The next next wave
Now that the logistics business is finally warming up to the O2O space, the question becomes, what will be the next phase in the online evolution?
Ken Fleming, CEO of Eyefreight, said ventures like his that focus mainly on shippers and managing their transportation costs will be a huge market. “We’ve already reduced manufacturing to bare bones now,” he said. “The only place left is the supply chain, which is one of those industries that are generating a lot of interest from private equity firms.” By examining thousands of route structures via its automated algorithm, the company can let shippers and forwarders know the optimal route to schedule – even if it happens to be longer than point A to point B.
Founded in 2009, Eyefreight raised €5.4 million in a funding round from investors De Hoge Dennen Capital and Global Cleantech Capital, in addition to securing an Innovation Credit of €1.8 million from the Dutch Ministry of Economic Affairs. Then, in early 2014, it landed another €9 million investment. The service was designed to provide shippers a return on investment in as little as six months, Fleming said.
Freightos’ Schreiber said now that forwarders are using theses online tools to speed up the shipping process, they can also focus on business intelligence suites that can tell them how well their business is doing.
“There’s certainly no shortage of capital and lots of willing investors,” said Britton of SmartKargo. “For a lot of people in this business, though, the real barrier to it is acceptance. We have a lot of cultural and institutional barriers in the air cargo business that prevent innovation. Air cargo folks have a hard time moving beyond the P’s – the paper, pen and phone.”
If the last six months are any indication, this old bias may be crumbing, Aleph’s Eisenberg said. “There are not a lot of venture capital funds yet, but we’re starting to see more angel funds,” he said. “We will certainly see more activity with ships and shipping of cargo. You want to show that you can capture the entire logistics market – air, road and ocean – before you focus on one mode.”
Now that the early arrivers in this business, like SmartKargo, Shipster, and Eyefreight, are beginning to establish themselves, the floodgates are starting to open. Aleph’s Eisenberg summed it up: “I think you’ll see lots more piling into this sector in the next few years.”
As SmartKargo’s Tavishkar wondered years ago, yes, “this might be a business” after all.
See chart of latest logistics venture rounds