Trade Winds Editorial  

September 9th,2005-It Looks As Though Online Purchasing Is Finally Coming Of Age.

The cost of online marine-supplies purchasing is set to be driven down by a second generation of automated systems paving the way for smaller shipowners to make the kind of savings that so far only bigger groups have been able to access.

SeaSupplier, the e-procurement subsidiary of Stolt-Nielsen, is on the verge of rolling out a second-generation system that it says will fully automate the supplies buying process for all participants for the first time.

The new system, called SeaManagerII, is currently being tested by the big shipping groups SeaSupplier has so far gained as customers, including SeaBulk, BP Shipping, Teekay Shipping and the Stolt-Nielsen Transportation Group.

SeaSupplier managing director Terry Kearney told TradeWinds: “E-procurement is about to get a lot cheaper. The price of Internet services to owners will drop, allowing medium-size companies to conduct full systems integration rather than just transfer files.”

Over the last five years, many Internet-purchasing start-ups failed but SeaSupplier has stuck to developing systems that can be fully integrated between buyer and supplier, rather than applying Internet protocols to match different companies’ systems a cheaper but possibly more limited approach.

Kearney says SeaManagerII has been developed to integrate with Microsoft desktop programmes and should be fully ready by November. He says using the web to automate supplies procurement promises to cut costs by 15% to 25%, and the new system is designed to be a lot quicker and easier to install. It also incorporates some 3,000 changes suggested by existing users.

“Owners should be able to get up-and-running in two weeks with minimal cost,” said Kearney. SeaSupplier absorbs the upfront cost of providing the system to owners, who just pay for the amount of time they use it, and those fees should drop.

Suppliers will also see substantial savings. Kearney says a typical $10,000 to $15,000 integration cost borne by suppliers will be cut by 20% to 30%.

He believes SeaManageII’s benefit-to-cost ratio will be the best in the industry, adding that it will include the industry’s largest global database on suppliers, warehouses, freight forwarders and agents.

Increased integration and automation means a number of clever things can be done with the database. The new software is capable of connecting many users on the same platform, so suppliers’ catalogues can be put on the web and matched up with owners’ systems, allowing pictures of ordered spares to be sent to a ship to verify that the right part has been chosen. Delivery can also be tracked by forwarders who have contracts with owners. And owners should find it easier to monitor their spending to make sure they are getting value for money with easier-to-use data-reporting packages.

So, five years after the dot.com boom and a lot of initial frustration that promises were not being met, the use of the Internet for marine procurement looks as though it is coming of age.

Last month, Internet procurement rival ShipServ, which went for a less software-based approach, reported doing its one millionth transaction. ShipServ chief executive Paul Ostergaard says online buying is taking off as companies that have dipped their toes in e-commerce are now experiencing the advantages and moving from experimentation to all-out use.

There are still issues to be conquered, including the full integration of delivery and distribution elements into the process and the development and use of electronic invoicing.

Both ShipServ and SeaSupplier serve owners of around 1,200 vessels and both accept they have so far only touched the tip of the iceberg.

ShipServ puts an emphasis on its neutrality, while SeaSupplier points to its experience initially as an in-house service provider to Stolt-Nielsen before it became an independent subsidiary during the Internet boom.

If Kearney and Ostergaard are right, the time may now be ripe for a lot more owners and managers to take a fresh look at e-commerce.

Kearney describes his company’s system as putting “the decision-making power in the hands of the shipowners and suppliers, while taking the burden of information-technology management off their backs”.