By Chris Gillis
U.S. Bank's PowerTrack system for electronic freight and other service payments has experienced on average 50 percent growth year-on-year since its inception more than a decade ago. Now in a joint venture with Visa, that expansion is expected to accelerate.
The joint venture firm Syncada, announced in late July by U.S. Bank and Visa, will offer a much wider range of businesses and government agencies worldwide an efficient, integrated way to pay and be paid by replacing paper-based billing processes with a fully electronic platform.
'What we have effectively created is this global business-to-business supply chain network,' said Richard Langer, chief executive officer of Syncada, and the lead developer of PowerTrack, in an interview.
| Langer |
'Visa will provide much of the sales and marketing to help build the company and establish the brand,' Nick Marchetti, Visa's head of global supply chain solutions, told American Shipper. 'We'll make introductions to other banks. We're definitely going to promote it at trade shows.'
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| Marchetti |
Langer explained that many third-party payers don't operate under the same rules and regulations that have applied to PowerTrack. Some of these companies that bellied up in the late 1990s and early 2000s left their customers scrambling to cover outstanding bills.
PowerTrack coordinates both domestic and international financial transactions for its customers.
'Our system allows customers to cover their cross-border supply chain activities and pay their bills just as efficiently as a domestic transaction,' Langer said. 'We can even handle transactions in different languages, such as combining a bill of lading in German with a French invoice.'
Through U.S. Bank, PowerTrack has operated in 47 countries and made payments in 13 currencies. In 2008, PowerTrack processed about $18 billion in invoices, including payables, receivables, freight, telecommunications, utilities and global trade payments, for its clients.
PowerTrack offers its customers a layer of protection against financial discrepancies by incorporating quick invoice delivery and receipt, pre-payment audits, automated approvals, electronic settlement, and integrated trade financing, in addition to compliance with the U.S. government's Sarbanes-Oxley rules for financial audits and other country specific regulations, vendor company legal entity validations and fraud detection.
The company's list of nearly 260 customers includes many of today's largest multinational manufacturers and retailers, such as Wal-Mart, Best Buy, Honeywell, Nissan, Ford, BP, Sunoco and Home Depot. These companies are connected through the PowerTrack network to more than 16,000 transportation and other suppliers.
In addition, PowerTrack has numerous government customers. U.S. Bank first introduced PowerTrack to the U.S. Defense Department in 1998. The military saw the system as a way to replace its cumbersome paper government bills of lading with a commercial-built bill of lading structure. PowerTrack is now used by other federal agencies, including the Agency for International Development, and the State, Homeland Security and Agriculture departments.
Over the years, the company has expanded its operations through both internal investments and outside acquisitions. In 2006, PowerTrack added offices through the acquisition of AIMS Logistics, at that time a top-five provider of freight audit and payment services in North America and the largest provider of these services in Europe.
Syncada, based in Minneapolis, will have 550 former PowerTrack employees, and offices in Chicago; Memphis, Tenn.; Toronto; Mumbai; and Brussels. The joint venture company's day-to-day operations will be led by an independent management team, U.S. Bank and Visa said.
In transportation, PowerTrack maintains a dominant position by connecting customers to more than 10,000 carriers across all modes, representing about 85 percent of the market, Langer said.
Syncada will start by serving U.S. Bank clients and existing customers from the PowerTrack network. The PowerTrack name will eventually be phased out, said Robert Fleischman, director of marketing at Syncada.
'Nothing changes for our existing customers at U.S. Bank. They will have the same relationships with U.S. Bank employees that they've always had,' Fleischman said.
In recent years, other large banks and investment firms, such as JPMorgan, American Express and Citigroup, have targeted the financial side of the supply chain business.
Realizing the need to expand beyond transactions within U.S. Bank's global footprint, PowerTrack began talks with Visa two years ago about forming the joint venture, Langer said. Visa has explored opportunities to branch into the finance-side of supply chain management.
Marchetti said Syncada 'gives Visa the opportunity to take its payment services beyond traditional cards and compete more effectively along with our bank partners in the supply chain space.'
The U.S. supply chain spend is estimated to be about $750 billion a year, and only about 10 percent of that is outsourced. 'We've got quite a bit of opportunity when you look at the logistics market share. We're going to continue to grow,' Langer said.
