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Post by Lucy.T.Morris » Tue Sep 25, 2018 4:16 pm

Information emerges as transportation's 5th mode

Forget about trucks and trains. Don't even think about ships and jets. What's really moving your freight today is information. That's right, cold hard data.

As cycle times shrink and inventory-lean manufacturing processes become the norm, transportation buyers are becoming more concerned with where a shipment is in the distribution pipeline than with the shipment itself.

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"The movement of the product has become routine," says Doug Foster, vice president of sales for Emery Worldwide, an airfreight and logistics giant. "The key in transportation today is providing information on a shipment, like what it is, where it is, where it needs to go, and when it will get there."

The task of moving data

This insatiable appetite for timely and accurate shipment information has carriers investing millions (or in the case of the United Parcel Service and Federal Express, billions) of dollars each year on high-tech bar coding, communications, and networking equipment. It also has propelled information into the lofty role as the fifth, and some say most important, mode of transportation.

Carriers today are beginning to look beyond the gritty work of hauling boxes to the more complex task of moving data. Says Bill Zollars, president of Yellow Freight system, the nation's largest less-than-truckload carrier: "We're an information management company more than we are a transportation company."

He's not kidding. Over the past few years Yellow has spent $70 million to build information "nerve centers" in Des Moines, Iowa, and Sioux Falls, S.D., and has invested heavily in the Internet's World Wide Web. Other leading transportation companies, such as Emery Worldwide, Con-Way Transportation Services, APL Limited, and ABF Freight System are spending similar amounts to bolster their information systems. And express giants FedEx and UPS each dole out about $1 billion per year on technology.

That's a far cry from the early 1980s when, according to Robert Delaney, executive vice president of Cass Information Systems, "information was one half of 1% of a carrier's budget."

What's fueling this high-tech investment craze? The simple answer is that shippers are demanding more information on their shipments than ever before. However, the factors behind that demand are more complex. They reflect major shifts in business practices, new shipping patterns, and the availability of new and more affordable technology.

On the most basic level, the need for more information is being driven by change. Businesses simply don't operate the way they used to. Manufacturers can no longer afford to stockpile parts and finished goods in warehouses. (This is particularly true among high-tech manufacturers where components are expensive and finished products can drop in value overnight.) Instead, they are rapidly adopting just-in-time and lean manufacturing strategies, which operate with little or no inventory. And this has had a profound impact on shipping and the information associated with it.

For one thing, JIT forces manufacturers to rely on suppliers and transportation providers to get the necessary materials and parts to the assembly line precisely as they are needed. It also requires more frequent shipments, often several times per day, but smaller lots.

While this can produce some significant efficiencies and inventory savings, it makes manufacturers more vulnerable to disruptions in supply. With as little as two hours worth of inventory at the plant, even the slightest delay in delivery can cripple an assembly line. To control this risk, transportation buyers (as well as their cohorts in purchasing and manufacturing) are requiring more and more information on each shipment and where it is in the distribution pipeline.

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Carriers are responding to the challenge by investing in a wide array of technology, including on-board computers and communications equipment for trucks; scanning technologies for containers; equipment locator tags; and roadside and satellite tracking systems.

Emery Worldwide, for example, is spending $70 million to improve the way it handles shipment data. A key component of that is the carrier's Positrack system, which will be installed at hubs throughout the U.S. and Europe by year-end. It updates shipment data every three seconds. "We will know where a shipment is on an aircraft and in which container at any time," says Foster.

The railroad industry is providing similar visibility for rail and intermodal shipments with Automatic Equipment Identification (AEI) tags, which are attached to all freight cars, boxes, and locomotives. These tags are read at rail ramps and by backside scanners, providing data on the location of freight shipments and allowing railroads to predict the estimated time of arrival of a shipment. AEI data is the cornerstone of an industry-wide Interline Service Management project designed to coordinate links between all rail lines, allowing for lane-by-lane scheduled service, trip plans, and real-time shipment status reports. This information is already being used to smooth the handling and transfers of containers at traditional bottleneck spots like intermodal terminals and ocean ports.

Most major steamship lines use global positioning satellite (GPS) tracking technology and electronic data interchange software to monitor vessel voyages and provide status and arrival information to customers. Some ocean carriers, like APL, allow access to this information through the Web.


GPS technology also is popular in the trucking industry. Several motor carriers, like truckload carrier Contract Freighters Inc., use GPS systems to provide dispatchers and customers with real-time status information on trucks and shipments. Truckers also use wireless communications systems, basically an on-board computer, from such companies as Qualcomm Inc. to provide similar shipment status information.

Such shipment tracking technology is key to providing BOSE Corp. with the visibility it needs to keep its JIT manufacturing operations running smoothly. The high-end stereo equipment maker has brought a representative from each of its three major transportation providers in house. Each rep has on-line access to his company's corporate freight management system, allowing him to schedule deliveries, make routing decisions, and track shipments--all from the BOSE manufacturing plant in Framingham, Mass.

Says Lance E. Dixon, executive director of the JIT II Education and Research Center at BOSE: "Having all the shipment data linked by computer turns material in transit into functional inventory. Once we can see that shipment information, we can intercept a part anywhere along the supply chain and change modes to make that material show up five days to five weeks ahead of the original schedule."

BOSE put this theory to the test last year when it received a last minute order for Best car speakers brands sand didn't have the components to build the speakers from stock. An in-Plant transportation rep located the necessary parts in an ocean container docked at a California port and arranged for the parts to be expedited to the Framingham plant in time to fill the order (PUR: Oct. 17, '96; p. 53.).

Death to paper!

Pipeline visibility is only a small piece of the information trend sweeping through the transportation industry. Shippers are also requesting that carriers trim one of the most time-consuming aspects of the distribution process: paperwork.

"Traditionally, you had three key paper documents that rode along with the physical shipment: the shipping label, the bill of lading, and the freight bill," says Bob Obee, VP of operations planning and engineering for Roadway Express. "This documentation was handed off [between shippers and carriers], usually being retyped or keyed into each of their own forms or systems, opening up the potential for errors or lost information."

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