Though he made hundreds of deals in his lifetime, the late businessman Victor Kiam was best known for just one. In a commercial for Remington electric shavers, he proclaimed, “I liked the shaver so much, I bought the company.”
Crowley Maritime wasn’t inspired by Kiam’s strategy in its recent deal, but the business philosophy is similar: Crowley loved its industry portal so much it licensed the underlying software.
And just as Remington blossomed under Kiam’s decision, Crowley Maritime is benefiting from its giant step into e-business.
Technology provides competitive advantage
Jacksonville, FL-based Crowley Maritime Corp., is a privately held container carrier whose cargo ships transport everything from food to components between the United States, Latin America, and the Caribbean. While competing with larger carriers such as Sea-Land, Hapag-Lloyd, and Maersk, Crowley Maritime gained a quick advantage by enlisting an industry portal, hosted by GT Nexus (formerly Tradiant), that lets customers book cargo space, fill in bills of lading, and check the progress of shipments online.
One reason Crowley chose GT Nexus was an existing relationship between the portal and the carrier. When the portal software became available in December 2000, Jorge Estevez, Crowley Maritime’s VP for pricing and yield management, became a member of the "carrier council," the GT Nexus customer advisory board.
According to Nancy Ritter, Crowley’s VP of IT, 11 percent of Crowley’s business started coming through the GT Nexus portal after it went live in April 2001.
As a result, Crowley went one step further and licensed the GT Nexus software for its own Web site—a tactic that features three advantages:
- Using the portal software increases efficiency and reduces bill-of-lading errors.
- As customers are accustomed to using the software on the GT Nexus site, there’s no development or training costs.
- Since the software is no longer on a portal—where customers can easily see competitors' information—there’s stronger brand recognition and increased customer loyalty.
Admittedly, the shipping industry is not technology advanced. Electronic Data Interchange (EDI) is still widely used, and customers also conduct business with shippers the same way they did 40 years ago—by telephone and telex, or more recently, by fax.
Prior to joining the portal, Crowley customers would book cargo space via the phone and Crowley employees would have to input the information into databases—a process subject to human error.
“The goal of the portal was to migrate people away from phone and fax for these basic functional execution things and migrate them into an electronic environment. Customers find it convenient and quick. It saves us time, and we have better accuracy on orders,” explained Estevez, who estimates that using GT Nexus’ Web-based Execution suite has reduced input errors by half.
Taking advantage of familiarity
When GT Nexus launched its shipping portal, more than a dozen worldwide shippers committed to its use. It gave customers the opportunity to create online booking, and companies witnessed quick adoption.
More important, the portal provided a consistent interface for customers. Just as the widespread use of tools like Microsoft’s office applications has made the tools de facto standards, Crowley found the portal made it easier for its customers.
“There are 100 carriers out there,” said Estevez. “We can’t force our customers to learn 100 systems. Even if there are three systems, that’s better than 100.” In addition to GT Nexus, there are two other shipping portals in place for carriers.
Crowley didn’t have to develop its own interface to its back-end systems, as that’s handled by EDI-to-XML translators set up by GT Nexus using Vitria integration software.
Increased brand recognition
In the latest phase of the project, scheduled to be completed this fall, Crowley is licensing the software under a private-label agreement with GT Nexus. This allows it to use the same software, which customers are familiar with, featuring the Crowley logo. It’s a quick and easy approach to maximizing the portal capabilities, according to Crowley.
“Why would we want to reinvent a system? Why would we want to implement a new system and teach customers how to use it?” said Estevez. “It’s easier for our customers, and it’s a benefit to us.”
Crowley clearly isn’t the biggest fish in the shipping business, acknowledges Estevez, and its competitors are certainly planning to gravitate customers to electronic booking as well, noted Estevez.
“By partnering with GT Nexus, we have state-of-the-art technology without having to invest the millions that the megacarriers have invested. We’re able to offer the same technology that customers can see through the portal, at a reasonable cost.”
Enhancing the shipper’s brand recognition doesn’t hurt either.
“It’s basically a brand management advantage,” said Dave Adams, VP of global services for GT Nexus. “On the private-labeled system, the customer feels like they’re on Crowley’s Web site.”
According to Estevez, the private-labeling system also helps the carrier create Crowley-specific templates that simplify not only the booking process but also the ability to create reports from the shipping data.
Portal technology also saves bucks
Weaning customers off the established systems isn’t going to be easy, acknowledged Estevez. Crowley will still have to run its manual input systems side by side with the electronic systems to continue serving customers who aren’t quick to adapt. Estevez anticipates an eventual cost savings but declined to name a specific figure.
In an industry where profit margins are in the single digits, any system that contributes to cost savings is clearly welcome.
“I would like to see a majority of our transactions come to us electronically,” said Estevez, “but if a carrier can get 30 to 40 percent of its transactions done electronically, that becomes significant.”
With its deployment, Crowley is paying heed to a less famous quote of Victor Kiam’s: “In business, your competition will bite you if you keep running. But if you stand still, they will swallow you.”