Community building

Of all the industry?s in the world this is the one that can benefit most from e-commerce,” proclaims Gil Patrick, chairman of Setfair. He shares the view of his compatriots at ShipServ and iShipExchange, that the proliferation of faxes involved in paper-based purchasing, the global nature of shipping and its fragmented characteristics, demonstrate the efficiencies shipping company?s can eke out of the purchasing process through using e-commerce. ShipServ has recently celebrated the first anniversary of the launch of TradeNet, its maritime e-commerce platform. iShipExchange?s ShipEx Procure platform went live in September 2000. Setfair, having launched its system just three months ago, in May, is still a relative infant. Paul ?stergaard, ceo of ShipServ says the potential savings through replacing the paper-based requests for quotation (RFQ) system with an electronic one amount to about $40,000 per ship per year. Patrick expresses the savings in percentage terms. He points to a recent UK study by KPMG, Oracle and Bristol University, which indicates savings in the order of 7.5%. Irrespective of how these statistics compare, the companies agree that the more their systems are used, the more the user can save. This might sound like the ideal scenario for providers of e-commerce solutions. But it also presents them with their biggest challenge. To utilise e-commerce more, buyers need more of their suppliers using compatible systems and conversely suppliers need more of their buyers using compatible systems. And growth is needed fast so users realise savings before they lose patience with e-commerce. “We?ve all got to revenue build much more quickly,” confesses Patrick. “The crucial thing is to provide a critical mass of supply for buyers and demand for suppliers.” Since Setfair went live it has signed up a double figure total of buyers and suppliers. The company is unwilling to reveal more than this, saying it wants to respect the confidentiality of its clients. It also won?t reveal any transaction data, saying its non-transactional fee-structure means it has no need to measure totals. It denies its secrecy is because low user numbers would put off prospective future customers. Patrick claims to be encouraged by the take-up, especially as Setfair?s first three months have coincided with traditionally slow months for business. The company?s current hit list of potential customers carefully targets less than 1,000 companies, he says. All of whom will be offered a pricing scale that recognises the liquidity in the system. ShipServ says the number of transactions over its TradeNet Internet trading platform is currently doubling every 2-3 months. Speaking during a function held to celebrate the first anniversary of TradeNet?s launch, ?stergaard said the 25 buyers and 125 suppliers who have so far signed up have conducted over 15,000 transactions on the system. In July alone more than 3,500 transactions took place on TradeNet, he said. The company said its “ruthless focus”, its “relevant scale”, its independence from any ship operator and its decision to give away the Maritime Trading Markup Language (MTML), on which TradeNet is based, all help to differentiate it. With a recent $4 million cash injection in the bank, the company says it is aiming at profitability in 2002. Company?s using ShipServ?s system include ?buyers? like J. Lauritzen and Denholm Ship Management and suppliers such as MAN B&W, who signed a three-year agreement in June. Hong Kong-based iShipExchange says it is currently working with about 20 companies at various stages of implementation. Each of these buyers invites their suppliers to use the exchange – resulting in over 350 suppliers. “We are especially pleased with this progress, as 70% of the managers? suppliers are now operating in the system,” says Don Staffin, the company?s vice president of business strategy and development. The company?s fee structure is transaction-based with the buyer paying a commission. It plans to offer other value-added services for which it will charge ?a la carte? fees to the appropriate party, says Staffin. The hope of all the companies is for a snowball-like growth. Buyers signed up, anxious to take full advantage of the supposed supply chain efficiencies, are encouraging their suppliers to sign up also, they say. In turn they claim these suppliers are encouraging other companies that buy from them to sign up also so that the supplier too might get full advantage from its investment. In short, their e-commerce platforms are not designed to put buyers in contact with new suppliers, rather they seek to make existing buyer-supplier relationships more efficient. There is a keen rivalry between the various solution providers, but not to the extent of mud slinging. They recognise the enormous task of selling the e-commerce concept – and in particular its credibility – outweighs any individual competitive concerns. Each dot.com failure feeds the negative thoughts of customers and makes the job of selling e-commerce that much harder. The solution providers are, for now, focused on customer integration and community building. n