Cost

Potential implementation costs for an Electronic Freight Management system range from $6,720 – 16,800

FHWA researchers assessed electronic freight management systems to optimize drayage operations for 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.

The EFM implementation case studies were intended to examine the degree to which the EFM applications can improve the operational efficiency within intermodal supply chains. Each case study documented the cost-effectiveness, long-term viability, and sustainability of the EFM package, as it was modified and implemented within the supply chain.

Each case study documented the environment into which the EFM package was being deployed, captured the implementation parameters that were put into place to successfully operate the package, and assessed the benefits in terms of business process cost savings to assess the return on investment to the participating organizations. The tables below show actual and estimated implementation, operations and maintenance costs for the study participants (DEMDACO, Express Systems Intermodal, Interdom-Pride, Interdom-Agmark, WorldWide ISCS, and ACME). The tables contain the implementation and operations/maintenance cost summary for the EFM Case Studies. These are the costs that 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
  • The number of hours spent by SAIC and Trade Data Organization (TDO) staff providing technical guidance (Note: The TDO is the operator and administrator of the Trade Data Exchange (TDE). The TDE is a member-run and member-owned system enabling partners to track shipments.)
  • 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 TDE or EFM package to provide enhanced service

Table 1. DEMDACO Implementation, Operations and Maintenance Costs
Implementation Costs:
Party
EFM Clients
EFM Services
Cost per party
DEMDACO
1
0
$3,360
TransVM (SAIC integrated shipping and final delivery management system)
2
2
$6,720
Carrier (Ocean)
0
0
$0
TDE
0
2
$4,480
Total Implementation Costs
$14,560
Annual O&M Costs: 24 hours per year at $28/hour
$672
Assumptions:
· 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 2. ESI Implementation, Operations and Maintenance 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
Annual O&M Costs: 16 hrs./year at $28/hr.
$448
Assumptions:
· 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 3. Interdom – Pride Implementation, Operations and Maintenance Costs
Party
EFM Clients
EFM Services
Cost per party
Interdom
1
2
$5,600
Pride
2
1
$5,600
Total Implementation Costs
$11,200
Annual O&M Costs: 24 hrs./year at $28/hr.
$672
Assumptions:
· 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 4. Interdom – Agmark Implementation, Operations and Maintenance Costs
Party
EFM Clients
EFM Services
Cost per party
Interdom
3
1
$6,720
Agmark
1
2
$5,600
Carrier (Rail)
2
0
$4,480
Total Implementation Costs
$16,800
Annual O&M Costs: 24 hrs./year at $28/hr.
$672
Assumptions:
· 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 5. WorldWide Implementation, Operations and Maintenance Costs
Party
EFM Clients
EFM Services
Cost per party
WorldWide
0
$0
TransVM
1
$3,360
Griffin Pipe
1
0
$3,360
Total Implementation Costs
$6,720
Annual O&M Costs: 24 hrs./year at $28/hr.
$672
Assumptions:
· 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

This report, dated June 2012, conveys the value that publically accessible electronic freight management systems can add to the operations 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

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Keywords

drayage, intermodal freight, electronic freight management, optimization, logistics

Cost ID: 2014-00316