Pacific Asia Express

www.pae.com.au

Executive Summary

Pacific Asia Express (PAE) was established eight years ago to provide shipping services to importers, exporters and freight forwarders, both national and international.  PAE's main customers are from the Australian market.  The company has offices in several Australian states, and is an agent for Pacific International Lines, a leading transportation company in Asia, Pacific Direct Line of New Zealand and Pacific Express Service.

In 1996, Pacific Asia Express adopted e-commerce at the suggestion of the Australian Customs Service as part of an initiative by the Government to improve online access to public services.  Customs suggested automation of processes that would effectively simplify the heavy documentation requirements inherent in the shipping industry.

As a result, PAE centralises all company documentation in their Melbourne head office and have installed Seawolf software, recommended by Customs.  This is accessed by dial-up Internet access and facilitates simplification of documentation procedures.  Uptake of electronic submission of information to the various regulatory bodies such as Customs, Quarantine, and the Port Authority has resulted in substantial cost savings for PAE.

In 2001, cost savings amounted to approximately $105,065.  This was predominately due to the reduction in employee time, previously required to administer hardcopy documentation ($100,000) and time spent in managing these transactions ($20,000).

The uptake of electronic communications including use of the Customs Connect Facility has produced greater business efficiency.  Submission of electronic manifests results in faster turnaround of the approval process by Customs.  This in turn improves the delivery cycle and transit times of cargo for PAE.

The Business

Pacific Asia Express has multiple Australian and Asian shareholders.  Services offered by Pacific Asia Express include special and dangerous cargo, supply chain solutions, and equipment hire including dry containers and open tops.  The company mainly targets the Australian market and services importers, exporters and freight forwarders.  Pacific Asia Express currently runs two weekly routes being the Australia-Asia-Alliance and the New Zealand service. 

Pacific Asia Express is based in Melbourne, Victoria and employs 180 staff across Australia.

Getting Started

Prior to adopting e-commerce, systems were paper-based and decentralised.  Management and submission of manifests was an extremely time-consuming task requiring several people in each state office.

As part of an e-government initiative in 1996, the Australian Customs Service suggested that the company should implement e-commerce to streamline its business processes.  This would minimise paperwork that needed to be transmitted to the various parties involved in the shipping process including customs, the quarantine authority, the port authority and terminals.

In particular, Customs recommended the business centralise documentation and use of the Seawolf program.

For Pacific Asia Express, Min Nguyen is responsible for implementing e-commerce and consulted the Australian Customs Service for information on process improvements and the relevant technologies to be used.

While dial-up access is used to access the Seawolf software, PAE has also installed a fibre optic cable to enable broadband access for communication.  This provides the necessary information-carrying capacity to enable the transfer of large electronic files to the various parties involved in import and export transactions.

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 initiating process improvements for businesses.  For a shipping business such as PAE, Customs has supported the uptake of e-commerce by providing guidance as to how documentation processes can be streamlined, such as recommendation of the Seawolf software.

Recognising the effect of the information submission process on shipping delivery cycles, Customs has established the Customs Connect Facility that provides a dedicated and secure means for businesses to electronically submit information such as manifests and payment to Customs.    The Australian Customs Service supported the online system by sending, free of charge, a senior officer to establish the system at PAE and to train the relevant staff in using the facility.

As a result of these initiatives, manifest information is dispatched faster which in turn has a favourable impact on PAE's delivery cycle and transit times.  It also leads to a large cost saving.

Current E-commerce Strategy

The main features of the online system are the uptake of electronic communication, centralisation of all documentation and shift of manual administrative procedures to online.

Large amounts of paper correspondence have traditionally been inherent in the shipping industry.  Where previously hard copy manifests were transferred between Customs, Quarantine, Port Authority, Terminal and PAE, this is now administered electronically via the Customs Connect Facility (CCF).  All transactions relating to imports and exports of cargo pass through the CCF.

All documentation is centralised in the Melbourne head office of PAE.  With one central base, access to the required documentation is made simpler and reduces the time spent preparing and wading through paper manifests for customer information.

Some administrative tasks have also been integrated into the new system.  Banking and payroll are now managed online.  Staff can also access websites to obtain container-related information from stevedore firms and send electronic documents (manifests, quotes and correspondence) to depots and stevedores via electronic file transfer. 

Security initiatives implemented to protect the online system include the establishment of a firewall to protect the system from viruses and outside intrusion.  In addition, all electronic data is backed up regularly by the Customs Connect Facility and PAE itself.

Prospective customers can check the company's website for information on available shipping routes, transit times, ports of load and of discharge.  This saves time in answering customers telephone enquiries.

Revenue and Costs

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

Financial Analysis

In 2001, PAE achieved an operating benefit from e-commerce of $156,400, which is an extremely successful outcome.  As the online business strategy did not involve establishment of an additional revenue stream, all benefits from the implementation of e-commerce are the result of cost savings.

Cost savings totalled $156,400 in 2001, of which a major share is due to the use of the Seawolf software.  Usage has eliminated the need for staff to print, file and physically lodge the paper manifest at Customs as well as sending the documents to other parties in the shipping transaction.  Simplification of this process has significantly reduced staff time in each of the 5 offices, equating to a cost saving of approximately $100,000.  In addition the company estimates that staff members save 30 minutes per day previously spent managing correspondence between the various shipping parties by eliminating physical filing, faxing, waiting for replies and accessing information via the phone from Stevedores amounting to a saving of $20,000. 

Use of a dedicated communication service such as the Customs Connect Facility ensures that staff time is not wasted corresponding with the wrong person or transferring/obtaining incorrect status reports.  By no longer having to physically send bulk documents to the various parties, courier disbursements on a twice weekly basis have been reduced by $36,400.  The ability to email large files containing manifests, quotes and correspondence to parties such as the port authority and various terminals also reduces faxing expenses.

Ongoing costs for the company totalled $51,335 in 2001.  The single largest cost is rental of the fibre optic line providing Broadband Internet access for $28,800.  Annual fees charged for access to the Customs Connect Facility amount to $14,400.  Miscellaneous expenses include rental of the telephone line at $330 and $390 for dial-up access. In addition, $2415 was allocated to the amortisation of capital expenditure over four years.

PAE invested a total of $9,660 in establishing the e-commerce system. This included staff time spent in software training ($1,000) as well as training with the Australian Customs Service ($240), which were provided free of charge.

Investment in new hardware to support use of the Customs Connect Facility included purchase of a new computer and modem ($1,880) and purchase of the Seawolf software ($3,000).  In setting up the infrastructure required for Broadband Internet, $3,500 was spent on installation of a fibre optic cable.  

Non-financial Benefits

The e-commerce system has supported a number of process improvements in the company.  In particular, head office in Melbourne now has central control over the documentation relating to each of its ships no matter which port they are in.  This has simplified processing procedures and reduced staff time required in each office.  Instead of searching for the paper manifest, any staff member can log onto the system and access detailed information about the cargo on each ship.

The uptake of electronic communications including use of the Customs Connect Facility has introduced greater business efficiency.  Submission of electronic manifests results in faster turnaround of the approval process by Customs.  This in turn improves the delivery cycle and transit times of cargo for PAE.

Online banking has contributed to improved efficiencies in terms of travel time, bank fees and staff time.  Furthermore, the ability of staff to obtain exchange rates and accurate information from stevedore company websites means that time is not wasted in transmitting incorrect information or speaking to the wrong person.

Challenges

While PAE uses Broadband Internet access for most applications, Seawolf software can only be used via a dial-up modem.  The resulting delays in connection have impacted on staff productivity.  With Customs signalling upgrades to existing online services for business, this issue is likely to be only temporary.

Future

As part of the Cargo Management Re-engineering project, it is expected that faster and more convenient methods of providing information to Customs will become available for businesses.  These include enhancements to the Customs interactive facility and to the Electronic Data Interchange messaging service.