Logistics.com Might Prove An Internet Success Story After All

On September 18, Logistics.com, Inc., a provider of transportation procurement and management technology, announced the successful completion of a $10 million round of additional backing from Internet Capital Group (NASDAQ: ICGE). This follows $15 million of previously unannounced financial support late last year. This funding reportedly provides Logistics.com the required financing to continue its rapid growth and demonstrates Internet Capital Group's confidence in Logistics.com. This also supplements the $39 million already received to bring total funding to date to $64 million. No other e-logistics company is funded at the level of Logistics.com and no other is closing new customer deals at the volume and frequency of Logistics.com, according to the company.

The additional funding will support continued build-out of the business, particularly in technology, customer-reaching initiatives and strategic acquisitions. Logistics.com claims it is the only company nowadays offering technology to both shippers and carriers enabling them to buy, sell, manage and optimize transportation services.

Further, no other e-logistics provider is reportedly closing new customer deals at the volume and frequency of Logistics.com, indicating that the company is likely outdistancing other players in this space. Logistics.com's client list is comprised of 35 Fortune 500 companies, with over 120 customers in total, including Compaq Computer Corp., Colgate-Palmolive Co., PPG Industries, Inc., Quaker Oats Co., Wal-Mart Stores Inc. and eight of the top 15 trucking companies in North America. For the first half of 2001, 47% of the company's business came from new clients; bookings in the second quarter of 2001 were up 82% from bookings in the first quarter of 2001.

"Given our growth from a customer, revenue, technology and funding perspective, we feel that Logistics.com is well-positioned to continue its unmatched scope of service to the transportation industry," said John Lanigan, CEO of Logistics.com. "Internet Capital Group's continued confidence validates our competitive position and success as an organization."

Rapid Growth Continues

This funding caps a year of rapid growth, both in terms of customer base and technology. The company attributes the growth to the fact that its solutions represent short-to-medium term investments that carry a very rapid return on investment (ROI), typically less than two months. As an example, in April, Logistics.com announced that it managed over $2 billion in transportation procurement in the preceding 12 months, saving its customers over $100 million within that timeframe. Other recent company news includes an announcement of a $1.24 million savings for The Limited, Inc.

The following are the most recent high-profile contract wins:

  • On October 2, Logistics.com announced The TJX Companies Inc. (NYSE: TJX), the leading off-price retailer of apparel and home fashions worldwide, has selected Logistics.com for strategic transportation procurement. The Fortune 200 company will deploy Logistics.com's OptiBid Network solution to procure truckload transportation for inbound delivery of merchandise that it will deliver to its over 1,300 T.J. Maxx, Marshalls, HomeGoods and A.J. Wright stores across the United States. OptiBid Network is a planning solution for strategic transportation procurement that provides customers with annual contracts that satisfy the company's stringent cost, service and operational requirements.

  • On September 10, Logistics.com announced PPG Industries, Inc. (NYSE: PPG), an $8.6 billion Fortune 500 manufacturer of coatings, glass, fiber glass and chemicals, has deployed Logistics.com's ASP-delivered OptiManage transportation management and execution solution. PPG is utilizing the entire suite of ASP-delivered OptiManage modules, which include OptiManage Core for integrated, web-based transportation management and execution, OptiManage Consolidator for optimizing order consolidation and route selection, OptiManage Selector for optimizing of real-time transport provider selection and OptiManage Capacity Finder for rapidly securing capacity from preferred transport providers at existing contracted rates using a private transportation exchange (PTX). As part of the agreement, Logistics.com will manage PPG's relationship with over 80 transport providers, most of which are already connected to Logistics.com via the Internet or Electronic Data Interchange (EDI). PPG is Logistics.com's ninth customer to use a solely ASP-based solution.

  • On August 6, Logistics.com announced that Staples, Inc. (Nasdaq: SPLS), the $11 billion retailer of office supplies, business services, furniture and technology, deployed Logistics.com's OptiBid Network to procure a portion of its annual truckload transportation requirements. Through this solution, Staples might be able to cut costs and improve efficiencies on product deliveries to Staples distribution centers and nearly one thousand retail stores across North America. OptiBid Network addresses many of Staples' critical business factors, including freight variability, network flows and transport provider rates and service levels, and assists the company in establishing an optimal strategic transportation plan. OptiBid Network is part of Logistics.com's OptiBid transportation procurement solution that also includes OptiBid Lane, an online procurement solution ideal for shippers with less complex networks or for shippers making tactical adjustments to larger networks.

  • Last but not least, on July 30, the company announced that The Gillette Company (NYSE: G), the world leader in male grooming products, has engaged Logistics.com to assist in the strategic procurement of the company's North American truckload and inter-modal transportation service requirements. The Fortune 200 consumer goods company will also optimize its transportation network using Logistics.com's OptiBid Network solution.

New Architecture - LEMA

Further, in its quest to build the industry's first standards-based logistics network, on October 1 Logistics.com introduced Logistics Event Management Architecture (LEMA), with the goal of leading the logistics industry into its next quantum improvement. Logistics.com developed LEMA as an open, standards-based and user-driven architecture to empower a more seamless flow of information among supply chain and logistics community members as well as adjacent industry participants such as providers of information technology and services. LEMA supposedly offers three primary benefits, which are 1) intra- and inter-enterprise application integration, 2) free flow of information and 3) the reduction of cycle time in processing logistics events such as simultaneous offer and acceptance of shipment moves.

LEMA should simplify the integration of legacy systems and protocols with Internet-enabled systems and protocols, and should transform internally focused supply chain events into truly collaborative events between trading partners, such as vendors and customers. Through the adoption of LEMA, multiple organizations can possibly process the same logistics event through independent workflows and customize their own specific view of that event's activity.

LEMA addresses five critical logistics industry-specific business issues that represent the context in which logistics events execute:

  1. Business Objects such as distances, locations and facilities, trucks and ocean and air containers

  2. Relationship Rules and time components that make up the process of contract management

  3. Business Rules, or rules that define the business processes associated with execution of events

  4. Event Monitoring and exception management capabilities such as rejected load scenarios

  5. Integration of various business processes, which is addressed by tXML (Transportation XML)

Logistics.com reportedly developed tXML in conjunction with customers to enable standard application integration among all members of a logistics chain as well as intra-enterprise requirements between legacy and new systems. Logistics chain members include shippers, carriers, consignees, suppliers, third-party logistics providers (3PLs) and other vendors. The backbone of LEMA is its message bus, which reportedly integrates with over 70 distinct external business protocols such as EDI, HTTP, SOAP, XML/RPC and XML over the web. This standardization could reduce the cost and risk of intra- and inter-enterprise application integration (EAI) and should enable the free flow of information versus custom integration.

One immediate benefit of LEMA adoption is the possible elimination of high initial set-up fees and on-going interface maintenance fees associated with each interface between enterprises or applications. Logistics.com's LEMA standards are available to its customers and any other company wishing to reap the benefits of an open and standard business platform. The company plans to expand its momentum to standards bodies.

The following Logistics.com web-native transportation procurement and management applications were developed natively to the LEMA and tXML standards:

  1. OptiManage Capacity Finder - a fully automated, web-native product for rapid capacity acquisition

  2. OptiManage Core - a web-native, inter-enterprise transportation management solutions

  3. OptiBid Lane - a web-native e-procurement tool for transportation

  4. OptiYield Profit Analyzer - a web-native interactive tool to improve carrier profitability

This concludes Part One of a two-part Event Note on Logistics.com. Part Two will discuss the Market Impact and make User Recommendations.

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