Business-to-business marketplaces for freight transportation

Thesis (M.Eng.)--Massachusetts Institute of Technology, Engineering Systems Division, 2000.Includes bibliographical references (leaves 52-54).Business-to-business (B2B) marketplaces bring together buyers and sellers in different industries using the Internet to conduct or facilitate business transactions. Among these new intermediaries or "infomediaries" are several firms that address spot market transactions and long-term contract negotiations for truckload, airfreight, ocean and intermodal shipments. Most of the initial activity in freight transportation has focused on the highly fragmented truckload sector. Currently, none of these firms process enough shipments to constitute critical mass or a self-sustaining business model. Without liquidity, B2B marketplaces that rely solely on an exchange cannot present a viable alternative to existing transportation intermediaries, such as brokers and forwarders, since shippers' orders cannot be frequently matched with carriers' capacity. Channel mix and domain expertise are the critical strategic mobility barriers for B2B marketplaces. Firms must make strategic decisions early about whether to include or exclude existing intermediaries and also how carriers' direct sales forces may be displaced. The service offering must either reinforce or replace the basic functions of intermediaries. Technology leadership in applications critical to shippers (e.g., shipment consolidation, mode selection and combinatorial bidding) is a proxy for domain expertise and will largely determine a company's ability to differentiate its offerings and form a broad versus narrow line. Shippers will receive the greatest benefit from B2B marketplaces and Internet-based transportation management systems present the best opportunity for value creation. This research examines indirect channels for freight transportation and the specific functions performed by existing intermediaries. Trading models are categorized and four case studies of truckload marketplaces are presented. Frameworks are provided for channel structure and strategic groupings.by Marc D. Boyle.M.Eng