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May 26, 2014

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82 THE JOURNAL OF COMMERCE MAY 26.2014 TOP 100 IMPORTERS AND EXPORTERS By Peter T. Leach MUCH OF THE attention paid to the con- tainer shipping industry in the last few years has focused on the relentless drive of carriers to cut costs by ordering bigger, more fuel-efficient ships. Now it's getting ready to tackle the next stage: automating the system by which car- riers issue invoices and by which freight forwarders validate them against their own records. Carriers and logistics providers have been quietly chipping away at the manual booking, scheduling and invoicing that cost the industry some $14 billion a year. Those savings could be as large as any that the big ships can realize. The industry already has automated most of the booking, scheduling and tracking processes. When Maersk Line ordered 20 Triple E ships capable of carrying 18,000 20-foot- equivalent container units, for example, the main rationale was that fuel costs would be cut 20 to 30 percent on the Asia-Europe trade lane. After all, what could be more dramatic than ships of that size and savings that substantial? Well, take a look at the partnership between the large Swiss logistics pro- vider Kuehne + Nagel and INTTR A, the electronic booking platform. K+N has been working closely with INTTR A to auto- mate the process of booking, scheduling and tracking cargo for its shipper custom- ers almost from the time the e-booking platform was founded by a group of car- riers in 2000. "INTTRA helped us increase our pro- ductivity tremendously over the last 10 years, so that nowadays we have relatively few files to handle manually," said Otto Schacht, K+N's executive vice president of global seafreight. "We have increased our productivity by 50 percent over the last six to seven years." K+N measures productivity by the num- ber of booking files its clerks must handle every day. Ten years ago, most bookings were completed by phone, fax or e-mail, which required booking clerks to open numerous files each day. "We said we can't deal with 20 to 25 carriers out there, so when the Internet arrived we decided to automate the process," Schacht said. K+N clerks currently handle fewer than 10 files a day. "Our carrier connectivity through the INTTRA platform was one of the main contributors to this productivity increase," Schacht said. The reduction in paperwork is mirrored equally on the side of the carriers on which K+N books its cus- tomers' cargo. K+N has automated more than 90 per- cent of the booking and shipping instructions it used to handle manually. The only book- ings it still must handle manually are for oversize cargo that doesn't fit the INTTRA template. The two companies now are looking to crack the large cost nut that still resides in the manual invoicing by carriers and the laborious process by which forwarders match those bills against their own records of the cargo they booked and the rate they agreed to pay for it. "The last one and the most complicated one is the payment pro- cess," Schacht said. Under the system, a carrier presents a forwarder with an invoice that is still on paper in most cases. At K+N and other for- warders, it ends up on a desk, where it sits until it reaches the person with the proof of the invoice. If the invoice is wrong, the for - warder sends it back to the carrier, which then must issue another paper invoice with the corrected amount for the billing. "While over 90 percent of bookings and other documents are submitted electroni- cally, percentage-wise, anywhere from 2 to 40 percent of invoices get disputed because of rates and surcharges," said Ivan Latanision, INTTRA's chief product officer. "There's a lot of work to be done to automate this process and realize the savings." The invoice error rate varies from car- rier to carrier and by trade lane. "In certain trade lanes, rates are extremely volatile, changing on a weekly basis," Schacht said. "Maybe not so much in the trans-Pacific or trans-Atlantic, but in the Asia-Europe or Asia-Middle East trade, rates are changing on a daily basis." The potential for error is high. Invoices can be wrong because, although a shipper or forwarder may have negotiated new rates with the carrier, the carrier's update may not have been fast enough to be incorporated in the paper invoice it sends out. INTTRA has developed an electronic payment system that consists of two com- ponents. In the first step, a carrier sends an electronic invoice to K+N or another for- warder. Using INTTRA's new electronic system called Automatch, a forwarder compares the carrier's invoice with the amount it accrued for the booking based on the freight rate and surcharges it had agreed to pay when it first submitted the electronic booking. If the carrier's invoice matches K+N's Invoicing Goes Electronic Ocean carriers and logistics providers look to save billions of dollars a year by eliminating manual billing

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