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Embracing eLogistics/eTransportation November 14, 2000 Jun-Sheng Li

TLI Annual Fall Forum University of Arkansas Emerging Trend in Logistics. Embracing eLogistics/eTransportation November 14, 2000 Jun-Sheng Li. Current State of Transportation Industry. Carriers. Shippers. Each line represents a different process/practice. 500,000 more.

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Embracing eLogistics/eTransportation November 14, 2000 Jun-Sheng Li

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  1. TLI Annual Fall ForumUniversity of ArkansasEmerging Trend in Logistics Embracing eLogistics/eTransportation November 14, 2000 Jun-Sheng Li

  2. Current State of Transportation Industry Carriers Shippers Each line represents a different process/practice 500,000 more

  3. Current State of the Industry • In other words ... • highly fragmented • lack of economy of scale • lack of standard practice • fuel surcharge • payment • communication/technology • lack of timely information/communication • waste in asset use • empty miles • detention hours • trailer pools • inefficient for both shippers and carriers

  4. Shipper Challenges • Must manage a large number of carriers to meet the freight needs • Service and communication • Seasonality of freight and capacity shortage • Business require faster and more reliable transportation solutions

  5. Carrier Challenges • High driver turnover rate and low OR • Fuel and driver • More demanding customer service • Empty miles • Detention hours • Very transactional

  6. Will the industry consolidate? • Not in the traditional sense! • Mergers and acquisitions not effective • Dis-economy of scale • ownership and entrepreneurial spirit • micro management • People intensive • New technology can enable virtual mega-transportation provider

  7. What’s missing in dot-com startups? • lack of vertical industry expertise • lack of business relationship • lack of commitment from assets operators • spot pricing (treating capacity as commodity) • lack of integration with shipper’s supply chain planning and execution • where’s the liquidity? • where’s the critical mass? • at whose expense?

  8. What to Look for in 3PL E-Marketplace? • Industry knowledge and expertise • vertical industry expertise, understanding the issues of both shippers and carriers • proven track record with similar transportation logistics business model • Technology and execution • proven technology and practice developed through transportation logistics programs • True economic benefits: improved utilization and efficiency • opportunity to optimize the match of the carrier assets with freight on a larger scale • streamline the entire transportation process and practice • Industry sponsorship: backed by asset based providers (carriers) • assured capacity, most competitive rates, helping carriers reduce cost • Attraction to shippers • addressing the shipper’s concern about shortage of capacity, reliability and safety • committing to shippers the needed capacity at competitive price • Leverage existing relationship with shippers and carriers • credibility, trust and liquidity • Foster collaboration and integration between shippers and carriers to improve efficiency and service

  9. Shipper Needs from Logistics Providers • Management services are critical • Enterprise Planning Integration • Shippers seek partners, so they can run their business • Real logistics expertise and technology will be the separator • Ability to stay at forefront and adapt to change • Access to shippers and capacity is essential • Web applications and scalability • Logistics will drive freight optimization and asset utilization Source - Bear, Stearns &Co.

  10. But, critical mass is the key!

  11. The Creation of Transplace.com A Merger of Six Leading Transportation Companies • Covenant Logistics • J.B. Hunt Logistics • M.S. Logistics • Swift Logistics • U.S. Xpress Logistics • Werner Logistics

  12. Transplace.com Mission To leverage large-scale network and logistics technology to optimize freight and assets while driving out network cost, improving service system-wide, and marshalling and deploying committed capacity where and when it is most needed.

  13. Transplace.com Overview • A web-enabled platform to bring together shippers and carriers worldwide to collaborate on their transportation logistics planning and execution in the most efficient and effective manner: • Provides shippers easy access to virtually unlimited transportation capacity with operational efficiency unmatched by any single shipper or carrier. • Provides carriers combined purchasing power for fuel, equipment, maintenance and repair parts, insurance, and many other services.

  14. Current Industry State System/Communication Links Carriers Shippers Each line represents a different process/practice 500,000 more

  15. Carriers Shippers Futuristic View 500,000 more

  16. DNE Optimization Algorithms Critical Mass Value Proposition • Dense Network Efficiency System • Industry leading optimization system and technology • Combined networks of shipper freight base and carrier capacity • Critical mass for achieving synergies across networks • Web portal to reach vast population of carriers and shippers

  17. Shipper Benefits • Guaranteed carrier capacity availability • Unequivocal support from six of the largest carriers • 5,000 member carriers and growing • Ability to meet seasonal peaks and freight surge needs • Simplified access and streamlined process • Track and trace from single web portal for all shipments • Reduced operational, administrative and systems costs

  18. Shipper Benefits • Design, analysis and consulting service • Re-engineering, supply chain analysis and design • Site selection optimization • Private fleet routing and design • Private fleet carrier membership privileges • Full carrier membership rights • Access to backhaul freight needs • Procurement of major fleet expense items

  19. Carrier Benefits • Access to a huge network of freight across shippers • Fast-growing freight base (35%-40% annually) • Consistent freight pattern (i.e. law of large numbers) • Improved driver and equipment utilization • Streamlined transaction process • Low-cost, web-enabled communication • Reduced operational, administrative, systems and marketing costs • Procurement privileges and services

  20. Transplace.com Cost Advantage • Achieves critical mass: • Combined freight networks between shippers • Reduction in empty miles and detention hours • Increase in backhaul and continuous move opportunities • Creates more driver friendly routes • enhanced service and safety through better knowledge of customer supply chain requirements • increased labor availability and reduced turnover

  21. Transplace.com Cost Advantage • Provides cooperative purchasing economies to lower costs: • fuel • tires • maintenance and repair parts • insurance • equipment • communication • technology

  22. Current Business • Logistics Services for Shippers • Annual freight base > $1 Billion • 5 Million P.O.’s • 1.25 Million Truckloads of Shipments • Freight base growing at 35-40% annually • Procurement Services for Carriers • Fuel, tires, maintenance and repair parts • Insurance, credit, benefits • Telecommunications • Technology

  23. Thank You !

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