Concordia International Forwarding Corporation

http://www.concordiafreight.com/regions/Australasia/australa.htm

Executive Summary

Concordia International Forwarding (CIF) provides import and export broking services for international air and sea freight.  It is a subsidiary of an American company that has been operating in Australia for 17 years.  CIF is based at Brisbane Airport and employs 13 staff in Australia. 

Robert Rimes, a broker with CIF, was involved in the implementation of e-commerce, which was part of a company-wide initiative in 1999.  He was in favour of adopting e-commerce because he felt it would produce large time and cost savings and fewer errors would be made with electronic rather than paper-based processes. 

The Federal Government was active in encouraging businesses to introduce e-commerce in line with its commitment to put all appropriate Government services online by 2001.  The Customs authority uses an electronic system called Compile to receive and process cargo information.  Robert was keen to implement an electronic system that would streamline the Company's procedures and also interface with the systems used by Customs and Quarantine.

CIF uses Deliverance software for entering client and freight details into a template that is delivered to the Customs Compile system.   Other online applications include email usage and Internet searching for suppliers and clients. Broadband technology (Access IP frame relay, a fibre optic connection) has recently replaced dial-up to support these applications due to its speed and reliability.

The business has achieved the cost savings Robert anticipated, totalling $69,840 in 2001. Email saved staff a considerable amount of time and the online tracking facility reduced the volume of client enquiries significantly. The number of errors made with manual processes has been reduced with the introduction of the Deliverance software. The company generated an overall operating benefit of $56,645 and they expect future revenue growth and operating efficiencies, producing a strong return from their investment in e-commerce. 

Customers can track the status of their freight via the website at their convenience. The new systems enable staff to record data more quickly and accurately, increasing productivity and reducing errors.  For Robert, the Internet provides research opportunities into potential new business and suppliers.

The Business

Concordia International Forwarding (CIF) provides import and export broking services for international air and sea freight.  It is a subsidiary of a 20-year-old American family-owned company that has been operating in Australia for 17 years.

CIF is based at Brisbane Airport and employs 13 staff in Australia.  The parent company has 150 staff worldwide.

Getting Started

CIF's implementation of e-commerce in 1999 was part of an industry-wide initiative for companies to implement specialist freight management software. Deliverance software, in particular, has been deployed by a large number of importers, exporters, freight companies and brokers within the industry.  

Robert Rimes, a broker with CIF, embraced the initiative and was instrumental in CIF's implementation of e-commerce. In addition to following industry trends, Robert appreciated the potential time and cost savings that could be achieved with streamlined procedures.

Initially, Robert found it difficult to obtain information on how to implement the e-commerce system.  A rapid implementation was decided upon and the software was installed and operational in one step.  Dial-up connection was originally used, although it was then determined that CIF would receive greater benefit from the installation of an Access IP-frame relay fibre optic Broadband connection which was recently adopted.

E-Government

In line with the Federal Government's commitment to put all appropriate Government services online by 2001, the Customs Department has been active in encouraging the introduction of e-commerce by businesses.  Businesses such as CIF were heavily reliant on paper-based manifests and correspondence. Customs have encouraged businesses to adopt e-commerce with advice on how documentation processes may be streamlined using software such as Deliverance.

Implementation of Deliverance software was viewed as the appropriate tool for simplifying the procedures associated with forwarding cargo information to the Customs Compile system and the Quarantine Authority.   As a result of this initiative, cargo information is approved more quickly, improving CIF's efficiency and productivity.

Current E-commerce Strategy

Deliverance software enables the entering of client and freight details into a template that is delivered through e-mail to the Custom's Compile system.  This process streamlines data entry by negating the need to re-key data.  If customs duties and taxes are payable, the Compile system responds with an invoice which CIF can pay electronically.  Clients pay the Compile access fees and Customs fees directly into the CIF account.  Deliverance also sends information to the Quarantine authority.

The Australian branch of the business does not have its own website address but is accessible via the parent company website in the United States. The website is managed by the parent company.  Tracking of freight by Australian clients may be done via a "quick" track or a "detailed" track system.  For detailed tracking, a password is required and for quick tracking, a consignment number is required.   Deliverance software is maintained and supported by Eagle, the company involved in its deployment. 

Security has been installed for systems protection.  Clients and staff both have passwords to access data.  The system has firewall protection and anti-virus software has been installed for protection of e-mail systems. CIF relies on receiving warnings about new viruses rather than downloading regular update patches. System back-ups are not conducted in Australia. A global system back up is done by the parent company in the US. 

Revenue and Costs

* Note: Capital Expenditure was amortised over a four-year period

Financial Analysis

The cost savings that were anticipated with the introduction of e-commerce were achieved, totalling $69,840 in 2001.  Additional revenue of $15,000 was also generated as a results of customers contacting Concordia after visiting the website, which contributed $6,600 to gross profit.

The shift from a paper-based system to an electronic based system resulted in improved staff efficiencies with subsequent savings of $25,000. Electronic systems have improved the integrity of the data entered. This has significantly reduced clerical errors.  It is estimated that $20,000 has been saved from simplifying administration functions and on time saved correcting input errors.

Staff time was also saved with the introduction of an online tracking facility, allowing clients to monitor freight via the website ($9,600).  Similarly, e-mail requests reduced the amount of time spent responding to telephone queries ($15,000).

Establishment costs totalled $21,199. Web development costs were avoided because the site is managed from the US. The purchase of hardware and software incurred the most significant costs, such as $7,155 for the Deliverance software, $7,393 for servers and computers and $1,891 for printers.  Staff training on the new systems cost an estimated $4,760.

Ongoing costs of $19,795 were incurred in 2001, with the major portion attributed to license fees for the Deliverance software ($6,720).   Telecommunications charges accounted for $5,685 in costs, with $525 for the rental of two telephone lines, $4,800 in charges for calls made to the previous Internet Service Provider (ISP) and $360 for ISP services. Staff training on the e-commerce system cost $1,200 and $240 was paid in financing costs. In addition, $5,300 was allocated to the amortisation of capital expenditure over four years.

Concordia expects further revenue growth and operating efficiencies to produce a strong return on their investment in e-commerce.

Non-Financial Benefits

The anticipated non-financial benefits were realised with the introduction of e-commerce. Customers are able to track the progress of their freight easily at any time, and appreciate the convenience.  Staff productivity is increased due to a reduction in client enquiries, minimising administrative errors and the time spent on the telephone. The functionality of the system assists with accurate data entry, thereby saving labour intensive corrections.

Challenges

The additional cost of hardware and software for use with the Compile system were substantial.  The support and maintenance of the software by Eagle has posed communications problems with staff when there are issues with the system. This issue of communication is still being resolved.  Return to manual processes is not considered as an option because of the increase in costs and the staff time required to manage them.

Future

CIF plans to move away further from manual systems with the implementation of online banking in the next two months. This will enable electronic payment of both staff and suppliers.