Cost

A case study of an Electronic Freight Management system shows that implementation, operations and maintenance costs can be as low as $13,888

FHWA researchers assessed an electronic freight management system to improve the productivity and efficiency of intermodal carriers in the United States


June 2012


Summary Information

In public-private collaboration with industry and the USDOT, the Federal Highway Administration, in 2006, began development of an electronic freight management system to help optimize the delivery of intermodal freight. The purpose of this project was to develop a web based system that shippers can use to improve the efficiency and productivity of the freight logistics supply chain through the electronic exchange of shipping information from origin to destination, improve data accuracy throughout the process, and minimize costs for shippers and supply chain partners. The online EFM system www.efm-saic.com allows all partners throughout the supply chain to access real-time information throughout the freight transportation cycle.

In the execution of the EFM case study, USDOT researchers sought to demonstrate the application of the EFM package on a mobile device in addition to automating manual activities typically completed from a desktop. The mobile phone application offered customers direct access to container tracking via their smart phones. This would have productivity advantages over the existing access methods by reducing the amount of time necessary to access the desired data, and increasing the availability of the information. With respect to the automation of the invoicing process, the research team sought to automate a previously manual exchange.

Prior to creating the message schemas and implementing the web services which exchanged the supply chain information among partners, researchers and ESI first documented the supply chain process used by ESI to determine where the EFM package could add value:

1) First, they documented the ESI technical environment and defined the business problems that EFM implementation could address or provide opportunity for.
2) They then mapped and documented ESI’s technical environment (all information technologies and communications that support order placement, fulfillment, and delivery, and the processes by which these communications are completed).
3) Once the supply chain process was laid out, they identified which communication methods were the best candidates for replacement or supplementation by the EFM package.
One unique goal of the ESI EFM case study was to demonstrate the use of EFM web services to communicate supply chain data to a mobile device; this goal drove the decision to use the package to provide container availability and status to a mobile device. The decision to automate the invoicing process was driven strictly by the fact that it was the most manual process within ESI and their dray provider (Hammer Express) and therefore had the opportunity for improved efficiencies as a result of the EFM package implementation.

Implementation Cost Summary

The costs associated with implementing the EFM package for the pilot reflect the costs to ESI for implementing EFM web services within their server environment to exchange information for purposes of this pilot. The costs also include the labor associated with the researchers technical and management personnel, who developed the web services, message schemas, and provided technical assistance to ESI in order to deploy these services and troubleshoot issues identified during implementation, as well as time to test the mobile phone application with a selected ESI customer (Domestic Container Transportation).

Table 1 below contains the implementation, operations and maintenance cost summary for the ESI EFM Case Study. These costs were factored into the benefit-cost assessment conducted using the Freight Technology Assessment Tool (FTAT). These costs are based on:
  • The number of web services that were deployed within the IT infrastructure of each supply chain partner
  • The number of hours spent by key IT staff to refine and prepare the EFM package for implementation. Given the limited involvement of ESI’s partners (Hammer Express and Domestic Container Transportation), the team assumed these entities had no cost.
  • The number of hours spent by research staff providing technical guidance to ESI
  • An estimate of the annual number of hours required to continue EFM operation - this includes the minimal maintenance costs of running support servers, but assumes no further modification to the EFM package to provide enhanced service to ESI.
  • Hardware costs were negligible because ESI deployed their web service on an existing server.
Analysis assumptions for the ESI implementation, operation and maintenance costs include the following:
  • Technical assessment of deployment environment takes on average 2 weeks (40 hours per week) = $2,240. This cost is factored into the cost per party as a flat rate expense
  • Each client/service takes on average 1 week to deploy = $1,120 per service/client
  • Average hourly rate = $28/hour

Table 1. Implementation Costs

Party
EFM Clients
EFM Services
Cost per party
ESI (mobile app)
3
1
$6,720
ESI (invoice)
3
1
$6,720
Total Implementation Costs
$13,440
O&M Costs: 16 hrs./year at $28/hr.
$448
Total Implementation, Operations & Maintenance Costs
$13,888

This report, dated June 2012, includes many more details of the case studies and conveys the value that publically accessible electronic freight management systems can add to the optimization of intermodal freight operations. These findings along with the costs provide a valuable resource to those considering the implementation of advanced technology for the optimization of intermodal freight logistics.


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Source

Electronic Freight Management Case Studies: A Summary of Results

Author: Newton, Diane (SAIC); Jim Cassady (SAIC); Al Hovde (SAIC); Ron Schaefer (SAIC); Al Veile (SAIC); and Bob Fredman (Battelle)

Published By: U.S. DOT Federal Highway Administration

Source Date: June 2012

Other Reference Number: FHWA-JPO-12-069

URL: https://rosap.ntl.bts.gov/view/dot/4036

System Cost

EFM Implementation Costs: $13,888

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Keywords

dray, intermodal, freight, operations, logistics, management, implementation

Cost ID: 2014-00304