1 / 44

INDUSTRIES IN TRANSTION: FREIGHT TRANSPORTATION INTERMEDIARIES IN THE INFORMATION AGE

INDUSTRIES IN TRANSTION: FREIGHT TRANSPORTATION INTERMEDIARIES IN THE INFORMATION AGE. Jiong Song and Amelia C. Regan Metrans 2nd Annual Transportation Conference Feb. 2, 2001. Outline. Section I. Traditional Freight Transportation Intermediary.

kwanita
Download Presentation

INDUSTRIES IN TRANSTION: FREIGHT TRANSPORTATION INTERMEDIARIES IN THE INFORMATION AGE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. INDUSTRIES IN TRANSTION:FREIGHT TRANSPORTATION INTERMEDIARIES IN THE INFORMATION AGE Jiong Song and Amelia C. Regan Metrans 2nd Annual Transportation Conference Feb. 2, 2001 ITS, UC Irvine

  2. Outline Section I Traditional Freight Transportation Intermediary Current State and Evolution of the Industry Section II Section III Niche Markets -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  3. Section I Traditional Freight Transportation Intermediary Current State and Evolution of the Industry Section II Section III Niche Market -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  4. Third Party Logistics • “Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function.” -- Simchi-Levi (2000) • “A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship” -- Murphy & Poist (1998) ITS, UC Irvine

  5. Third Party Logistics Outsourced Operation Transportation Shipper Warehousing Shipper 3PL IT support Shipper In-house Operation SC integration Shipper In-house Logistics Department Others Others IT support Warehousing Transportation

  6. Characteristics of 3PL • Perform outsourced logistics activities • Process management / Multiple activities • More customized services • Mutually beneficial and risk-sharing relationship • Long-term commitments (1~ 3 years) ITS, UC Irvine

  7. Why is it needed? • Advantages • Cost reduction • Focus on core competency • Improved efficiency, service and flexibility • Industry-specific application – “build-to-order” systems and e-merchants • Disadvantages • Loss of control • Impact on in-house workforce ITS, UC Irvine

  8. Section I Traditional Freight Transportation Intermediary Current State and Evolution of the Industry Section II Section III Niche Markets -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  9. Industry Evolution Third Generation ( 2000 and beyond) • Online freight marketplaces • Web-based 3PLs • Increasing supply chain integration • Non asset-based companies • Asset-based companies increased service offerings Second Generation (1980s - 1990s) • Transportation / warehousing • Freight forwarders / brokers • Shipper’s agents First Generation (1970s - 1980s) Broader more integrated services

  10. Dedicated Contract Transportation / Transportation Procurement Inventory Management Logistics Management and Consulting Freight Audit and Bill Payment Customs Services Shipment Tracking and Tracing Reverse Logistics and Value-added Services Current State -- Service Offerings ITS, UC Irvine

  11. Current State -- Market Size 3PL market is growing ( $ Billions ) ITS, UC Irvine

  12. Market Structure Annual Revenue > $100 million $20 - 100 million < $20 million • Orange Courier • Regal Logistics • Cass Information • System • California Distribution • Bax Global Logistics • Menlo Logistics ITS, UC Irvine

  13. Current use of 3PL by industry • Industry • Percentage of 3PL use in different industries Computer Consumer Retail Chemical Medical Auto Source "What's ahead for 3PLs“ Modern Materials Handling, April, 2000 ITS, UC Irvine

  14. Current Industry Status • No commonly accepted terminology • Technologies increase visibility, efficiency and integration • The service menu is rapidly changing • New breed of companies are emerging ITS, UC Irvine

  15. Section I Traditional Freight Transportation Intermediary Current State and Evolution of the Industry Section II Section III Niche Markets -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  16. Niche Markets – Online Logistics Providers • Online Freight Marketplaces • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation Market • Infomediaries ITS, UC Irvine

  17. Online Logistics Providers-Opportunity • The Freight Transportation Industry is Ideally Suited e-commerce • High Fragmentation of Shippers and Carriers • Many Intermediaries • Complex Supply Chains • High Search Costs • Significant Opportunities for Economies of Scale • Several Models Emerging ITS, UC Irvine

  18. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  19. ITS, UC Irvine

  20. ITS, UC Irvine

  21. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  22. ITS, UC Irvine

  23. ITS, UC Irvine

  24. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  25. ITS, UC Irvine

  26. ITS, UC Irvine

  27. ITS, UC Irvine

  28. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  29. ITS, UC Irvine

  30. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Meta-marketplaces • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  31. ITS, UC Irvine

  32. ITS, UC Irvine

  33. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Application Service Providers (ASPs) • Purchasing Consolidation market • Infomediaries ITS, UC Irvine

  34. ITS, UC Irvine

  35. Niche Markets – Online Service Providers • Spot market • Auction and RFQ • Exchange • Application Service Providers (ASPs) • Co-ops • Infomediaries ITS, UC Irvine

  36. ITS, UC Irvine

  37. Section I Traditional Freight Transportation Intermediary Current State and Evolution of the Industry Section II Section III Niche Markets -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  38. Recent Research • General market examination • Lieb and Randal (1999) • Lieb and Peluso (2000a, 2000b) • Contracts and relationships • Leahy, Murphy & Poist (1995) • Sankaran & Charman (2000) • Decision-making processes • Menon, McGinnis & Ackerman (1998) • Lim (2000) ITS, UC Irvine

  39. Behavioral Models • Carrier and Shipper behavior models • Carrier selection • Contract design • Contract negotiation • 3PL provider’s behavior • Service offerings • Carrier selection • Contract design • Contract negotiation ITS, UC Irvine

  40. Online Freight Marketplaces • Integrated and Time Sensitive Optimization Problems • Dynamic and stochastic routing and scheduling systems • Dynamic inventory management systems • Combined inventory-routing models • Real-time bidding and freight matching algorithms • Optimal pricing strategies for intermediaries and carriers • Optimal bidding strategies for shippers • Simulation-based analysis of costs and benefits to shippers, carriers and 3PLs under competing business models • Is it a zero sum game? Who wins? Who loses? How much? ITS, UC Irvine

  41. Section I Traditional Freight Transportation Intermediary Evolution and Current State of the Industry Section II Section III Niche Markets -- Online Logistics Providers Section IV Research Needs / Opportunities Predictions / Conclusions Section V ITS, UC Irvine

  42. Predictions and Conclusions • The total market for freight transportation intermediaries is still growing with the boom of e-commerce; • The conventional 3PLs will not fade, but will face with the competition from the online logistics providers; • The companies have to combine the logistics expertise with advanced technology to evolve; • Strategic alliance and merge/acquisition will be important to obtain comprehensive and intergrated supply chain solution capability; • Small carriers and niche carriers will benefit from increased access to shippers and reduced search costs • Medium sized and Large carriers may resist and try to continue business as usual or simply become e-commerce enabled using current business models • The 120+ on-line freight marketplaces will be reduced to less than 10 leaders and a few successful niche players in near future. ITS, UC Irvine

  43. Predictions and Conclusions • The freight transportation industry has historically been slow to change • Personal relationships will continue to be important despite a growing acceptance of web based interactions • The potential benefits of IT are huge • Major industry changes will come – the question is how soon ITS, UC Irvine

  44. End ITS, UC Irvine

More Related