TRANSPORT AND INFORMATION SYSTEMS: A CASE STUDY OF EDI DEPLOYMENT BY THE AIR CARGO INDUSTRY

Neo-classical economics traditionally has pushed aside many problems by assuming 'perfect information'; perfect competition being an obvious example. This has gradually changed as the importance of information in decision making has become more widely accepted. This trend is now found in transport economics. Introducing the role of information systems into classical economic models, however, is still far from complete. Electronic data interchange (EDI) has become an integral part of modern logistics. From an economic perspective EDI has become important in tracking, in security and in attaining efficient just-in-time production management. EDI has become more sophisticated as technology has advanced and as its incorporation in logistics management has become more effective. This paper looks at a particular application of EDI to examine the institutional context in which it operates and to explore its current strengths and weaknesses as they relate to economic modeling. The case study concerns the use of EDI in the air cargo sector by companies in the Washington DC region of the US and also looks at some of the challenges currently posed to suppliers. Air cargo transport is an increasingly important component of logistics chains involving high value/low bulk commodities and in the movement of components. (A)