Variations in take up of online services for Orient Overseas Container Line
(OOCL)
No one could accuse Orient Overseas Container Line (OOCL) of faddishness towards the Internet. The
Hong Kong-based shipping group made its first moves on to the web in the mid-1990s, long before the
current daily addiction to the movements of Nasdaq took hold. By 1995, when only a fraction of global
companies even had a web site, OOCL allowed customers online access to basic ship schedule information,
much like the flight schedules airlines make available on the Internet or by phone.
‘This was not a public relations issue,’ says Niels Kim Balling, OOCL’s general manager, corporate
marketing. ‘It had to be something our customers would find useful. From the start, we wanted an
interactive, real-time exchange of information.’
It was a small step but the payback, in terms of new business from all the attention the company garnered,
was almost immediate. The initial investment was $250,000 and Mr Balling estimates the new business that
came in as a result of the innovation more than covered the cost in three months.
Challenge
At first glance, few industries would seem less likely Internet converts than the decidedly old-economy
shipping industry. Yet the business revolves around a continual flow of information across continents as a
customer in Chicago, say, contracts a shipping company to move goods from China to Australia. The need
to track the progress of movements makes the Internet a powerful tool to smooth interactions with the
customer. Just coordinating the information flow among the 160 offices OOCL has in 47 countries around
the world would seem a Herculean challenge in a pre-Internet era.
Harnessing the Internet to do just that has given OOCL an early lead in moving the shipping business
online, analysts say. For the more than 50-year-old Hong Kong shipping company, founded by C.Y. Tung
in 1947 in a bid to create the first international Chinese merchant fleet, OOCL’s quick move online could
provide a competitive advantage. Even if it does not have the flashy style of an Aristotle Onassis at its
helm, the company is something of a local celebrity in Hong Kong; it is owned by the family of the city’s
chief executive, Tung Chee-hwa.
In his role as leader of Hong Kong since 1997, Mr Tung has ambitions to make the city an IT hub for Asia,
but most companies in the territory are decidedly low-tech and many are still figuring out how to get their
e-mail systems right. OOCL, by contrast, could prove a role model with the launch of its IRIS-2 system.
Salomon Smith Barney analyst Charles de Trenck says that at the peak of its rollout last summer, OOCL
employed over 100 programmers and web designers in Silicon Valley. The company has moved away from
a reliance on mainframes and the IBM ES 9000 has been shut down to move main IT functions onto the
Internet, deploying five HP 9000 super servers for the backbone and 350 additional servers globally.
What this hardware adds up to is an ability to deepen the relationships between OOCL and customers’ back
offices, allowing two-way data exchanges and mass customization of service agreements. It also allows the
shipping line to do a better job of yield management. Hitherto, EDI allowed data exchange, but it is much
more expensive than the Internet and far less flexible.
Moving so many customer service functions on to the Internet has opened up a new world of smaller
customers for OOCL in obscure locations, like Kazakhstan. ‘The web allows you access to everybody.
Some remotely located importers and exporters have pushed us to do more. We got business that we didn’t
even know was out there,’ says Mr Balling.
Despite reaching out to an even more far-flung customer base, the move by existing customers to access
services through the company’s web site has been relatively slow. As often happens in the brave new world
of the Internet, customer service innovations, such as allowing online access to post-order services like
© Marketing Insights Ltd 2004
cargo tracking or the bill of lading (the contract to the goods), do not immediately win over the entire
customer base, many of whom seem complacently happy with the way things were. ‘This is not a
technology issue. It is a business process issue,’ says Mr Balling.
The initial switch was also possibly slowed by Y2K concerns. By April 2000, however, the switch of
customers to accessing the full complement of online services really began to take off. In Singapore, 40 per
cent of all business with OOCL is conducted through the web site, while in North America it is about one
third.
Beyond that, the growth in online interaction has been mixed; Germany has been ‘explosive’ but France
has been a bit of a ‘sleeper’, reports Mr Balling. On a global basis, nearly 10 per cent of all business is
being conducted through the company’s web site.
Mr de Trenck at Salomon Smith Barney estimates that OOCL can deliver an additional $10 m to the
bottom line in 2000 as a result of savings from the Internet portion of its total revenues. The early start by
OOCL is already delivering results.
Source: Rahul Jacob in Financial Times, 6 September 2000. © Financial Times.
Question
Discuss reasons for differing take-up of Internet services offered by OOCL
© Marketing Insights Ltd 2004