MAIN HEAD OOCL 's information technology DECK HEAD OOCL has reduced its spend on admin, customer service and documentation from 35% to 9% of total revenue using information technology, whilst only spent 1.8% of its total revenue on technology (budgeting 3.5%). Meanwhile it made plenty of other savings BODY About five years ago, there was talk that the container shipping lines were getting dangerously far behind when it came to information technology. They would soon be beaten by companies like TNT, DHL and Federal Express, which were carrying progressively larger items of cargo and could offer customers sophisticated shipment tracking and online documentation tools since the birth of the internet. Shipping lines would turn into bus drivers and owners, simply moving laden ships from place to place. All of the tasks associated with customer relations and managing the documentation would be covered by the logistics companies which, since they owned the customer relationship, could then squeeze the shipping line's operating margins to zero. Thankfully for the maritime industry it looks like it isn't going to happen, because shipping lines are developing their own information technology systems, led, as far as Digital Ship can see, by OOCL, the third largest container shipping line in the world (check). OOCL was went for the internet as soon as it came on the scene, in early 1992. Its online interface, CargoSmart, enables customers to do everything associated with their container shipments, including finding out if vessels are early or delayed, printing out documentation, handling all regulatory declarations and changing the destination of shipments in transit. The trend in e-commerce, says chief technology officer Ken Chih, is for personalisation of content, portal services, comprehensive security, automated customer care, process integration, and automation. Partnership relationshijp management, instant global status visibility, management by exception,customised business models. The end goal, Mr Chih says, is to "provide customer control of the shijpping chain by the web." SUBHEAD Other benefits OOCL didn't make this investment in technology just to provide customer service. It has reduced the amount that the company spends on service, documentation, administration and other communications with shippers from 35 per cent of its annual revenue to 9 per cent. Meanwhile the computer system, budgeted to cost 3.5 per cent of the company's annual revenue, only cost 1.8 per cent. The savings don't stop there; OOCL can provide much better information to its own sales staff for use in pricing, so they can see exactly how much profit it can make on a specific shipment taking into account the cost of returning the empty container and if a cargo for the return container might be found. "When the price war starts, you have to know when you want to start or you lose you shirt," says Mr Chih. "The problem with online bidding is that it pushes the price down. So we bid into the areas that we want." The company has integrated its information technology system so far with the core of the business that the company chief technology officer, Ken Chih, is in charge of all business process and systems for the company. SUBHEAD Improved visibility. There are other benefits to customers of the improved visibility and knowledge OOCL has due to its IT system. For example, during the West Coast US port strikes, OOCL could provide much faster, better and accurate information to customers about any delays. The system also makes it much easier for customers to change the destination of a container which is already in transit, for example if they want to cargo to go to a different warehouse which is short of the specific item. The computer system can work things out for the whole world, rather than looking at countries separately, as shipping lines traditionally have done. The 24 hour rule, requiring shipping lines to give US customs information about shipments to the US 24 hours before the container is loaded, was easy to implement, because OOCL as all the necessary information about the container as soon as it is booked. OOCL uses a technology called "object technology" to manage the systems - all the information about shipments is stored as objects. There are 700m objects in its database, which makes it the largest objects system in the world. "Its the proper way of managing software," says Mr Chih. The only other shipping line doing the same thing, the company says, is COSCO, which bought its operations software system from OOCL. OOCL is currently testing RFID (radio tag technology) on shipments, helping shippers keep track of where all their individal shipments are at any time. "We believe this will impact the whole shipping chain," he says. However the company believes that fitting RFID tags on the actual containers themselves is "still pretty far away," Mr Chih says. After all, OOCL knows where all its containers are all the time anyway, without any additional technology. SUBHEAD CargoSmart OOCL was the company behind CargoSmart, a multicarrier portal for shipping lines which currenty involves OOCL, COSCO, NYK Line and "three or four" other shipping lines which do not wish to be named. CargoSmart is currently being used by over 8,000 shippers. The biggest problem with CargoSmart, the company says, is that most shippers still don't allow their employees to use the internet, although resistance to the internet is gradually going down. The company claims that CargoSmart is much better than the rival multi-carrier portals, INTTRA and GT Nexus. INTTRA, Mr Chih says, pulls together all of the data from other shipping lines onto a single page, but does not reach deep into the various systems. GT Nexus is more of a logistics tool. However he notes that to take full advantage of Cargo Smart you do need to be using IRIS-2, OOCL's back end system. Of course most shipping lines already have their own proprietary computer systems. It is probably easier for a shipping line to connect into INTTRA than connect to CargoSmart. Mr Chih notes that it was never the original intention to make CargoSmart a multicarrier system, just a sophisticated customer entry point into the OOCL system. 90 per cent of Cargo Smart shipments are still OOCL. But a number of shippers asked for the system to link into other shipping lines. In particular a major shipper Herbal Life wanted to use Cargo Smart but they also wanted to use NYK Line as a carrier, so they insisted that NYK Line push data through Cargo Smart. OOCL is branching into offering XML services, where the data is transferred via the internet directly into the shipper's computer system, rather than, for example, the shipper having to go to Cargosmart.com to see the data on the internet. "We did the first EDI XML transaction in our industry with a Hong Kong freight forwarder," says Mr Chih. "We are XML ready but are customers are not. Our major customers still want EDI and when they want to access information they want a web user interface." SUBHEAD Other initiatives INTTRA has developed a new technology together with printer manufacturer Hewlett Packard which enables shippers to print out electronic documents, but the software makes sure that they are only able to print out the document once. Even if they print out the document and then photocopy it, the photocopy comes out with "copy" written accross it. OOCL has a number of other "Smart" initiatives. This includes Operation Smart, to improve the efficiency of communicatios between OOCL and its container terminals using EDI. Claims Smart is a tool to manage claims with depots; Depot Smart is a neutral online depot operations network being used by over 450 depots. DS Smart is a maintenance module. Scheduling Smart is a tool to integrate the bookings of the containers with the actual ship itself. If the ship is delayed, the ship master can update the schedule automatically. This means that if a vessel is delayed or early, or delayed due to a stevedore strike, shippers can update their plans accordingly. The software is fully developed, Mr Chih says, and just being rolled out. "In our industry there is no real time scheduling," says Mr Chih. "When customers book they look at newspapers."