With the explosive growth of the digital economy, fleets are finally getting the chance to go paperless. In fact, they probably don't have any other choice.

Paperwork is a lot like paying taxes. Everyone says they hate it, but no one is exempt. It's always on the verge of being simplified and reduced, but for one reason or another that never really happens. Like taxes, the burden of paperwork seems to be in an ever-increasing spiral upward.

Not that we haven't been tantalized with promises of a paperless world (this is where the analogy with taxes ends). In trucking, there's been no shortage of visionaries with "just-around-the-corner" predictions of paperless shops, paperless logs, paperless parts replenishment, paperless invoicing, and the wholesale replacement of all that unwieldy paper with digital data. In fact, at most fleets, you are handling more electronic records than ever before, but the paper still piles up. What's happened to the paperless promises?

Have patience. Paper is indeed deeply ingrained in the world of commerce and trade, and it will never be eliminated completely. No matter how much we complain about paperwork, most of us find comfort in records we can hold, fold, and file.

The tools of business have changed radically, however. Not only is paperwork becoming unnecessary, it's also becoming too expensive in the highly productive world of electronic commerce. And cost, not habit or preference, always wins out in today's business environment.

While it may seem like a contradiction, the major reason trucking hasn't already moved to a paperless environment is efficiency. There's a long list of digital data applications for fleets, but up until this point those applications have only addressed the business of trucking as isolated operations.

There are integrated fleet management systems, and integrated business management systems, and even data bridges between those systems. Those systems have offered some productivity gains, but the gains have been relatively small for the investment required because the "integration" rarely extends beyond a few related operations, and only the largest fleet operations have been able to justify the investment.

What's been missing is an overall business environment that will repay fleet efforts to adopt a truly digital structure. And that's what's changing with e-commerce.

Business vs. operations Today in trucking, e-commerce means EDI (electronic data interchange), a term that's highly unpopular with most fleets for precisely the same reasons most fleets haven't been able to shed their paperwork. Essentially, EDI is a set of standards for digital data that can be transferred and used by machines automatically without any human intervention.

"That's the real value of EDI," says Jack Shaw of Electronic Commerce Strategies Inc. "It makes sense when two large companies in a trading partnership use it for transactions moving in and out of automated business management systems."

Most fleets, however, have gone to the considerable difficulty and expense of implementing EDI only because a large shipper requires it. Fleet use is limited to a few essential shipping documents and to a few shippers. "When one player doesn't have an automated (business management) system, then they lose the benefits of EDI," says Shaw.

"EDI as used by trucking right now is little more than messaging," adds Greg Rocque, president of the National Transportation Exchange, an electronic trading forum for shippers and carriers. "Electronic commerce is a process taking place on a dynamic playing field of goods and services. Even fleets that are using EDI don't get access to those market dynamics."

Up until this point, at least, trucking operations bear the considerable costs associated with EDI, but have no realistic expectations of recovering those costs because whatever automated systems they may have are limited to specific operations or applications. And most midsize and small fleets haven't even been able to afford the limited EDI implementation required by large shippers, which has meant leaving that business to the large fleets.

However, two related developments are quickly changing both the cost and importance of electronic commerce for business in general and, more specifically, for trucking operations of all sizes. And you probably won't be surprised to hear that both involve the Internet.

The first development is the migration of EDI to the Internet. Fleets and shippers have traditionally relied on private, or value-added networks (VANs) for EDI communications. The Internet, however, offers a no- or low-cost communications pipe, essentially bypassing the VAN channels.

In addition to lowering communications costs for current EDI users, the widespread availability of Internet access has also extended EDI capability to even the smallest fleets with Web-based EDI services. These services translate fleet data into EDI formats and shipper EDI documents into simple e-mail data messages for fleets.

"For the smaller carriers that were shut out of big corporate markets, they can now get access to EDI capability with little or no cost just by filling out forms at a Web site," says Shaw.

Although Web-based EDI will expand use of paperless business transactions, it still involves the electronic standard's specialized formats, which require translation or a customized interface for use in most business information systems. In the next three to five years, however, Shaw predicts that a new format called XML EDI will further streamline trading of electronic documents over the Internet. "XML codes data so that it can be read by a machine as well as be displayed as HTML on a Web browser," he says. "That means you can have machine-to-machine communications over the Internet. We'll also see much greater compliance in business systems with XML standards, which have broader application than EDI standards. This means it will be much easier to use automated business systems."

The big picture While EDI's migration to the Internet is making it easier for trucking to handle business documentation electronically, its effects on fostering a truly paperless environment would be relatively minor if it wasn't for the second Internet-related development - the explosion in e-commerce.

"The world is moving to a digital economy," says Shaw. "After business gets Y2K problems behind it, growth in e-commerce will dwarf the growth we've already seen. That growth will bring profound changes to transportation."

The move by consumers to direct purchases via e-commerce sites on the Web has implications for parcel delivery and LTL fleets, as well as for private fleets, Shaw points out. And on the business-to-business side, e-commerce is allowing companies to move to continuous replenishment systems. This means more frequent but smaller shipments.

"The old model of truckload shipments won't fly any more, or go on trucks," says Shaw. "But fleets that can cost-effectively handle smaller shipments more frequently will prosper. Fleets that figure out a way to use e-commerce to streamline their operations will make a ton of money. Those that don't will lose out."

Streamlining, however, won't happen just by converting paper to digital documents and sending them over the Internet.

"The Internet is just a pipe for information, and EDI is just a format," says Ken Bob, senior vp of Descartes Systems Group, a logistics software company. "Neither provide much in the way of decision support."

Fleets and their trading partners need "applications and services on that information conduit that control messages, that give meaning to them," he says. For example, receiving delivery confirmation information on every shipment isn't any more useful when it's received electronically unless there's an automated system that can watch for exceptions and send that information on to the people who can use it, Bob points out.

"The supply chain is getting compressed by e-commerce," Bob says. Descartes' DeliveryNet and other systems like it electronically link everyone in the chain and allow fleets to effectively provide the new levels of customer service and information exchange required to operate in "Internet time."

Inside and out "The momentum created by e-commerce makes it inevitable that trucking customers will want more services at lower prices," says NTE's Rocque. And for fleets, "the only way to deliver on the promise of e-commerce is by having technology do a lot of the heavy lifting," he says.

NTE's main business is providing a dynamic electronic market on the Internet for excess capacity that allows both private and for-hire carriers to use yield-management tools to improve productivity and profitability. However, Rocque is quick to point out that fleets need to look beyond external trading to realize the full benefits of moving into the digital age. In order to truly exploit the advantages offered by electronic data, fleets will also have to look to their internal operations, bringing them into the same paperless environment.

Praxair is an international supplier of bulk gases with a private distribution fleet of 750 tractors in the U.S. and Canada, and another 125 tractors in Mexico. A few years ago it developed the North American Logistics System (NALS), which among other things provided electronic document communications with many of its 10,000 North American customers.

Initially, the fleet stored delivery information in on-board computers, retrieving that information when tractors returned to terminals and transferring it to the NALS. Other fleet functions, including dispatch and driver logs, were handled with the traditional mix of paperwork and telephone calls.

Earlier this year, Praxair began converting its entire North American fleet to completely paperless, automated management with Eaton's Fleet Advisor Transportation Logistics System. Combining wireless communications, on-board computers, GPS location tracking, and fleet management software, the system is helping the fleet streamline internal operations by providing paperless driver logs, automatic fuel-tax reporting, and computer-aided dispatch.

While those are important features, the new system's value extends far beyond fleet management improvements, according to Gary Vanderoef, a staff consultant with Praxair's computer technology group. "We know when a vehicle arrives and departs from a customer site, and we get gauge readings at every delivery point," he says. "That information automatically feeds NALS for billing, supply chain planning, and so on."

This month, the fleet began testing wireless communications of that delivery data, which will further extend the complementary benefits of Fleet Advisor and NALS. "With real-time data, we'll know how much product drivers have left and how quickly they can respond to any emergency delivery situations," says Vanderoef. "It will also help us optimize driver routes in real-time and for the following days."

In other words, Praxair has found a way to get rid of the paper and realize the promises of e-commerce. As most fleets will soon learn, the two go hand in hand.