Internet Can Help Shipping Companies Cut Costs, Say IT Firms

Friday, September 03, 1999
Shipping companies, criticized for being slow to modernize, are being targeted by information technology (IT) companies seeking a slice of a container management business estimated to be worth up to $14 billion. IT companies say they see the Internet as a way for shipping companies to cut the annual cost of handling containers. The problem mainly arises when companies ship cargo from point A to point B, only to find they have no return cargo. They either have to pay storage costs or ship them back empty. Greybox Logistics Services territory manager, Far East and North Pacific, Dana Lee, said that in 1994, 24.6 million TEU were handled empty in 1994 - about 19.5 percent of the total handled by ports that year. However, despite obvious inefficiencies involved in shipping empty containers, IT companies said they sometimes had difficulty persuading shippers to adapt. "I walk into one office and the guy says, 'The only way I do business to cut container management cost is pick up the phone,'" said Sean Downes, far east director for SynchronNet Marine Inc., which has set up a database to allow shipping companies to share information to make it easier to fill containers. Downes said one study estimated that the total cost of managing containers annually was about $14 billion, a significant amount of which was just moving empty containers. "You're earning no revenue on an empty box," said Mark Hulme, Asia-Pacific area coordinator for Greybox, which also helps shipping companies manage containers. Greybox estimates that shipping companies spent about $10 billion on empty containers annually, much of which could be saved if they shared information to fill empty containers. "The cost-saving is phenomenal. It's between $280 and $400 per unit," said Lee.

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