Enhancing the "Art" of Shipping

Logistics is a people business, but technology can help, Logistics Forum concludes

Atlanta  June 21, 2002  Despite the rapid inroads that technology has made into the shipping industry in recent years, shipping remains an art rather than a science, according to transportation logistics experts who met recently in Atlanta at the Leaders in Logistics Annual Forum, presented by The Logistics Institute (TLI) at Georgia Tech.

Technology is helping carriers move freight faster, consolidate loads for better efficiency and increase the numbers on the bottom line. But even as the industry implements new solutions, carriers are learning that nothing affects profits more than relationships, participants in the forum said.

The strongest relationships are built when a carrier uses its sales force to uncover and understand shippers' global needs. To be successful, the industry must not lose sight of its human resources; it should learn to embrace technology as a tool, not a total solution, the participants concluded.

Today's professionals have access to unlimited information, yet much freight continues to be manually routed and tracked. A recent TLI study found that 60 percent of truck transportation planning is still manual. Although carriers overall have a positive impression of the available software, many have concerns about automating highly complex practices. "The cost of acquiring technology, training individuals and maintaining that infrastructure is driving a technology credibility gap," said Harvey Donaldson, director of TLI.

"The technology is challenging," said Chris Lofgren, chief operating officer of Schneider National Inc., the largest truckload carrier in North America, "and technology is probably the easiest part of it." Logistics costs have increased steadily in the last five years, and market trends indicate they will continue to rise.

Logistics software and service providers are developing decision support models to take advantage of developing technology. Logistics provider Manugistics offers a sophisticated freight-pricing model, known as "target pricing," to its carrier customers. Nistevo operates a collaborative transportation network, enabling shippers and carriers to utilize a shared network and lowering costs by combining shipments. "We've just scratched the surface," Nistevo founder Kevin Lynch said of the technology movement. "The smartest people I've run into are doing the simplest things."

For example, consider Consolidated Freightways (CF). "We use the lowest common denominator technology," said Jack Baranowski, CF's vice president of terminal operations. The company equips each of its drivers with a cell phone that is Web- enabled so that the driver can instantly confirm a delivery or arrange a pick-up. "Our drivers are in constant communication with our dispatchers, even when they are inside the customer's site," Baranowski said.

The bottom line for most in the industry is, well, the bottom line. Can technology increase customer service while reducing operating costs? "We don't want to be overwhelmed with data, but we want to know what may go wrong before it actually does," said Tom Sanderson, president and CEO of Clicklogistics.

Gene Long, president of UPS Consulting, advised those navigating the technology minefield to be realistic, to set project goals and to not let the IT department make decisions in a vacuum or forget to keep supply chain partners in the loop. "Are you willing to open the larder so your partners can participate?" he asked, acknowledging that some companies have become "a hostage to their own decisions."

Despite the industry's initial hesitation, Roger Morley, vice president of Transcentric believes that these Internet-induced growing pains are part of a new world order. "Right now there is a lot of noise, and even management is confused," he said. "But, I believe that when this plays out, it will be bigger than the Industrial Revolution."