Ford hands off customs operation to software vendor

By Staff -- Logistics Management, 9/1/2000

In a move that could signal a new outsourcing trend, automobile giant Ford Motor Co. of Dearborn, Mich., has turned over its customs operation to software vendor Vastera of Dulles, Va. Vastera says it will merge Ford's customs department into its trade-management service operation.

The two companies have signed a 10-year agreement for Vastera to provide Ford with global trade services, including overseeing the car maker's import and export trade processes in the United States. As part of the deal, Vastera will give Ford shares of its common stock. At press time, the merger still needed approval.

A vendor of international-trade software, Vastera plans to leverage its applications and expertise to manage Ford's global trade activities. It intends to use its global-trade application to enable collaboration between carriers, forwarders, brokers, banks, and customs agencies.

Some analysts see Vastera's takeover of Ford's customs operation as part of an evolution on the part of software vendors into service providers. "More and more software vendors will become business-service providers, especially those with real, deep functional expertise," says Larry Clopp, a research director in the integrated logistics strategy group at Stamford, Conn.-based Gartner Group.

Although he applauds Ford's management for innovation in the deal with Vastera, analyst John Fontanella of Boston's AMR Corp. has some reservations about other software vendors following Vastera's lead to provide services. "The core competency for a software company is software development," Fontanella says. "This is a whole new territory for software companies."