Delivery time remains big question for shipping; lack of dockside visibility deplored

Despite billions spent on shipping industry consolidation in the name of efficiency and better customer service, companies engaged in large-volume shipping would rather do business with several providers than centralize their operations with one main supplier.

In fact, trade-offs abound in selecting global freight shipment providers, according to a survey by Blue Bell, Pa.-based IT consultancy Unisys.

Survey respondents favor integrators of freight services overall, yet they rate air and ocean line services as best in terms of lending visibility to goods in-transit, since they track shipments via a single information system. Those relying on a mix of independent carriers had problems with end-to-end visibility due to myriad IT systems that create gaps in data flow.

"Integrators received the highest level of satisfaction primarily for the nature of their business: taking a shipment from pickup to delivery, door-to-door," says John Strain, VP of marketing of Unisys Global Transportation. "However, while respondents appreciate the information flow, large freight integrators are far less flexible in tailoring services to the needs of customers. Freight integrators are the most automated, relying on paperless systems. They've honed the process and made it effective, but they're not going to change to meet the needs of every client."

Air shippers are rated as much more flexible, yet at the time of the survey, higher fuel prices prompted caution for reliance on air. "Respondents say they would consider relying more on air shipment if prices came down," says Strain.

The report was drawn from interviews with 52 multinational corporations, including Microsoft, IBM, Honeywell, and Sun; as well as Caterpillar, Pfizer, DaimlerChrysler, and Nestlé—among other users of multimodal international shipping services. Annual transport expenditures averaged $150 million, with 40- percent reliance on air, 39 percent on ocean lines, 19 percent on express carriers/integrators, and 2 percent deemed "other."

Speed is the primary driver for using air services. Nearly 75 percent say they would use more air cargo transport if costs dropped; while 70 percent have no intention to move to a single-medium provider, having an expressed strategic policy not to rely on a single source of services.

Ocean lines generally are viewed as mired in the past, with rudimentary IT capabilities at best. Some recent improvements were conceded with regard to port-to-port visibility, but dockside processing was relegated a "black hole."

Far and away the most desired value-add service is real-time visibility to the estimated time of delivery—4.7 on a scale of 5. Respondents don't want transit details on every shipment, but instead prefer timely information of exceptions only.

Currently only about 1 percent of shipments on average are processed via RFID. Respondents look for this to grow to 8 percent in 2007, and jump to 25 percent by 2009, with pressure coming from customers (38 percent) and internal stakeholders (37 percent).

Unisys recently introduced an online portal service to assist shippers with air freight information—air freight providers being Unisys' main global shipping customer segment.