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Rates: The Internet Factor

November 1, 1999

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There was no trucking activity on shipping-auction.com (www.shipping-auction.com) last week, but then this latest transportation auction site on the World Wide Web just opened for business. In a news release, shipping-auction.com's president said, "This site is a win-win for everyone."
The site offers a broad range of transportation services. Shippers can look for bargains from truckers, railroads, air carriers and steamship lines.
Like at least 30 other Internet sites, shipping-auction.com brings shippers and carriers together. Some call themselves freight- or load-matching services, some auctions. Either way, they have helped create a spot market for trucking that is rapidly acquiring the volatility of electronic commerce.

What will that mean for shippers and carriers working under comparatively long-term contracts? What will it mean for private carriers whose very existence often turns on the cost of commercial transportation?
No one can say. But one near-term result seems probable: The low-end of the trucking market, a gritty business at best, could get grittier. Few crystal balls indicate surging rates for backhauls. According to some trucking e-commerce experts, transportation auctions in particular are designed to drive rates down. If that is the case, shippers will be happy.

Of course, individual matching services help make individual carriers profitable, but the overall advantage remains on the shipper's side. That being the case, what will all this mean when our current prosperity gives way to whatever comes next?
As shipping-auction.com was opening for business last week, Fed Chairman Alan Greenspan was calling the current U.S. economic growth rate "unsustainable."
If the emerging electronic market in trucking services is helping to hold -- or even drive -- down rates, what will it mean when the industry eventually finds itself with too much capacity?
It may not be a very pretty picture.

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