OOCL cuts operating, administrative costs through IT system

OOCL cuts operating, administrative costs through IT system    Hong Kong-based Orient Overseas Container Line said that the adoption of the company’s “object technology” information system, called IRIS-2, has substantially cut its documentation and other administrative costs, and improved its yield management.
   “That’s why in 2001, other main carriers lost money and we, at OOCL, made money,” said Ken Chih, director and chief information officer of OOCL.
   Chih told a press conference in London on Monday (Nov. 24) that the system, introduced in 1999, was ahead of those of competitors at the time. The company has since refined the system and added to it Web-based applications    for customers (CargoSmart) and vendors such as terminals, depots and trucking companies (OperationSmart).
   Chih said that the system automates many tasks of a shipping line, and provides full transparency of costs at the shipment and customer levels — information that is regarded as key when margins are tight.
   “When the price war starts, you have to know where to stop, when you lose your shirt,” Chih said. With the IRIS-2 data, OOCL knows how much profit or loss it will make on any shipment, before taking the booking.
   Chih stressed that the cost of responding to customer inquiries on their shipments — averaging nine inquiries per shipment — accounts for a big portion of administrative costs for a carrier. But “self-service” by shippers using a shipping line’s portal dramatically reduces the customer service costs of the carrier, Chih noted. He cited estimates that Forrester Research that the cost of handling a customer inquiry in shipping costs $32.74 by phone, or $9.09 by e-mail, or $1.17 by “Web self-service.”
   About 65 of OOCL’s business volume in TEUs is handled with customers who are registered to CargoSmart, the OOCL-owned multi-carrier Web portal. COSCO, NYK and another “three or four” carriers also use CargoSmart, Chih said.
   But Chih recognized that larger shippers still prefer to do business with carriers using electronic data interchange (EDI), and that many shippers to not give Internet access to all their employees.
   In a separate development, OOCL spokesman Stanley Shen said that the introduction, by the U.S. Bureau of Customs and Border Protection, of the “24-hour rule” on prior transmission of cargo manifests has “actually helped” OOCL.
   When complying with the rules, OOCL has more lead time to handle documents and does not run the risk of missing documentation when the ship reaches a port in the U.S., he explained.
   Chih said that OOCL continues to develop new e-commerce applications and systems.
   OOCL completed its first extensible markup language (XML) transaction in September with OCS, a Hong Kong-based forwarder. “We’re XML ready — most of our customers are not,” Chih said.
   While CargoSmart has also just started providing “e-payments” for freight charges under an agreement with CitiBank.