The Secret to the Success of B2B Logistics Companies:
A Balanced Value Proposition
By Patrick Conneely, Strategic Development and Product Manager, eflatbed.com
It is imperative for a successful business-to-business (B2B) Internet-based e-logistics company to build an organization that is equally focused on shippers (buy-side) and carriers (supply-side). The transportation intermediary that achieves transaction liquidity, or loads, from shippers while successfully engaging and maintaining an active carrier base is the one that brings a viable solution to the marketplace.
The following points demonstrate how a B2B e-logistics company
can generate interest from shippers to achieve liquidity:
At the same time, the successful B2B company must balance its value proposition with the supply-side, or carriers. To engage and maintain carriers, a B2B e-logistics company must:
Examine, for example, the model of eflatbed.com (www.eflatbed.com) of Pittsburgh, Pennsylvania, an online logistics company focused exclusively on the flatbed transportation industry. eflatbed.com follows the business model described above and has proven its ability to achieve liquidity and engage carriers in its first year of existence. The company serves both carriers and shippers in the metals industry by providing professional services, web-enabled tools, and informational resources to manage the entire transportation process.
The Shipper Side: Securing Load Volume
Since its formation in 2000, eflatbed.com has effectively created a nationwide network of flatbed freight shippers by leveraging the load volume of Pittsburgh Logistics Systems, Inc. (PLS), its founding company and a leading third party logistics (3PL) company with many clients in the metals industry. PLS, having been in business since 1991 as a traditional 3PL, developed strong operational expertise in handling the transportation needs of metals clients. eflatbed.com created the web-based technology to facilitate PLS's shipment transaction process. eflatbed.com's online suite of tools enhances PLS's relations with carriers by providing a private environment to facilitate its clients' load transactions. Shipments can be automatically tendered to preferred carriers and hard-to-move loads can be made available to a spot market of more than 1,800 pre-qualified flatbed carriers. In addition to decreasing transaction time by web-enabling the shipment process, eflatbed.com gives PLS unprecedented access to reports and information related to load activity. The combination of PLS's brick-and-mortar-based operational expertise and eflatbed.com's technology was so successful that the two companies were brought together under the same holding company, Quadrivius, Inc., in August of 2000 to jointly serve clients.
Together, PLS and eflatbed.com manage between 3-4,000 flatbed loads per day. The volume of PLS shipments moving through eflatbed.com's transportation management system increased from 5 to 50 percent since January of this year. Even without 2001's figures, eflatbed.com was recently named Pittsburgh's largest B2B Internet company based on shipment transactions completed through the site in 2000. During that year, eflatbed.com launched in March and completed online transactions that totaled more than $7 million in revenue.
After joining under the umbrella of Quadrivius, eflatbed.com and PLS combined their abilities to offer a full spectrum of logistics services that appeal to small and large shippers alike, which benefited clients of both through the leverage of higher load volume. For instance, in addition to offering a comprehensive 3PL transportation solution to shippers, it created a pure technology-based service offering for shippers that want to maintain control of the transportation function. In addition, it offers a load-matching service for shippers that need assistance with hard-to-move spotshipments. By creating this broad range of service offerings, Quadrivius was able to meet the various transportation needs of shippers of all sizes in the flatbed marketplace to secure additional load volume.
Having a large load volume simply is not enough for an online logistics company to succeed. In B2B e-logistics, it is imperative to establish relationships with carriers, or the supply-side, to move the freight. In eflatbed.com's case, the company forged relationships with PLS and other shippers' core carriers to move contract shipments that are offered via an automatic tendering function through the website. For overflow loads and spot shipments, eflatbed.com leverages its relationships with over 1,800 flatbed trucking companies throughout the U.S. and Canada that can log on to the site to secure freight.
Carriers who use the website gain value by increasing their asset utilization. They are able to use eflatbed.com to find loads for trucks that may run empty, or deadhead,otherwise. This way, when sending a truck to the west coast, for example, the truck can find freight for the return haul to the east coast. Carriers that were recently surveyed about using eflatbed.com versus traditional methods of booking freight noted that some benefits of the technology were its timesaving ability and efficiency in securing loads online rather than using phone or fax. Others said that it is beneficial to see the holistic view of available loads and then choosing those that best fit their drivers' routes.
Carriers who have traditionally been booking loads via phone or fax have found that the world of e-commerce has posed several challenges to their operations-including, for some carriers, the integration of computers into their everyday business. To help carriers acquire computers, eflatbed.com forged an alliance with Gateway to offer computers to flatbed carriers at discounted rates - up to 12 percent off the regular price of desktop and portable computer. In addition, eflatbed.com's customer service department takes the time to walk new carrier members through eflatbed.com site training or they can use eflatbed.com's comprehensive training manual for easy-to-read directions on site usage.
An additional benefit of eflatbed.com's model is its ability to provide value-added services to carriers that have been challenged by economic conditions and high operating costs. According to a recent Wall Street Journal, approximately 1,555 trucking companies went out of business in the first quarter of 2001 because of rising fuel costs and driver wages. To help offset these rising costs, eflatbed.com teamed up with T-Chek Systems, Inc., of Eden Prairie, Minnesota (www.tchek.com), to offer financial and information services to flatbed carriers. Through this alliance with T-Chek, eflatbed.com offers carriers the eflatbed.com Fuel Card+ to help control and manage fuel purchases. The card also acts as a cash card and phone card, and offers carriers access to two discount fuel networks-the eflatbed.com Fuel Network and T-Chek's Advantage Fuel Network. The eflatbed.com Fuel Network, a group of 350 truck stops across North America, reduces carriers' fuel costs by offering point-of-sale discounts and cost plus deals on the price of fuel. In addition, the eflatbed.com Fuel Card+ gives carriers access to T-Chek's Advantage Fuel Network, a network of 500 fuel locations that will pay carriers' transaction fees. In these ways, eflatbed.com is able to provide services to carriers that have a positive impact on their entire business.
The eflatbed.com example demonstrates how one B2B e-logistics company is
succeeding now with an even brighter future ahead. Because eflatbed.com understood
the transportation needs of metals industry shippers, it was able to effectively
create services to meet those needs and, at the same time, recruit and train
carriers to move its load volume. The end result? Significant, measurable
value creation for shippers and carriers. eflatbed.com is now able to expand
its services to other industries that use flatbeds, including lumber and building
materials. The sky is the limit for this B2B e-logistics company.
(This article appeared in American Metal Markets August 6, 2001 Transportation and Logistics Special Report.)