Shippers Usage of the Internet Including E-Marketplaces in the Trucking Industry

By Kent, John L.; Parker, R. Stephen et al. | Journal of Transportation Management, Spring 2003 | Go to article overview

Shippers Usage of the Internet Including E-Marketplaces in the Trucking Industry


Kent, John L., Parker, R. Stephen, Schaefer, Allen D., Journal of Transportation Management


INTRODUCTION

In today's competitive business environment, shippers increasingly view the transportation of goods as an integral component of supply chain management, rather than simply a cost of doing business. This new approach requires that every effort be made to increase visibility of the transportation of products in addition to managing this cost center.

The growth of the Internet has coincided with this new orientation. Electronic marketplaces, defined by Forrester Research as, "new models of electronic commerce, including auctions, aggregators, bid systems and exchanges," have made considerable inroads into the transportation industry as a means of improving efficiency by matching demand of the shippers with supply of transporters. In the trucking industry, load matching follows shipment tracking as the second most commonly used Internet service function, followed by rate quotation and driver recruitment (Mele, 1998a).

That is not, however, to say that all e-marketplaces have been or will be successful. As Bannan (2001) points out, e-marketplaces often fail to reflect accepted business practices, such as allowing customers shipping prices to reflect their shipping volume levels. In the trucking industry specifically, Hyland (2001) reports that most shippers still conduct business on a contractual basis in the open market, rather than facing the uncertainties involved in dealing with unknown carriers. Indeed, data security, information privacy, government regulation and e-marketplace longevity are reported to be among the greatest concerns associated with the use of e-marketplaces in general (Gilbert 2001).

Shippers may also be deterred by the expensive proposition of hooking into e-marketplaces, which sometimes necessitates heavy systems integration and/or subscription fees (Hammer 2000). Part of the back-end system integration problem involves the use of XML, which provides a format for defining data elements in various documents, thereby simplifying document exchange. However, compatibility problems due to growth in the number of XML variations and the electronic data interchange (EDI) systems sometimes confuse shippers (Gladwin 2001).

Despite these drawbacks, this new form of linking shippers with transportation companies has caught the attention of many in the trucking industry. Galea and B rewer (2000) report that business-to-business electronic commerce is forecasted to increase to approximately $2.7 trillion by 2004 and that electronic marketplaces will account for between 45 and 74 percent of electronic commerce in the supply chain. According to Hyland (2001), there are reportedly more than 100 Internet-based logistics companies, including auctions, exchanges, and application service providers, many of which are regionally focused and specializing in a particular transportation mode (e.g., truck, air, ocean, etc.). Furthermore, Sami (2000) reported that there are approximately 55 trucking service-related web sites and that these load-matching sites will be helpful, particularly for small transportation companies, in terms of matching shippers with carriers and thereby reducing costs as fewer trucks will be running empty. Arndt (2001) also believes that the cost cutting potential of Internet usage is significant and that freight companies, through the use of e-marketplaces, are in a better position to manage flows and reduce cost by eliminating unneeded inventories.

Given the growing acceptance of e-marketplaces as a load-matching technique for increasing efficiency, more quantitative research needs to be conducted in this area, Therefore, this study is designed to contribute to this growing body of knowledge by exploring shippers' present and projected future e-marketplace usage patterns as well as their attitudes toward and satisfaction with various aspects of e-marketplaces in the transportation industry.

LITERATURE REVIEW

Internet usage in the supply chain has received little research attention (Dressner, Yao and Palmer 2001). …

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