Lucent Outsources Global Logistics - InformationWeek

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Lucent Outsources Global Logistics

Global logistics outsourcing could become a trend as companies look to cut costs and stay focused on core business.

In an effort to cut costs, Lucent Technologies Inc. is outsourcing its global-trade-management operations to Vastera Inc. in a five-year deal. Lucent will pay $25 million for the first three years of service. Neither company would divulge details about the last two years of the deal.

Vastera will handle export and import management for Lucent's U.S. operations, which includes classifying goods to determine duties, fees, taxes, and insurance. Vastera also will:

- screen orders for compliance with export and import regulations,

- calculate the total cost to ship goods,

- and track and trace shipments throughout the global supply chain.

As part of the agreement, Lucent will distribute Vastera's track-and-trace software, TradeSphere, to all of its divisions.

As the economic slump continues, global companies are starting to look at their core competencies and figure out ways to cut or outsource tangential activities, says Mike Bittner, a director with AMR Research. "All major multinational enterprises have horror stories about handling global logistics," he says. "They were forced to tackle it internally because they didn't have an alternative." Now, with firms like Vastera appearing, Bittner says more companies will outsource. He adds, "If Lucent does this, others in the high-tech industry will say 'why aren't we doing this?'"

This is Vastera's second largest deal to date, the first being a 10-year, global-trade-outsourcing contract with Ford Motor Co. That agreement, which was signed last year, is worth $47 million for the first four years. Vastera also acquired Ford's 120-person global-trade-management team and its proprietary technology, which is designed to help with duty management and preferential programs like NAFTA, according to Greg Stock, Vastera's VP of marketing.

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