Disruptors are changing logistics
More and more new companies are breathing strong gusts of fresh air into logistics. This, as well as increasing digitalisation, forces existing corporations to rethink their business models and become more flexible in their activities. Emerging new logistics enterprises offer attractive opportunities for investors.
“The digital transformation that is currently revolutionising not only logistics is unstoppable. Whether it is freight brokerage, transportation tracking, security or billing, high-quality, data-rich, intelligent solutions are already available for every field of logistics,” says Joris D’Incá, partner and logistics expert at the international strategy consultancy Oliver Wyman. Just how many startups there currently are in logistics and in the maritime industry is documented in the material provided by the US platform Angellist. In shipping alone the industry network currently lists 498 startups, in supply chain management there are 652.
Seed capital is venture capital
Another indicator is the high level of investment capital coming into the sector. In 2017 approximately USD 3.5 billion was invested in new logistics ventures. Around 90% went to American and Asian startups. Oliver Wyman’s annual marketing analysis came out in February and provides the latest data. So far, most of the latest financing for digital newcomers has largely been provided by venture capitalists – with no sign of their sources of capital drying up any time soon. Secondly, interest in the global transport industry, worth a total of about USD 1 trillion, is rising steadily, as several recent examples have shown.
Flexport is the leader
Flexport, a digital container shipping company founded in 2013, has so far received more than USD 201 million in venture capital. It even chartered a cargo plane at the end of last year. The Israeli operator of Freightos, an online tool to compare transport prices, has received almost USD 53 million so far. Shipchain, also from Israel, announced in January that it had raised USD 30 million to build a freight and logistics platform based on the blockchain technology Etherium. In another development, the Norwegian sea freight rate benchmarking platform Xeneta has so far collected USD 20.5 million. Another one of Freightos and Flexport’s competitors, the fully-automated freight-space purchasing online platform called Haven, founded in 2014 and with centres in Singapore, San Francisco and Basel, has so far received USD 13.8 in venture capital funding.
According to Oliver Wyman, however, the two leading companies in terms of investment volumes generated are two Chinese enterprises that received billions for the development of their concepts. “We’re a long way away from that in the German-speaking world,” Oliver Wyman’s Max-Alexander Borreck explained recently.
Nonetheless, the digital freight forwarder Freighthub, which is headquartered in Berlin, managed to raise approximately EUR 20 million. Much to its delight its competitor Instafreight, also from the German capital, raised more than EUR 8 million. According to Oliver Wyman the number of startups in the sector in Germany, Austria and Switzerland rose by 33% in 2017, from under 40 to more than 60 today.
Established providers are catching up
There is thus growing pressure on established companies to get in on the act too, as is demonstrated by the rise in their in-house activities tackling the digitisation of their core business; as well as in the number of startups they are launching themselves.
Examples include Maersk, the container shipping market leader, which has launched its own digital forwarding company called Twill; and CMA CGM, the world’s third-largest shipping line, which recently founded the startup centre Ze Box, based at its own headquarters in Marseille.
The logistics provider DB Schenker uses the technology of the new US company UShip, in which the group has a financial stake, for its digital freight exchange called ‘Drive4Schenker’. Fiege, in the meantime, is cooperating with the Munich-based firm Magazino for the development of perception-controlled picking robots.