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CIFFA Report

Dog Gone Dot Com - B2B or Not 2B

by Tony Young

Internet stocks on the Nasdaq Exchange have taken a dive in recent months. Cyber billionaires (on paper) are now mere multi-millionaires (if they can unload all their stock before the price drops even further.What happened to all the dot com hype? As more and more dot comers fold, venture capital for new start-ups seems all but dried up. The virtual gold rush seems to be no more than a flash in the pan, fools’ gold.

Does this mean e-commerce is dead? Don’t be fooled by the stock market trend. What we are seeing is not only a stock market correction (in reality, most Dot Comers haven’t really made any money) but an industry wake up call as well. Precipitated by the Initial public offering (IPO) phenomenon of the likes of Amazon.com and e-Bay, upstarts sprang up overnight offering a cyberversion of everything in the real world. Information itself became a hot commodity, regardless who owned the information. Shipping and freight forwarding are no exception to the would-be merchants of info.

Get-a-ratequote.com, Auction-your-freight.com, Sell-your-cargospace.com, Send-your-documents.com, etc.com. There are now third party dot com companies for virtually every aspect of shipping and freight forwarding on the Internet. Indeed, information is power. The more, the better, and the faster, even better. A shipper with a container load of laptops to ship halfway around the world would simply need to put it on a freight auction site and the winner of the bids, an unheard of company from nowhere, picks it up and promises to deliver it at an incredible freight cost of $1. Guess where the shipment is going? Well, thankfully, there’s probably an Insure-your-shipment-from-crooks.com for cases like that. The same rules that apply to talking with strangers on Internet chat-rooms ought to apply to doing business with strangers through E-commerce sites.

Information can be as valuable as the goods themselves. Should it be placed in the hands of third parties not actually part of the logistics chain? Consider the code of ethics in which the forwarder is contractually and legally bound to keep clients’ sensitive trade information confidential.

Information can be as valuable as the goods themselves. Should it be placed in the hands of third parties not actually part of the logistics chain? Consider the code of ethics in which the forwarder is contractually and legally bound to keep clients’ sensitive trade information confidential. Consider the Internet Privacy Act and the Web site operators’ pledge to hold all client information strictly confidential. Now, consider Toysmart.com, a failed on-line toy store (owned by Disney, no less) that put its client database up for sale in the Wall Street Journal as part of its liquidation of assets. So much for client confidentiality. But there was a sigh of relief by those unwittingly disclosed clients as it was a only a toy store! What if it’s your business’s data and your clients’ confidential trade information that was being put up for sale by a defunct e-commerce service bureau? The Internet Privacy Act does not extend beyond personal privacy.

The wakeup call for our industry is to realize that the Internet is a wonderful medium and E-commerce a powerful tool. As such, they can be dangerous but equally beneficial. They are something every shipping line and freight forwarder should acquire as the latest tools of the trade. Every freight forwarder should be a dot com in its own right with its own Web site on the Internet show-window with an engine behind it to process the data. The fax machine made the telex machine obsolete. Now the Internet is poised to do the same to the fax machine. Correspondence is already being conducted by email for the most part. Yet, most commercial documentation is still being faxed or couriered among shippers, liners and agents. Web technology is the answer to processing information and moving documentation digitally from B2B cheaply and efficiently. And B2B does not mean B2B2B. Those critical functions should not be outsourced to third party dot coms just as it would be unthinkable to outsource one’s operations or documentation department to another firm. In the so-called “New Economy,” each freight forwarder will have to operate its own site to service its own clients or fall by the wayside and lose its clientele to those who do. In a recent article in the Journal of Commerce, it was reported that “business-to-business e-commerce will total (US)$2.7 trillion by 2004. Some 93 percent of all corporations surveyed plan to conduct business over the Internet by 2002.” When inputting the query words <international freight forwarder> the Internet search engines list about 14,000 Web sites. With an estimated 40,000 firms in the industry worldwide, it is a wakeup call for the stragglers still wondering what E-commerce is all about.