Open Season

Latin Trade, April, 2001 by Michael Fabey, Mike Zellner

"The Internet is the great enabler," says John Urban, who helped found Tradiant.com, a Web-based company that brings shippers and shipping lines together to move sea-borne cargo. Tradiant and Inttra.com are two new major online shipping exchanges that seek to create alliances using the Internet. The dot-com dream would be easy to disregard if not for the fact that the exchanges have partnered with global shipping lines.

Tradiant draws support from APL; CP Ships, the container shipping business of Canadian Pacific Ltd., which includes ANZDL, Canada Maritime, Cast, Contship Containerlines, Lykes Lines and TMM Lines; Hanjin; Hyundai; K Line; Mitsui OSK Lines; Senator Lines; Yang Ming and Zim Israel Navigation Co. Key-punching trade. Inttra has gained the backing of Maersk Sealand, P&O Nedlloyd, Hamburg-Sud, Mediterranean Shipping Co. and CMA CGM. They have reportedly invested a total of between $70 million and $100 million in the company.

These initiatives could well spell more trouble for third-party logistics suppliers. The average international container transaction involves 21 parties, including consignees, shippers, carriers, truckers, forwarders, third-party logistics providers and customs brokers, according to Mark From-Poulsen, interim president and CEO of Inttra. "More than 70% of the people in the supply chain are used for manually re-keying information," he recently told specialized publication Traffic World. "There are so many disconnects in this chain of events, the benefit of automation is huge." As automation progresses, some companies will inevitably get cut.

To be sure, not all is doom-and-gloom for independent logistics providers in Latin America. Month after month, the region's trade with the world is growing. In November 2000 alone, total trade of the eight largest economies grew 12%, to $56 billion, compared to the same month a year ago.

Ironically, despite improvements in customs administrations, technology and port facilities, moving cargo in and out of the region still requires expert knowledge. "They've got all kinds of fast-track programs for clearing cargo these days," Panalpina's Schwab says. "But if the documents are not perfect--forget about it."

Deregulation is also opening opportunities in major countries. Last year, for example, Brazil passed legislation allowing true logistics companies to operate there, making it possible for businesses to move a piece of cargo among different modes, such as ship to train or airplane to truck. Before, each move required a different entity and a whole pile of paperwork.

The country's port privatizations have already sparked positive results. Santos, Rio de Janeiro and other major marine gateways now offer better services at lower rates. Even secondary ports like Salvador in the northeastern state of Bahia are getting into the act. Brazilian transport company Wilson Sons recently won the port concession there. "We've already moved offices right to the docks," says Wilson Sons Manager Demir Lourenco. "We've done quite a bit already to improve operations here."