited e-commerce services. In fact, they ranked eighth, 27th and 30th on our index among the top 55 carriers' portals. This indicated that shippers seem to still prefer carriers that charge low rates, even if the carriers don't offer sophisticated e-commerce functionality. This encourages many carriers to focus on lower rates, which may affect their ability to finance investment in e-commerce.

For e-commerce to advance to the point of offering real economic value, real commitment by shippers and carriers is needed. Shippers can greatly influence this progress by including

e-commerce as one of the key criteria in selecting carriers, or through direct involvement in the development of functionality that meets their needs. Shippers need to collaborate with their service providers, and carriers must respond to their customer base. With such collaboration, both parties will gain the promised benefits. Without it, everyone will lose.