global e-business and transport opportunities and threats - QUT ePrints

Working Paper 9 of the E-Business and Transport Project for The National Transport Secretariat

GLOBAL E-BUSINESS AND TRANSPORT OPPORTUNITIES AND THREATS

by

Nariida Smith CSIRO - Building, Construction and Engineering &

Luis Ferreira Queensland University of Technology &

Elspeth Mead Queensland University of Technology

12 June 2001

For further information or clarification please contact: Dr Nariida Smith Principal Research Scientist CSIRO Building, Construction and Engineering PO Box 310 North Ryde NSW 1670 Phone 02 9490 5466 Fax 02 9490 5777 e-mail [email protected]

This research was undertaken in collaboration with the Built Environment Research Unit of the Queensland Department of Public Works. © CSIRO/QUT 2001

Global E-Business and Transport Opportunities and Threats

Working Paper 9

EXECUTIVE SUMMARY This is the final Working Paper in a series, reporting research into the likely impact of ebusiness on transport in Australia and considering the possible effects of global changes on the national transport task. We focus on trends in North America, Western Europe and the Asia Pacific - the homes of the majority of the 304 million people now online and increase of 78 percent accessing the Internet in the past year.. Trends are discussed under three headings: Technologies and Transport Supply: Specific enquiry into new overseas technologies of relevance to Australia found few technologies that were not trialed in some way, but, with potential for take-up being of greater interest. International technologies of potential value included systems for compliance, accreditation; fleet and load management; and information leveraging. Changes in External Demand: E-Commerce opens wider markets for Australian business but while ‘any Australian firm that has a web site has the potential to be an exporter’ the goods or services must still be delivered. Australian SMEs are also benefiting, with 28 percent in the Transport and Storage industry taking up international opportunities. The ‘push’ supply chain: is being replaced by a ‘pull’ model where customers demand goods, built to order and quickly dispatched. Global procurement is leading to international sources replacing local sources and also new roles for transport companies. There is also significant potential for e-business to provide the port and sea freight efficiency needed in the new environment. Internal Impacts: Many external impacts are reflected internally. There is also potential for online retailing applications developed in America to impact Australia. We may also start to the see the impacts of e-materialisation, replacing physical products with virtual products. For example, America is actually experiencing a drop in paper usage currently. Then a set of threats and weaknesses, then opportunities and strengths were identified including negatives with fragmented implementation of technologies, tyranny of distance, increased external competition and destructive internal competition. Positives include critical mass of global consumers, initiatives for improved industry linkages and international roles for Australian transport firms. Finally, Transport is the Key to compete a global e-business economy. The major challenge for Australia will not be in developing communications technologies and practices but in developing the transport technologies and practices if we are to win world markets.

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................ II TABLE OF CONTENTS ..................................................................................................III TABLE OF FIGURES ......................................................................................................IV 1

INTRODUCTION ................................................................................................... 1 1.1 GLOBAL IMPACTS OF E-BUSINESS................................................................................1 1.2 GLOBAL E-BUSINESS AND AUSTRALIAN TRANSPORT............................................2

2

TECHNOLOGIES AND TRANSPORT SUPPLY............................................... 4 2.1 NEW TECHNOLOGIES EXPECTED SOON? ....................................................................4 2.2 COMPLIANCE AND ACCREDITATION SYSTEMS........................................................5 2.3 FLEET AND LOAD MANAGEMENT SYSTEMS ............................................................6 2.4 INFORMATION LEVERAGING SYSTEMS ......................................................................6

3

CHANGES IN EXTERNAL DEMAND................................................................ 8 3.1 WIDER MARKETS...............................................................................................................8 3.2 INTERNATIONAL MARKET PULL...................................................................................9 3.3 GLOBAL PROCUREMENT...............................................................................................10 3.4 SEA FREIGHT AND PORTS .............................................................................................11

4

GLOBAL TRENDS TO IMPACT TRANPORT DEMAND WITHIN AUSTRALIA.......................................................................................................... 12 4.1 EXTERNAL IMPACTS REFLECTED INTERNALLY.....................................................12 4.2 ON LINE RETAILING TRENDS .......................................................................................13

5

OPPORTUNITIES AND THREATS .................................................................. 14

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5.1 THREATS AND WEAKNESSES.......................................................................................14 5.2 OPPORTUNITIES AND STRENGTHS .............................................................................16

GLOSSARY ....................................................................................................................... 22

TABLE OF FIGURES Figure 1: Growth in Worldwide E-Commerce Revenues...................................................................................1 Figure 2: Explosion in Communications Technology Options 1847 to 2000.....................................................2 Figure 3: Growth in Adult Internet Users by Region 1995-2005. ......................................................................3 Figure 4: Percentage of SMEs Involved in International Business Other than Import/Export...........................9

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1 1.1

Working Paper 9

INTRODUCTION Global Impacts of E-business

This is the final Working Paper in a series reporting the findings of a research project designed to consider the likely impact of e-business on transport in Australia. The project, carried out for the National Transport Secretariat, by the CSIRO/QUT Built Environment Research Alliance supported by the Queensland Department of Public Works, defined e-business broadly to encompass electronic communications within companies as well as electronic commerce between companies, B2B, and between companies and customers, B2C. In this inclusive definition e-commerce includes both i-commerce, the term sometimes used to describe distinctly Internet based commerce, and m-commerce the newer and growing field of mobile communications, for example, via SMS [short message services] and EMS [the new elaborate message services. The impacts of e-commerce on the global economy are rapidly growing in significance as can be seen in Figure 1. The total impacts of all e-business are even more significant.

Figure 1: Growth in Worldwide E-Commerce Revenues.

[Source: IDC, 1999]

This research has focussed on a subset of those impacts, those relevant to transport, and, within that subset, those relevant to Australia. However, the subsets are broad. Since transport is a derived demand, it is impacted both by direct changes within the transport industry and indirect

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changes to all other industries resulting in changes. In a similar manner, Australia is impacted both by internal changes and by global changes affecting our economy. Moreover, these changes are just part of a general change in national economies from a manufacturing based to knowledge based economies. This has been described as “the third great societal transition in human history” comparable with the first, an introduction of agriculture and the second, the move to manufacturing industry in the industrial revolution, [see for instance, Brotchie et al., 1999]. These changes and the associated globalisation of business and industry is affecting trade, employment and the entire fabric of societies everywhere. In this situation it is difficult to distinguish changes attributable to e-business in general, however, we aim to do so. Figure 2 shows the explosion in communications technologies, particularly, in recent times.

Figure 2: Explosion in Communications Technology Options 1847 to 2000.

[Source: WA-TIAC, 1999]

1.2

Global E-Business and Australian Transport

We concentrate particularly on changes to the transport task and the opportunities and threats to Australia due to such changes. We will also concentrate on the situation in North America, Western Europe and our own Asia Pacific Region. As can be seen from Figure 2, it is in these regions where potential for change due to e-business will be realised in the medium term.

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Current growth seems in line with forecasts with Internet access has growing significantly in all regions of the world, rising from 171 million people in March 1999 to 304 million in March 2000, an increase of 78 percent [NUA Surveys, 2001]

Figure 3: Growth in Adult Internet Users by Region 1995-2005.

[Source: Computer Industry Almanac, 2000] Working Papers 2 and 3 in this series have already described changes taking place in e-business [WP2] and its impacts on transport [WP3] in America, Canada, Europe and to a lesser extent Asia. This paper reports changes in technologies and practices already in place elsewhere in the world which are likely to be introduced in Australia, changes introduced elsewhere which are likely to affect Australian export industries and Australian industry in general. Section 2 of this paper deals with technologies which directly impact transport supply. As noted in all previous papers, these are important but less significant than the broader range of e-business applications that are changing the demand for transport to deliver goods and services, as described in sections 3 and 4. Section 3 considers changes in demand affecting trade in and out of Australia, then section 4 considers changes to transport demand within Australia.

Finally section 5

summarises the papers findings in term of opportunities and threats for Australia, noting that such issues should be considered at both individual jurisdiction and at the national level. In contrast to our assessment of impacts within Australia in earlier papers, we do not tie possible global impacts into five or ten year timeframes. Here, we are noting trends plus suggesting opportunities and threats where reactions will make large differences to outcomes. Global impacts are tied to issues of geo-political stability and to the opening or otherwise of individual national economies to allow foreign trade and investment. Such consideration is outside the scope of this work.

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However, no discussion of possible global impacts can exist without some implicit assumptions about global futures. Our assumptions are described here in terms of a scenario modelling exercise Austrade has recently carried out. This model considered the impacts on the ‘new economy’ in Australia [Harcourt, 2001]. Scenarios offer the opportunities to test alternative futures, although at the same time they require bundling of numbers of major changes together to avoid a confusing proliferation of alternatives. The three scenarios are as follows: •

“Open Road” - buoyant global economy with open trade and a rise in wealth of underdeveloped nations;

•

“Flying not Driving” - ‘high tech’ scenarios including a new form of transport replacing road based transport; and finally

•

“Bush Track” - backlash against globalisation, tensions between regions with increased trade barriers.

This paper may be seen as relevant to the first scenario, with inclusion of some of the growth in importance, and value of e-technology in the economy, from the high technology scenario. Consideration of the political drivers of the “Bush Track” scenario is far outside the scope of this study. Similarly, there is more value in assessing the many emerging technologies than speculating on fantastic futures where “flying” replaces “driving”. Although stating this, it is worth noting that some of the technologies discussed in the next section, and the internet itself, would have been viewed as science fiction by many people only twenty years ago.

2 2.1

TECHNOLOGIES AND TRANSPORT SUPPLY New Technologies Expected Soon?

When interviewing transport experts about the expected impacts of e-business, see Working Paper 4 [Smith et al., 2000], we specifically enquired about expected changes in other areas of the world likely to impact Australia. Specifically we enquired: “Changes somewhere and coming here? Are there any particular B2B or B2C initiatives in Europe, USA, or elsewhere in the world, likely to impact transport here either via global impacts or by being introduced here in the near future?” Only a few cases of completely new technologies not yet in use in Australia were cited in this context. The international links of Australia’s major companies ensure that most new technologies are trialed in some way. However, a much more important issue is the degree of

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take-up of appropriate new technologies. Existence of one experimental system in one vehicle will not change the face of Australian transport. For example, while in-vehicle guidance systems are available in some Australian passenger vehicles, they have not the impact here that they have had in Japan where the level of uptake of such systems is high. This may change, as in-vehicle navigation systems become standard in the mass market. For example, ITS installed in the Holden Statesman or different approaches to the same problem are trialed.

Pacific Access [2001], owned by Telstra, using imported

technology from Webraska, offers map guidance to some Australian cities over the web and expect to be in all Australian cities by the end of 2001. They also intend to expand the service to in-vehicle information via mobile phone SMS. Thus the appropriate question regarding new technologies is not “is it available in Australia?” or “when will it be available in Australia?” but rather “when, if at all, will it have sufficient take-up to have an impact on the Australian market?”. There are many new technologies under development or coming on the market in Europe, America and Japan. Listed below are some of the types of technologies where significant Australian take-up seems likely.

2.2

Compliance and Accreditation Systems

Worldwide, various paper based systems exist for checking a great variety of safety and licensing requirements. They range though checks of loading in various ways, compliance with road charges or permits, restricting access to certain routes for heavy vehicles, through to vehicle condition checks, including environmental impacts such as noise and pollutant emissions to driver behaviour, such as speeding or driving too many hours. The disadvantages of paper based systems are obvious. Compliance must be checked by inspection, which, by its very nature, intercepts only a sample of vehicles. This allows less scrupulous operators to decide the risk of being caught is less than the cost of compliance. Thus, there is little dispute that electronic compliance systems that can be applied to all, would be more useful for agencies. The current impediments to adoption include: lack of systems tailored to local needs; cost of implementation; industry resistance; and also, the need to evaluate a multiplicity of systems geared to serving different compliance requirements. While there are local systems, such as Safe-T-Cam, under operation/testing in Australia, applications developed overseas also have some applicability. The American government has directed significant funding to development of systems for commercial vehicle operation. For example the ‘ITS for Commercial Vehicle Operations Project’ applications for safety

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information exchange, electronic screening, and electronic credentialing [DOT, 1996]. Prepass [Help Inc., 2001] is an automatic vehicle identification [AVI] system that allows transponder equipped commercial vehicles to bypass designated weigh stations and port of entry facilities. Applications under development in Europe are particularly concerned about cross border compatibility for the European Market. For example, an electronic tachograph [Ertico, 2001] of defined technical specifications will be needed for all new commercial vehicles by early 2003.

2.3

Fleet and Load Management Systems

Private industries, as well as governments, want to monitor driver behaviour. They too, are interested in driver performance issues such as fatigue, driving behaviour leading to excessive fuel use, although industry interest in this is due fuel cost, rather than environmental damage. Industry also want systems to improve driver efficiency, such as dynamic route planning and navigation tools sometimes termed driver support systems. These are being marketed in a range of comprehensive fleet management packages, which also include all the routines of fleet management, such as task of vehicle dispatch and location monitoring. Some international examples include Volvo Dynafleet 2.0 [AB Volvo, 2001] which handles both driver and vehicle information, as well as communication between the driver and the base. Features include navigation, on board data logging and a smart card to documenting driver activity. The availability of cheap geographic positioning devices aids both vehicle management and load management. In addition to tracking the condition and behaviour of the vehicle and the driver, there is an increasing emphasis on tracking loads. One of the major changes to transport due to e-business is enhanced customers’ expectation of reliable and on-time delivery. Systems are in place in Australia and some international examples are listed. eLogicity [2001] provides a global track and trace solution that has the capability of providing real-time information on the location of cargoes. Systems from Diversified Software Industries Inc., [2001] are designed to manage both vehicles and loads. The mix of available systems and lack of interoperability between systems is an impediment to wide spread adoption of systems by SMEs and this problem has still not been solved overseas yet.

2.4

Information Leveraging Systems

Systems Using Operational Information to Predict Demand. In both America and Europe, new applications are being designed to bridge the supply and demand tasks. Logistics service

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providers can use the ‘track-and-trace’ and other operational information gathered to forecast demand for both suppliers and customers.

Federal Express [FedEx, 2001] has developed

information systems for some key customers in America, which provide both real-time and forecast information on product flows from order processing through to delivery. This demand information, available as a by-product of the operational control of supply, enables better production scheduling and better purchase decisions with respect to timing and quantities. This type of application may yield even greater commercial advantage over time than the efficiency measures on the supply side. Transport and Traffic Management Systems: Australia is an exporter of urban traffic management systems. The New South Wales Road and Traffic Authority’s SCATS system is in use across the world. The impetus to develop such systems has stemmed from early needs for engineering applications to make better use of existing road infrastructure, whereas in America’s usual response was just to build more roads. However, the need for traffic demand management is now recognised worldwide and hence there has been an increase in the development of sophisticated traffic management systems including systems to better forecast demand. These systems extend beyond urban networks. As described in Working Paper Four, a model of freight traffic across the USA has been built to estimate the impacts of expected changes in demand for rail, road and port infrastructure, as well as intermodal interchange requirements in the face of changes in transport due to e-business [Southworth and Patterson, 2000]. Standardisation Initiatives: Incompatible systems present problems affecting take-up of most of the types of technologies described above. They also impede initiatives to link data from different types of systems, for example, industry fleet management data and road authority traffic data to allow more efficient routing of priority vehicles. There are particular efforts in development of Electronic Data Interface [EDI] standards. Initiatives are underway in Australia and overseas. This all will be important if electronic document transfer is to replace handling the mass of paper documents that beleaguer freight shipments today. Finally, there are also wide ranges of new technologies not directly developed for transport purposes, which may have significant applications in transport. Mobile Telephony and Wireless Applications may be particularly important.

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3 3.1

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CHANGES IN EXTERNAL DEMAND Wider Markets

As the Chief Economist for the Australian Trade Commission has noted: “… in the information age, geography is less important as the Internet and e-commerce give Australian firms the economies of scale needed to reach the ‘critical mass’ of global consumers. This should markedly change the nature of international business as any Australian firm that has a web site has the potential to be an exporter.”[Harcourt, 2000] However, there still needs to be a means of delivering the goods or services to the customer without adding transport costs which make the price too high. A long ‘line-haul’ component is involved in delivery to customers in North America and Europe. Until recently most people using the web were in countries geographical distant to Australia. According to the American Department of Commerce, in 1999, 57 percent of people using the internet across the world came from America or Canada [USA Dept of Commerce, 2000]. However, the same report notes the advent of the internet has coincided with dramatic cost reductions in computers, computer components, and communications equipment. Declines in computer prices in America, which were already rapid [roughly 12 percent per year on average between 1987 and 1994], accelerated to 26 percent per year during 1995-1999. Between 1994 and 1998, the price of telecommunications equipment declined by 2 percent a year. There is rapid growth in Internet use in Asian countries such as China, India, Malaysia and Korea opening new markets for Australia. This will be accompanied by more use of Chinese on the net, with opportunities for Australian web sites in that language. The e-business revolution had increased the sale of services even more than the sale of goods. Sale of virtual services, which will be entirely delivered online, from sales of music to internet gambling, impact transport if they replace physical products and lead to reduction in the need for transport or impact the entire economy. However, the majority of services offered lead to increased business travel whether it is a teacher meeting face-to-face with a student in an electronic classroom in Asia, an engineering consultant over seeing construction in China or Australian IT firms tendering for contracts to put the United Kingdom government online. While some people fear sale of goods from Australia, due to the Internet, goods shipped into Australia may outstrip this. There may be less risk with export and import of exports.

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Global Impacts for SMEs Globally, AMR Research estimates that leading companies will move over 80 percent of their activity to the web. In Australia, the May 2001 Yellow Pages® Business Index – Small and Medium Enterprises Survey of 1800 businesses, shows that SMEs are starting to get involved in the internationalisation process with 21 percent involved in international business activities. As figure 4 shows while exporting [67 percent], and importing [61 percent ] accounted for most SMEs involvement, there were numbers of other activities.

supply to foreign aid procurement control overseas business invest in foreign joint venture accept foreign investment grant license or franchise registering in a global supply chain joint venture acquire license or franchise 0

1

2

3

4

5

6

7

8

9

10

% SMEs involved

Figure 4: Percentage of SMEs Involved in International Business Other than Import/Export.

[Source: Yellow Pages® Business Index Survey SMEs May 2001]

Of particular interest from the transport viewpoint is the 8 percent of SMEs registering in a global supply chain. Even more interesting is the relatively high percentage [28 percent] of Transport and Storage Industry SMEs involved in global business. This percentage is almost equivalent to the 29 percent of Manufacturers and only exceeded by the. 45 percent of Wholesalers.

3.2

International Market Pull

E-business technology is changing the supply chain for numbers of goods and services. The traditional ‘push’ model of the supply chain, where a company predicts demand, produces goods and then locates them close to the customer, has been replaced by a new ‘pull’ model where the customer demand the goods which are then built to order and dispatched. This new system has advantages for Australia. There is fewer requirements for inventories to be held

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overseas and the disadvantage for an international buyer in choosing a supplier as far away as Australia may be reduced. It is now the total time from order to delivery that counts and longer shipping times might be offset by more rapid order fulfilment. However, this also requires a flexibility of suppliers and closer partnerships with on demand shippers. Dell Direct computer sales were cited in our interview of experts as examples of this system, albeit in an import rather than export mode. In America, there has been a growth in virtual businesses or value webs with outsourcing of all non-core processes and even part of manufacturing processes themselves, using internet systems to control the production and delivery process. Components sourced from diverse locations are assembled at transit stops. Such systems increase the importance of transport within the entire supply chain. Not only is shipment flexibility and reliability critical to successful operations, but the transport logistics supplier is now a core partner in the enterprise and thus likely to have a long term relationship in production. This is in contrast to earlier roles as mere service provider who might easily be replaced by someone offering the service at a lower price.

3.3

Global Procurement

E-procurement via a series of electronic marketplaces is one of the most significant early impacts of the e-business revolution. An example, particularly relevant to the transport industry, was the General Motors, Ford and Daimler portal for auto industry procurement [General Motors, 2000]. As well as impacting the sourcing and servicing activities by international transport firms, these changes to industry have brought many firms new roles as suppliers of logistics systems built upon e-business technologies to control the whole procurement process. For example, the Descartes Systems Group [2001] provides customers with the Internet-based technological capabilities to manage the end-to-end supply chain. The Internet facilitates global sourcing, increases the supplier base and decreases the cost of purchased services and products themselves. Access to the wider supply base can produce significant cost saving. It is unlikely that the total number of suppliers used will increase. The new suppliers will replace older ones since shippers will not want the extra costs of dealing with more suppliers. The expanded geographic scope of sourcing has already led to increased demand for long-distance and cross-border transport movements in Europe and America. In this environment, shippers choosing carriers prefer those with multi-modal and worldwide service coverage. This will make it very difficult for individual small operators to compete, unless they

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have access to both internet services and international networks. A survey of American shippers by Morgan Stanley Dean Witter found that manual transactions, defined as face-to-face, telephone, fax and regular mail communications with freight transport providers, are expected to decline from the current 67 percent in 2000 to only 31 percent in 2002. E-procurement and epurchasing exchange both lead to more price competition in the supply chain, leading to pressure on suppliers, including transportation to have smaller price margins and work to have reduced costs. Another development of Internet procurement and the national and international linkages put in place is the bartering of goods with high transport costs.

For example, in America,

PaperExchange.com [PEx, 2001] is used to swap the loads of the same kind of papers going from an east-coast supplier to a west-coast buyer and from a west-coast supplier to an-east coast buyer, thus saving the costs of two cross-continent shipments. This sort of exchange also offers potential for saving on international shipments.

3.4

Sea Freight and Ports

Increasing impacts of e-business trends on land and air modes, with their resulting significant increases in travel and traffic have overshadowed consideration of the maritime sector of the transport industry in this study to date. However, e-business is bringing significant change to shipping lines, port authorities, stevedoring companies and inter-modal service providers at ports, in increasing productivity and decreasing costs. Port authorities can better plan turnaround time and berth utilisation. Shipper and customs both benefit from transmission of cargo information for pre-clearance, while the ship is still at sea, leading to timesavings for the shipper and more manageable workloads for customs officers. E-business tracking systems are particularly valuable for containerised cargo. While EDI has been in operation at most ports for many years, access to the internet by SMEs, plus the wider variety of internet applications available, is resulting in a ‘sea-change’ in port operations. The Boston Consulting Group estimates that 86 percent of the $671 billion in B2B e-commerce, for all businesses in 1998 was EDI conducted over private networks. However, they estimate that the EDI component will fall to 28 percent by 2003 [Boston Consulting, 1999].

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Changes at the ports are due to a diverse range of stakeholders. For example, the Australian organisation, Tradegate ECA [2001] established to facilitate the introduction of electronic commerce throughout business and government sectors to improve efficiency and reduce costs has linked with the Customs service. Internationally, COSMOS [2001], originally built on the experience of the port authority in Antwerp, supplies software systems for port terminal control and planning. They apply particularly to container, car and roll-on/roll-off terminals. However, there are still challenges to be overcome before e-business systems are universal in ports and shipping. The existence of EDI systems has slowed the introduction of replacement Internet systems. There are still shipping lines that have virtually no e-business systems. The multiplicity of players in the maritime industry worldwide, make development and applications of systems difficult. There are also concerns about the workforce reluctance, or workforce inability, to use complex systems. It is likely that impetus for change will come first in the land side operations of ports, particularly in intermodal interchanges which will be under the increasing global pressure for better service across the entire supply chain.

4

4.1

GLOBAL TRENDS TO IMPACT TRANPORT DEMAND WITHIN AUSTRALIA External Impacts Reflected Internally

Most of the developments noted in the previous sections have implications for transport demand within Australia. There will be an increasing uptake of technologies both due to external customer demand and due to government and industry initiatives to use e-business and etransport applications to make Australia more competitive internationally in both supply of transport services and infrastructure. For example, the Intelligent Access Program has been set up by state and federal governments to deliver a series of nationally consistent integrated information services to improve network asset management of heavy vehicles. At the same time, many changes to global demand are likely to be mirrored on a smaller scale within the country. There will be direct flow-on effects from increased international imports and exports. These are all of necessity inter-modal, and thus are particularly susceptible to efficiency and reliability in transport interchange. Improved logistics systems to increase speed and reliability at interchanges will be particularly valuable where faster delivery times are required. Where there is limited potential for increasing speed in main long haul modes, time saving will have to made through more efficient interchange. Prevention of loss or damage at interchange will also be vital.

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4.2

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On Line Retailing Trends

The growth of online shopping in America has seen the emergence of special purpose online retailers such as Amazon.com and, perhaps more importantly establishment of online services by ‘Brick and Mortar’ retailers. New logistics systems and networks to allow consumer orders to be picked and delivered, often of mixed goods, are being developed. Much of this dispatch is handled by courier vans, instead of larger trucks, although these may be courier subsidiaries of freight forwarders. Even in America, the growth of online shopping is smaller than earlier predicted. It seems even less likely that this improved service will translate to a sufficiently major shift from store shopping to online shopping in Australia to significantly impact transport. However, retailers from America with sophisticated online may find some market in Australia. The impacts in replacement of local shopping or deliveries would probably be less important than the potential for shipment of goods across Australia from the port of entry via either postal or courier services. Online digital shopping spaces can be perused for consumers by software specialised to operate as digital shoppers. Such digital agents, known as ‘bots’, cruise through numbers of Internet sites almost instantaneously, searching for the most favourable price and feature combinations [US Dept of Commerce, 2000]. Consumers wanting to shop online need an Internet service provider. This requirement refutes the early claims that Internet access would be ‘free for all’. Moreover trends in America show that the other claim of the Internet to ‘provide a level playing field’, is also in doubt. There is a trend to online media consolidation. Jupiter Media Metrix report that whereas 11 companies ‘controlled’ American cyberspace two years ago, now over 50 percent of time consumers spend online was controlled by the four web companies: AOL; Yahoo; Microsoft; and Napster. Virtual Goods and Services E-materialisation is the term used to describe the substitution of online products for physical products.

In America, there are trends towards decreasing physical mail per capita as

information is moved electronically. Although Australia Post’s experience does not yet mirror this change, it may be a future trend. Reducing the volume of paper bills mailed to consumers will also reduce the environmental impacts associated with paper production, printing, and transportation. Bills account for 60 percent of the first-class mail delivered by the US Postal Service. The average household receives 10 to 12 recurring bills each month, for an annual total number of more than 15 billion

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bills [Walker, 1999]. Financial transactions performed via the Web require far fewer material resources and none of the energy involved in moving information stored on paper to and from the home or office. It is estimated that electronic billing saves approximately 50 to 75 cents per bill in envelopes and postage, and another $1 in handling costs [Cohen, 1999]. According to Forrester Research, about 47 percent of US households now use some form of automated payment for at least one bill, and an additional 17 percent say they would do so if the option were available [Walker, 1999]. Forecasters estimate that by 2001, 535 million bills will be presented electronically, up 275 percent from 1997. As for income taxes, preparation software like Intuit's TurboTax [purchasable via the Web] has been available for some time, and now the Internal Revenue Service has made it easier to file taxes completely electronically. In 1999, for the first time, citizens were able to both fill out and file their tax forms without mailing a single sheet of paper [Cohen, 1999].

People in America are now reading text in electronic form instead of routinely printing. The change is also attributed to a range of business developments, some particularly relevant to the transport industries, such as Internet streamlining ordering systems, to other applicable to all industries, such as online distribution of human resource management material. Electronic document transfer systems are already in place in Australian ports and numbers of companies are offering custom design of systems, usually based on international software for particular enterprises.

Additionally, e-business web portals for document transfer both

internationally and within Australia are being set up. A reduction in paper use will have implications for transport. Both inter-urban freight and intraurban trips related to transport of paper and office supplies and then in a reduction in delivery of printed documents particularly within cities.

5 5.1

OPPORTUNITIES AND THREATS Threats and Weaknesses

Global changes pose a number of threats to Australian industry, in some cases due to internal weakness, such as our geographical position, our small population and our industry structures. Supply-side Issues Fragmented Implementation of Technologies: The competitive nature of Australian industry results in proliferation of proprietary systems impeding percolation of technologies down

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through industry.

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At the same time, government organisations, as well as private industry,

commit to ‘off the shelf’ systems due to price constraints. Thus, the advantages of comparable or interactive systems between industry and government or even between different government organisations are lost. Tyranny of Distance: Australia suffers dual disadvantages.

Goods and services must be

transported across vast distances within the country and global centres of international business and trade are ‘across the world’. E-business technologies provide instant communication but the expanded reach and speed must be accompanied, in the majority of cases, by delivery. Goods may need to cover considerable line-haul distance to get to port and then, another very long distance leg to their destination port. Ports Subject to International Competition: Australian ports have been relatively protected from international competition on an island continent. The global impacts arising from e-commerce now mean that efficient port performance is necessary to win new business. Information Overload: Austrade has adopted a new role in collecting and interpreting export related information for Australian business and directing them to appropriate internet resources. Demand-side Issues Increased Competition: Firms from America have large domestic markets to develop good ecommerce systems from attractive user-friendly web pages to attract buyers though to reliable fulfilment systems. They can thus offer service levels that local companies have difficulty matching. Reduced Importance of Commodities: Australia can no longer rely on traditional commodity based exports to offset a trade deficit due to imports of information economy-related goods and services. While bulk commodities from agriculture and mining will still be traded, growth will come from other sectors. Monopolies: The internet has also provided both incentives and mechanisms for large companies to enter the market and offer services, which are difficult for small providers to match. Freight and logistics companies are particularly advantaged if they can provide service at all levels of the supply chain and can offer that service worldwide. In a worst case scenario Australia could be disadvantaged if large global monopolies decided that cost and trouble in extending services here were not justified.

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General Issues Branch Office Economy: Experts interviewed during this project, expressed concerns that internet purchasing by both households and businesses in country areas would take most trade from local industry. One more pessimistic viewpoint saw the same process taking significant trade from Australia as a whole. Although there are obviously barriers to this pessimistic scenario the warning should be heeded. Less Technological Expertise in Senior Management: Australia has fewer scientists and engineers in senior management than our competitors in the new economy.

This may

disadvantage us in making the correct choices in adoption and use of complex new communications technologies and may also be the cause of lower investment in technology development. This limits our chance of being first with e-transport developments. Internal Competition: As the world moves to a global market, across a wide range of products, the degree of competition within Australia becomes a disadvantage. Interoperability of ebusiness systems is impeded by lack of co-operation between members of the transport industry fearing commercial disadvantage. At a higher level, jurisdictions compete for allocation of transport infrastructure from inter-modal hubs to railways and highways by both government and private enterprise.

5.2

Opportunities and Strengths

Many of the threats discussed above have also associated opportunities which Australian industry has the strengths to capitalise on. Critical Mass of Global Consumers: While there is threat of international business taking our local market, conversely our own businesses have access to world markets. Australian firms have suffered from small national markets, making it difficult to develop a diversity of products. Opportunities to sell to large global markets will allow development of new products and redevelopment of existing ranges from ‘one-size-fits-all’, to versions better suited to tastes and needs. These international markets will comprise other business and consumers. In both cases, timely and reliable delivery systems will be needed. In the case of consumers, specialist systems for handling returns will also be needed. Initiatives for Improved Industry Linkages: Concerns about industry fragmentation have lead to initiatives such as the Freight Transport Logistics Industry Action Agenda [Anderson, 2001]. A steering committee was set up in January 2001 aimed at a seamless transport system from

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supply source to end user. Key elements of the action agenda process are industry ownership and education and identification of training needs. Services: Opportunities exist for increased provision of expert services in areas directly related to transport. These include efficient provision of freight services by an industry already efficient by world standards and construction of transport infrastructure especially under hot conditions. Additionally, there will be provision of services by experts in education, many areas of agricultural and in burgeoning environmental industries requiring good international airline services. International Roles for Australian Transport Firms: For example, firms such as TNT, which is a leading express operator in Australia, Asia and Europe. TNT [2001] offers a range of transport products and services to the world. TNT specialises in the collection and distribution of time sensitive shipments and through a network of domestic and international hubs, warehouses and regional depots links Australia to destinations world-wide. E-Government: The Federal Government's approach to the Information Economy requires Government to be a lead user, supplier and purchaser of electronic services and provide the appropriate regulatory frameworks for the region.

Governments have also been active in

ensuring they have services online. These initiatives provide advantages for the both the Australian community, and business. Transport is Key: It is important that that Australian business and government direct particular attention to both identifying threats and opportunities coming from the changes e-business is bringing to the global economy. The windows of opportunity may be brief in such a rapidly changing world. It is particularly important that the ‘dot.com’ crash is not misunderstood. Failure of speculative investment, or failed business models, do not herald a return to the world the way it was before the internet. “Whichever way the stock market fluctuates between ‘old’ and ‘new economy’ stocks, the way in which all companies do business has changes forever”. [Harcourt, 2001] The corollary to this is that the way international business is transacted, has changed forever. The full implications of the change are not yet clear. The combination of internal and external geography makes transport very important for Australia, more perhaps than for any other nation. Thus it is likely that to compete in a global e-business economy the major challenge for

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Australia will not be in developing communications technologies and practices but in developing the transport technologies and practices if we are to win world markets.

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BIBLIOGRAPHY AB Volvo. [2001]. With Dynafleet 2.0 it’s easier to make the right decisions. Accessed June 2001. Available at: http://www.volvo.com/frameset.asp?url=http://www.volvo.com/home/portal.asp Accessed May 2001. Available at: http://www.austrade.gov.au/NEWSANDFACTS[] Anderson John. [2001]. Media Release: Freight Transport Logistics Industry Action Agenda. Commonwealth Department of Transport and Regional Services, Australia. Accessed March 2001. Available at: http://www.dotrs.gov.au/media/anders/archive/2000/sep%5F00/a148%5F2000.htm Boston Consulting Group. [1999]. New BCG Study Re-Evaluates Size, Growth and Importance of Business-to-Business E-Commerce, Press Release, December 21 1999. Available at: http://www.bcg.com/media_center/media_press_release_ archive2.asp Brotchie J, Newton P, Hall P and Dickey J [eds]. [1999]. East West Perspectives on 21st Century Urban Development: Sustainable Eastern and Western Cities in the New Millennium, Ashgate, Aldershot UK. Cohen, Nevin. [1999]. Greening the Internet: Ten Ways E-Commerce Could Affect the Environment and What We Can Do, Information Impacts Magazine, October 1999. Available at: http://www.cisp.org/imp/october_99/10_99cohen.htm>. Computer Industry Almanac. [2000]. Computer Industry Almanac, 8th Edition. Computer Industry Almanac, Inc., Arlington Heights, IL. Available at: http://www.c-i-a.com Descartes. [2001]. Collaborative Logistics Management. Accessed June 2001. Available at: http://www.descartes.com/ DOT. [1996]. US Department of Transportation, Federal Highway Administration. Accessed April 2001. Available at: http://www.itsdocs.fhwa.dot.gov/\JPODOCS\REPTS_TE/J501!.PDF DSI. [2001]. Diversified Software Industries Inc. Accessed June 2001. Available at: http://www.dsi-inc.net eLogicity. [2001]. eLogicity - The Strongest Link in the Supply Chain. Accessed June 2001. Available at: http://www.sg.elogicity.com Ertico. [2001]. Intelligent Transport Systems and Services – Europe. Accessed June 2001. Available at: [http://www.ertico.com] FedEx. [2001]. Federal Express. Accessed June 2001. Available at: www.fedex.com Ferreira L, Smith N and Mead E. [2000]. Working Paper 3 – Transport Impacts and EBusiness. QUT/CSIRO, Australia. Fisher, A. [1999]. E-commerce: Net is Shaping World Business. The Financial Times. September 24, 1999. Available at http://www.ft.com/ftsurveys/q7616.htm

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General Motors Corporation, Ford Motor Company, and DaimlerChrysler [2000]. Ford, General Motors and DaimlerChrysler Create World’s Largest Internet-Based Virtual Market Place. Press Releases, February 25, 2000. Harcourt T and Shepherd S. [2001]. Exporting and Beyond: How do Australian small and medium businesses Internationalise? Accessed May 2001. Available at: http://www.austrade.gov.au/NEWSANDFACTS/Page56705.asp Harcourt T. [2001]. Scenarios and Strategies for International Business: How Austrade fared with Globalisation and the ‘New Economy. Presentation to the IQPC Conference, Sydney, February Harcourt T. [2000]. Export.com.au: Is it happening for Australia in the Year 2000? Help Inc. [2001]. PrePass - A Nationwide Weigh Station Bypass Service. Accessed May 2001. Available at: http://www.prepass.com Hessenatie Group. [2001]. COSMOS. Antwerp, Belguim. Accessed June 2001. Available at: http://titan.glo.be/horemans/cosmos.html IDC. [1999]. The State of the Internet Economy – Trends Forecast 1998-2003. International Data Corporation, Framingham, MA. NUA. [2001]. How Many Online - Worldwide. Accessed April 2001. Available at: http://www.nua.net/surveys/how_many_online/world.html Pacific Access. [2001]. Where is. Telstra, Australia. Accessed April 2001. Available at: http://www.whereis.com.au PEx. [2001]. Welcome to Paper Exchange. America. Accessed June 2001. Available at: http://www.Paperexchange.com Smith N, Ferreira L and Mead E. [2000]. Working Paper 1 – Introducing the Transport Impacts of E-Business Project. QUT/CSIRO, Australia. Smith N, Ferreira L and Mead E. QUT/CSIRO, Australia.

[2000].

Smith N, Ferreira L and Mead E. [2000]. Stakeholders/Experts. QUT/CSIRO, Australia.

Working Paper 2 – E-Business Trends. Working Paper 4 – Insights from

Southworth F and Peterson B. [2000]. Intermodal and International Freight network modelling, Transportation Research Part C: Emerging Technologies, v8, Isssue1-6 Feb- Dec pp 147-166 TNT. [2001]. TNT Australia. Accessed April 2001. Available At: http://www.tnt.com.au Tradegate ECA. [2001]. Tradegate ECA. Sydney, Australia. Accessed June 2001. Available at: http://www.tradegate.org.au US Department of Commerce. [1999]. The Emerging Digital Economy II, Washington, D.C US Department of Commerce. [2000]. Digital Economy 2000, Washington, D.C

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Walker B. [1999]. Which way to bill your customers: By mail or electronic delivery, or both? Direct Marketing, 61[10], 44-47. WA-TIAC. [1999]. From Mines to Minds: Western Australia in the Global Information Econom. Western Australian Technology and Industry Advisory Council Accessed April 2001. Available at: http://www.wa.gov.au/tiac/mines/index.html

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GLOSSARY AVI– Automated Vehicle Identification. B2B – Business-to-Business; online transactions conducted between companies. B2C – Business-to-Consumer; online transactions, conducted between a company and individual consumer. Bricks to Clicks – a physical ‘bricks and mortar’ business moving into e-business. CSIRO – Commonwealth Scientific Institute and Research Organisation. Cyberspace – The term electronic forms of communication, as an environment that users enter and experience, such as over the Internet. DOTRS – Department of Transport and Regional Services. e-Business – All business transactions conducted on the Internet. e-Commerce – All transactions involved with the trade of goods and/or services, and payment conducted over the Internet. EDI – Electronic Data Interface. EMS – Elaborate Message Service. e-procurement – The purchasing of goods online. i-Commerce – Internet Commerce; commerce transactions conducted over the Internet. IT – Information Technology. ITS - Intelligent Transport System. IVR – Interactive Voice Response. Marketplace - Online trading environment that brings buyers and sellers together. m-Commerce – Mobile Commerce; commerce transactions conducted over devices such as mobile phones. NTS – National Transport Secretariat. Online – Connected and accessing the WWW. Portal – the term to describe a web site that is the initial place people see when using the World Wide Web. A portal offers access to a range of web sites, search engine/s and often offers services such as e-mail to entice patronage. QUT – Queensland University of Technology.

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SCM – Supply Chain Management. SME – Small and Medium Enterprises. SMS – Short Message Service. WP2 – Working Paper Two. WP3 – Working Paper Three.

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