SURVEY: SHIPPERS HAVE KEPT SAME CONTRACT PRACTICES POST-OSRA

SURVEY: SHIPPERS HAVE KEPT SAME CONTRACT PRACTICES POST-OSRA    One year after the U.S. ocean shipping deregulation, shippers are still contracting for freight services much the way they did before deregulation and e-commerce gave them greater flexibility and control, according to a survey.
   The consultancy firm Manalytics Inc. conducted a survey of 210 U.S. Shippers and forwarders for Tradiant, the online shipping markeplace company.
   Nearly 60 percent of the 210 shippers and forwarders surveyed said they still arrange freight transportation services with carriers during a single, hectic contracting season that typically lasts four to six weeks. Almost half of the shippers and forwarders said the process is less than satisfactory, primarily because it is too time-consuming and cumbersome.
   Additionally, carrier efforts to communicate their unique service features and brand “have had limited success with shippers,” despite the new competitive environment created by deregulation under the Ocean Shipping Reform Act, Tradiant said. OSRA was enacted on May 1, 1999.
   Sixty-four percent said a carrier’s brand is either not important or only somewhat important, compared to 36 percent who say it is a very important part of their selection criteria.
   The survey found that shippers want quicker carrier responses for quotes and contracts. Shippers today seek an average of only three to four quotes per spot transaction and two to five carriers for service contracts. Slow response time is the most frequently cited reason shippers don’t get more quotes or contract offers.
   The findings of the survey “suggest that the transportation industry is operating much the same as it has traditionally, with protracted contract negotiations and a reliance on low-tech solutions,” said John Urban, president and chief executive officer of Tradiant. Tradiant believes that the shipping industry can adopt more efficient processes by using e-commerce and taking advantage of OSRA.
   But only a fraction of the shippers, for example, are using technology to spread out their service contracting across the year to rationalize the transportation procurement process, the company said.
   “Similarly, only a handful of carriers are improving sales force productivity by using e-commerce to respond to new business opportunities and to reach a larger market more efficiently,” Tradiant added.
   The preferred online choice for shippers, according to the survey, is a site that offers services from multiple carriers. Fifty-eight percent of the respondents said that a marketplace is the most valuable online resource, compared to 14 percent for a carrier’s proprietary site – a three-to-one margin. Eight percent preferred no site at all, six percent were unsure, and four percent preferred other types of sites.
   Tradiant said that shippers are no different than customers in any other segment of the economy in that they value choice.