An Expose Did EDI influence their contracts with EDI Shippers
March 21, 2012
By
Ray Atia
Carriers were asked to indicate whether or not EDI had influenced their decision to contract with their EDI shippers by answering from a scale of one to ten, one being influenced strongly and seven having no influence at all, if they were coerced into the contracts. 73 responding firms answered with an average of 5.54, indicating that EDI had nearly no influence on the contracts whatsoever. These facts are consistent with Table 10 research and there were minimal differences found between LTL and TL carriers.
Inquiries included several questions on the extra costs associated with the lack of uniform standards and appropriate expanse of EDI services. Since there are no standardized formats, most EDI systems are shipper-specific and many carriers will not spend the additional funds for multiple EDI systems. Investments made by the carrier in specific EDI systems could cause it to become dependent on a specific shipper. In order to decipher whether or not this is in fact the case, Carriers were asked to choose whether they agree or disagree with the following statement: "There is a lack of uniformity among the shipper EDI systems, therefore it is a major concern that we will become captive to any given shipper or group of shippers." 25 or 35% agreed, while the majority, 47 or 65% disagreed.
This is an exploratory study on carriers that do not use EDI extensively. The Carriers questioned in this survey earn a small percentage of income from their EDI shippers and do not contract with a large number of EDI shippers. Additionally, few of the paper transactions associated with these businesses have been replaced by EDI and few of the possible transactions are used by the Carriers. It is likely that there will be an expansive increase of EDI transactions in the future, but the additional services will require the balance and respect of varying factors including EDI shippers, paper transactions and generated revenue.
EDI is often used in the motor carrier industry and is primarily shipper-driven. EDI is a tool designed to meet customer requirements, maintain and record information and host shipper accounts. The conclusion is that few respondents explore the benefits and costs of their EDI systems prior to implementing them, an understandably risky practice. These findings indicate that EDI shippers have a substantial amount of control and influence over motor carriers, especially in the case of much larger shippers who demand EDI services.