By
Nick Wood
In
an age when every business seems in a rush to re-invent
itself as the next dot com phenomenon, Schneider National's
approach to the billion dollar e-commerce bonanza is amazingly
straightforward.
"Somebody's
got to physically move that product from point A to point
B, and it's going to be on a truck or a boat or a train,"
said George Grossardt, Director of Schneider Logistics.
"We view (servicing Internet companies) as a logical extension
of what we're already doing."
Put
simply, Schneider Logistics is the "brain" that orchestrates
via satellite the daily movements of Schneider National's
worldwide trucking fleet. But Schneidner National is not
it's only client. In recent years, Schneider Logistics has
expanded beyond the parent company and now hires out its
expertise to such Fortune 500 companies as General Motors,
Chrysler and Wal Mart.
"We're
a shipper's advocate," Grossardt said. "We taylor make (transportation)
solutions looking at all types of (carriers). It's not just
about orange trucks."
Currently
Schneider Logistics oversees the movement of $1.4 billion
in freight annually. But like a lot of numbers in the "new
economy," that figure is about to explode.
In
January Schneider announced a partnership with PlasticsNet.com,
a web site that serves as a clearing house for a previously
unorganized market of small plastics companies around the
country. A short time later, Schneider partnered with its
second "dot com," Imark.com, which serves as a clearing
house for surplus heavy equipment such as trucking and paper
processing machines.
There
are three more dot com partnerships in various stages of
development, Grossardt said, and many more on the horizon.
"We
think that there's almost unlimited potential," Grossardt
said. "Our two-year projection is that dot coms will be
a significant piece of our current business, and eventually
they will be one of the biggest." And a lot of those future
partners don't even exist yet.
The
reason for all this untapped potential is that the Internet
has created a fundamental shift in Schneider's potential
customer base.
Most
plastics companies, for example, are small blow molders
or injection molders scattered here and there in industrial
parks around the country.
Individually
they were much too small for a company the size of Schneider
to be able to service efficiently.
"The
cost to serve small customers is high," Grossardt said.
"In a fragmented industry like plastics, there's no leverage.
But the Internet allows you to take a fragmented market
like plastics and consolidate it, and that lowers our cost
to serve it. It's good for us and it's good for the fragmented
buyer. As a result you just keep getting efficiencies all
the way down the supply chain, and that's good for everybody."
Another advantage the Internet has brought to Schneider
is the ability to let customers order and track online through
its website. Before Internet ordering, customers had to
phone or fax their order, which in turn was entered into
Schneider's computer system by an employee. When a client
wanted to know the status of a shipment, it required a phone
call, and again a Schneider employee would look it up on
the system. What the Internet does is allows customers direct
access to Schneider's computers to manage their own accounts.
In effect, customer service has been outsourced - to the
customer.
"The
Internet allows clients the ability to generate their order
online," Grossardt said. "It saves them time and hassle,
and it lowers the cost for us."
And
as Schneider's interests grow in Asia, Europe and South
America, the 24-hour-a-day, seven-day-a-week availability
of Internet will become increasingly important.
"Demand
for our services is growing rapidly in Europe and the Far
East," Grossardt said. "Orders are coming in at all hours
because we're global and we need a way to respond. The flexibility
(provided by the Internet) is an important feature for international
(accounts)," Grossardt said.
As
with any major market shift, however, there come new competitors.
The shipping, or third-party logistics, business is no different.
Grossardt can name a handful of brand new players in the
market off the top of his head, all of them aiming to become
the Internet shipping solution.
"The
advantage we have in the market is experience," Grossardt
said. "We have a heritage of actually moving freight."
What
it comes down to is people, "The 'P' behind the 'e,'" as
one of Schneider's Internet partners put it.
"You
can bet your paycheck that (in the trucking business) something
is going to go wrong. Do (new companies) have the right
people and the right experience to create solutions when
those things happen? At the end of the day, we know we do."
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