The global trade management solutions market

By N. N. Sachitanand

BANGALORE, MARCH 5. The borderless Internet is regarded as a great facilitator and driver of transnational trade. Any company's Web site, the argument goes, is a natural fly trap for international orders and the only thing stopping any company in the world from filling these orders is a mere lack of knowledge and experience with pesky details like actual landed cost calculations, Customs regulations and duties.

This has given rise to a new type of IT services - ``e - Global Logistics'' , that is , Internet-based technologies that streamline the process of moving goods and funds across borders. A report on `` e-Global Logistics '' published recently by Robin Roberts, analyst at Stephens Inc., an investment bank in Little Rock, Arkansas, USA, puts the worldwide spending in cross-border logistics technologies at $1 trillion a year by 2005.

The number of companies offering a variety of services aimed at U.S. companies that want to trade abroad is getting bigger daily, it seems. The latest entrants according to media reports are myCustoms.com, a service-based outfit offering information, documentation and advice; and Tarrific.com (you say it with a French accent), based in Montreal, which focuses more on the pure advantages of a big database of customs and import-export information. The companies vying to provide hand-holding services of varying kinds for this nascent trade include the above- mentioned companies, Vastera, NextLinx, ClearCross (formerly Syntra), From2.com, TradeCompass and others not yet prominent.

Roberts said demand would be most increased around logistics technologies that helped cross-border transactions. This would include international tracking, door-to-door transport management, screening for import/export restrictions, and calculation of total landed costs. She saw a less robust future for companies involved in non-transactional trade content portals, pure online auctions and exchanges.

She also said that traditional freight forwarders need to wake up to the true story of how they stand in regard to e-logistics companies; to stop seeing them as a threat, and to partner with them instead.

``The two are highly complementary to each other in reality. Since not all services offered by a freight forwarder can be digitized and delivered over the Internet, we believe that e- logistics will reintermediate traditional freight forwarders, rather than disintermediate them,'' Roberts said.

The report envisions the emergence of an ``end-to-end global supply chain management portal.'' This would link ``horizontal'' logistics functions, like transportation management, trade compliance and so on, with specific international trading portals, or ``vertical'' markets. However, Roberts acknowledged that technology was not the only thing standing in the way of such a portal, and that there were ``low levels of trust'' and ``cultural differences.''

Roberts saw a ``winning combination'' in companies that offered a combination of services, including both data content and consulting. She said that an understanding of the international trade process was more important than the sophistication of the software, even though that was still important.

So far, there are two missing links in the international e- logistics service offering, the report concludes. These are international reverse logistics for handling international product repairs and returns; and duty management services that would help minimize duty payments. However, Vastera and NextLinx both have a competitive advantage over other firms in addressing those problems, Roberts said.

All in all, the report predicts an international e-logistics ``heyday'' within a year or two, offering promising investment opportunities.

But now, there's not just competition to worry about. Even before these companies really start to see the expected swell of new ITL, there's trouble on the horizon from DE Technologies, a Union Hall, Va.-based software company with a product called Borderless Order Entry System. The company says it has been given a Notice of Allowance from the U.S. patent office, which means it will soon have an enforceable, broad patent over international trade logistics electronic services.

To summarize, an inevitable question-mark hangs over the idea that any one company can legally claim to have first dibs on online trade-related transactions.

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