How ecommerce helped the freight forwarding business

Introduction

The implementation of internet and electronic communication systems is changing the traditional face of freight forwarding and the shipping industry has to change with it. It is evident that e-commerce is no longer an emerging technology and it has already conquered a major place in the heart of freight forwarding business. Electronic communication system has become one of the main trump card in shipping industry to live up the higher expectations of a customer. This paper will review briefly the applications of e-commerce in general and in particular to the transport sector especially freight forwarding business.

E-Commerce

Electronic commerce is defined as the electronic exchange (delivery or transaction) of information, goods, services, and payments over telecommunications networks.It involves mainly distribution, buying, selling, marketing and servicing of products or services through the use of electronic means such as the Internet, and other computer networks. E-commerce has grown exponentially due to the convergence of technological developments, the merging of the telecommunications and computing industries, and globalised business models. The universal adoption of the Internet not only led to further rapid growth of the B2B sector, but also created a new business-to-consumer (B2C) market.The main factor that put e-commerce towards the top of the public is the popularisation and commercialisation of internet. E-commerce now touches virtually all aspects of economic and social life.(Swamidass,2000)

Freight Forwarding

Freight forwarders acts as an intermediary between exporters, importers or other companies organising efficient transportation of goods. They makes arrangement for transportation of goods by satisfying the customer requirements using various services like Shipping lines, Airlines Road and Rail freight operators. There are a lot of companies involved in freight forwarding business and these varies according to the size and type. In some cases the freight forwarders will only deal with particular goods only and they will be confined to certain geographical areas. Following are the functions carried out in freight forwarding business

Cargo consolidation and multimodal transport

Transhipment

Packing, warehousing and distribution.

Arranging cargo insurance

Documentation and customs clearance

Payment of freight and local taxes

Saved fax, phone and courier costs

Possibility to reuse information and create templates

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Transport distribution analysis and transportations arrangements

(UNESCAP,2011)

Greater speed in transactions

In e-commerce, transactions are faster than traditional commercial transactions. Before the advent of e-commerce, freight forwarders prepared the documents with the help of a lawyer and lot of stamps were used. The main advantage of e-commerce is that it allows electronic exchange of cargo documents through internet like bill of lading instructions, freight invoices, container status messages, motor carrier shipment instructions, and other documents with increased accuracy and efficiency by eliminating the need to re-key or reformat documents. It also enables streamline document handling for shippers, freight forwarders and trucking firms without the monetary and time investment required by the traditional document delivery systems and thus paperwork is significantly reduced and the shipping department will therefore be more efficient.(ELC,2011).For example US Customs Service supports an EDI-based system for ocean cargo which can report, electronically, the cargo manifest, bill of lading and other shipping-related information. This online data system has proved to be beneficial in permitting quicker cargo release and increased carrier productivity through reduced cargo-processing time. It has also helped some port authorities to become more competitive by reducing cargo customs clearance and processing times.(GXS,2011)

Use of e-commerce in cargo handling documentation helps in:

  • Reducing costs
  • Improving data accuracy
  • Simplifying business processes
  • Accelerating business cycles
  • Enhancing customer service.(ELC,2011)

Shipment tracking

Clients need connectivity with the Freight Forwarding systems to access their files for status, to extract reports from Freight Forwarding databases, and have their shipments processed in an error free and timely manner. Shipment tracking engages global positioning systems(GPS), which keep track of vehicles so that customers can find out exact location of the shipment at a given time. This gives instant shipping information access to anyone in the company, from any location. The greatest demands for shipment tracking has developed in express or parcel delivery services.(ELC,2011)

DHL is an example of a company where tracking has always been a crucial component to operations, which began with customers making calls to customer service to trace their goods. Now a number of options are available (Smith, 2002) Business Asia).

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Customer orientation

E-commerce helps in delivering better services to their customers like providing websites which helps the customer to gather information about the freight forwarders whom they wish to transit their goods. The customers can make right decision regarding their selection of the right freight forwarders. Some companies provide tariff information on the Internet sometimes along with calculators, enabling the shipper to input details such as cargo origin and destination, cargo characteristics, etc., providing the required freight rate instantly. These systems provide considerable benefit to shippers by simplifying and expediting numerous tasks involved in freight rating, which would otherwise involve considerable time, cost and human resources to complete .Another fact is that these website helps in boosting, branding and building up the goodwill of the freight forwarders for the purpose of marketing.(Lai & Wang,2008)

FedEx uses their secure saver which helps the software to set up an online catalogue and the order-handling system hooks into a user interface which helps to register online customers’ orders and make sure of confirmation numbers. With automatic inventory updating it is possible to pack the order.(Timmer 1999).. FedEx also has an E-Commerce Builder program, which offers Web design, hosting, order management, real-time financial settlement, and fulfillment to small and midsize companies, at no cost.(Business wire,2011)

Shipping portals

These have become a major strategic positioning exercise by liners, but internal strategies vary. The three major liner shipping portals online are

GT Nexus, an e-logistics software company, using its portal to drive its strategy of becoming a global leader in e-logistics software and services;

INTTRA, an industry portal rather than a software provider, aiming to facilitate the interaction between users and their carriers;

CargoSmart, aiming to add value to core booking and tracking facilities and to provide a more complete solution to users.(Wn,2011)

3PL Logistics

Increased adoption of logistic out-sourcing by manufacturing companies has led a steady growth of third party logistics (3PL) and in recent years, most of the traditional freight forwarders have transformed into 3PL.For the smooth operation of the organisation It is important to have successful information exchange between the parties involved in the business and to cooperate with remote warehouses and inland transport provider. Here e-commerce plays a vital role in helping the freight forwarders to sort out the problems with efficient communication systems and tools like EDI and ETF while they are emerging wholly as a 3PL. (Bumstead and Cannons,2002)

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ILG is a traditional freight forwarding company and now has emerged into a 3PL and provides services like shipping, e-commerce support, warehousing, fulfilment and the company believes that without the help of e-commerce they wouldn’t have emerged as a 3PL (ILG,2011)

Crown logistics, a freight forwarding company in Hong Kong with the help of e-commerce have helped to improve the utilization of its resources, such as warehouse space & transportation fleets, customs procedures, specialized packing and transports, on-time delivery and tracking technology. Company itself is in the process of expanding its operations across greater China, with the objective of becoming a full-pledged 3PL company (Crown logistics,2011).

Port services

Several maritime ports around the world, including those of New York, Rotterdam, Singapore and Hamburg have electronic systems which link up various parties engaged in the movement of freight through the port, including shippers, forwarders, customs, terminal operators, carriers and other port users.

Singapore TradeNet, an EDI system that has dramatically reduced turnaround times for processing information about ship arrivals, loadings and unloadings and departures .(Applegate et al,1993)

According to Lee and Whang in the near future, there will be an explosion of business-to-business applications of the Internet as visionary companies develop new paradigms of e-business for the future. This can be understood also to refer to new technologies that extend the ambit of e-business, such as mobile communications technology.(Lee & Whang,2001)

Conclusion:

E-commerce is an essential requirement in modern business methodology that cuts costs and at the same time increases the quality of services and thus achieving greater efficiency in freight forwarding business. The scope and range of these benefits makes it clear that e-commerce in the form of e-business processes and systems can have an enormous impact in terms of benefits to the entire supply chain.

Word Count: 1480

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