ECargo, the online freight exchange owned by Wellington-based e-commerce integrator eCentric and Carter Holt Harvey, will be relaunched in March having changed its focus from online bidding to business-to-business transactions.
ECentric head Phil McCaw says eCargo will relaunch with a wide range of products as opposed to the original launch which featured only one – an online bidding system called Spot Market.
ECargo will continue to offer Spot Market as about 5% of transactions arise as bids.
CHH, which owns 49% of eCargo and invested $600,000, swiftly realised that a bidding system was not suitable to its needs because 95% of its freight is under contract and freight margins are already slim – around 3%.
Brian Stokes of CHH's wood products division says the process of refocusing the website didn’t cost much in time or money because it happened at a very early stage – the decision was made within a few weeks of CHH’s investment.
CHH has been using eCargo to improve its relationship with freight companies and to cut operational costs, says Stokes. CHH believes that using eCargo to streamline freight transactions will save up to $1 million.
“We’ve done a reasonable amount of research on it. People forget the sheer cost of invoices. Freight invoices make up 50% of our total invoices, or about 250,000 invoices a year. They are usually for small amounts of money and are low margin so we’re trying to remove the cost of managing them.”
A key part of cutting costs is having an interface between eCargo and CHH’s enterprise resource planning (ERP) system, SAP, a new development which goes live in the next few weeks.
“A lot of information will be extracted straight out of SAP and used to populate the website. When goods are dispatched, the data will be retranslated into the trucking companies’ systems for billing purposes.
“The focus is that we want to enter data once. It used to be keyed in by our sales people, then keyed in by our dispatch people and then keyed in again by the trucking firms.”
Stokes says the interface has been developed to work with other major ERP systems.
Eleven CHH Tissue and Wood Products sites are now using eCargo to do business with three of preferred trucking suppliers, the biggest being Thames-based Provincial Freightlines. Stokes says transactions are running at around 400 a day.
He says although eCargo was developed primarily as a freight exchange it could just as easily handle any other transfer of data between customer and supplier. Another application the company has been looking at is pricing products.
McCaw says another company will start a pilot of eCargo in the next three weeks and adds that negotiations are starting with other potential investors.
ECentric Ventures, which is owned by Wellington systems integrators AMR and Trade Me, built the exchange using its own e-commerce technology known as Project Vortal.
Other eCentric exchanges include the auction site Trade Me and an online building and construction portal Build Me.