The idea of auctioning freight transportation services in an electronic bidding environment remains elusive in most modes. While the concept of automated procurement - which includes, but is not limited to, bidding and awarding transportation services via purely objective online auctions - is pervasive in modes like domestic truckload, there isn't a lot of similar activity in modes like ocean freight and rail.

Whether automated procurement is prevalent in a certain mode often boils down to a couple key factors: the level of competition, and the strength of shippers versus their service providers.

High levels of competition (re: fragmented markets with few key large players) and (buzzword alert) "substitute-ability" are clear indicators that e-procurement acceptance levels will be high. Alternatively, in modes where a cadre of large players dictates how service contracts will be negotiated, e-procurement acceptance levels will be low.

A note of caution: It's neither fair to say shippers alone are driving automated or e-procurement initiatives, nor that transportation service providers in any mode are hindering their development. But in speaking with supply chain consultants who see the process in a neutral way, it's clear that e-procurement - and procurement bidding auctions in particular - is far more prevalent in certain modes.

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