Signs of a shakeout among logistics exchanges?

By Staff -- Logistics Management, 8/1/2000

A merger and an alliance among online logistics exchanges last month may signal that the fledgling industry is about to undergo a shakeout.

This past month, Logistics.com Inc. of Burlington, Mass., and Quoteship.com of Boston announced that the two online exchanges-Internet sites where shippers can put out requests for proposals and carriers can bid on their business-would merge and the combined entity would operate under the Logistics.com name. Logistics.com offers decision-support software as well as an auction forum for the transportation industry. Quoteship.com was established as a virtual marketplace connecting global shippers with ocean and air carriers.

Logistics.com executives said the merger would create the first e-commerce company capable of procuring transportation services in all modes on behalf of shippers for annual contracts, individual service lanes, and spot markets. In a news release, the company said it had "hundreds of customers who together procure more than $6 billion in transportation services by land, air, and ocean."

Dr. Yossi Sheffi, the founder of Logistics.com, will stay on as CEO of the reorganized company, while Gregg Borgeson, the CEO of QuoteShip.com, will become president.

In a related development, the nation's oldest logistics-related portal (a Web site providing links to information and other Web sites), The National Transportation Exchange in Downers Grove, Ill., has formed an alliance with FreightWise Inc. of Fort Worth, Texas, which will formally launch its own, similar site this summer. NTE focuses on matching shippers and carriers for domestic truck movements, while FreightWise concentrates on intermodal, truckload, and rail shipments. The two plan to link their sites to generate cross traffic.

Over the past year, entrepreneurs have raced to establish Internet portals for transportation and logistics. More than 50 such entities now exist, vying for the business of shippers and carriers.

Exchanges typically charge either a transaction fee or a periodic contract fee, or both, for their services. The Boston-based market research firm AMR Research expects logistics exchanges of all kinds to earn between $3 billion and $4 billion in revenue by 2004. Indeed, many industry experts foresee exchanges evolving from their original purpose of a carrier-shipper matching service to online forums for supply chain collaboration.

Even if that evolution does occur, many industry analysts expect to see further consolidation of logistics portals and exchanges-and soon. "The user base is looking for combined functionality of both international and domestic [transportation]," says John Fontanella, an analyst with AMR. "I expect to hear of a lot more consolidations over the next month."