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Internet To Force Logistics Providers To Adapt Or Disappear, AEI Executive Says

Leading-edge Companies Will Use Internet To Drive Value-Added Marketing Strategies, Vargas Says

NEW ORLEANS, LA. (January 20, 1999) -- The Internet threatens the livelihoods of traditional logistics providers that fail to embrace the Internet to shape customer-driven marketing solutions, a leading AEI executive told the "Air Cargo Internet Symposium" yesterday.

Eric S. Vargas, AEI vice president, logistics applications, said sophisticated Internet-based technologies now enable businesses to perform basic tasks faster and cheaper than can their logistics providers. As these technologies become more accessible and user-friendly, "functions we now think of as being `too specialized' for customers will indeed be performed by the customer. And it will be done over the Internet," Vargas said.

Logistics providers not ready to adapt to this rapidly changing environment, Vargas warned, may fall victim to "disintermediation," where individuals or companies are removed from a transaction if they are not perceived to be adding value.

Vargas urged providers to take a hard look at the relevance of their business models in an Internet-driven world.

"All of you think you are adding value to your customer... But in the eyes of the customer, you could just be adding time, or adding cost, to the transaction," he said. "If the customer thinks that way, you are just one e-mail away from being removed from the equation."

The successful providers, Vargas said, recognize the value of information as a marketing tool as well as a driver for operating efficiencies. They are adept at capturing, analyzing and leveraging electronic information--much of it transacted over the Internet--to market programs and services that fit a customer's needs, he said.

"These leaders will take the Internet to the next level," he said. "They will use information to do more than support a customer's operations. They will become a part of the customer's sales and marketing network."

Leading-edge providers will also emphasize the importance of people, Vargas said. "The Internet is a powerful force, but it is still a commodity. Information, by itself, won't guarantee success. The difference between winning and losing lies in having skilled, talented people capable of using the Internet to deliver innovation to the customer."

Vargas said the stakes are enormous, citing projections from Forrester Research that, by 2003, 17 percent of all revenue in the "shipping/warehousing industry" will be generated over the Internet. That is compared with only 1/2 of 1 percent of all revenue in 1997.

"In essence, the Internet is giving us a choice," he said. "We can be rendered irrelevant by emerging technology. Or we can embrace the Internet to create unique solutions that will lead to deep, long-lasting and profitable relationships."

Headquartered in Darien, CT, AEI is a world leader in integrated logistics services, delivering multi-modal transportation, warehousing and distribution, customs brokerage and information management solutions across a network of 711 locations in 135 countries.

Full details of the speech can be found in "Our View"

For further information please contact:
Candace Bouchard
Tel: (203) 655-5792
Fax: (203) 655-5895
exocb@aeilogis.com

Eric S. Vargas
Tel: (504) 681-2227
Fax: (504) 524-9058
lusesv@aeilogis.com