Part of the appeal lies in the industry’s size and potential for disruption. The freight-forwarding business alone is worth $475bn in annual revenues, reckons Armstrong & Associates, a supply-chain research and consulting firm. The broader “third-party logistics” market, which includes transport management and warehousing, generates sales of $1.4trn. At the same time, freight remains technologically backward, especially the cross-border sort. “This industry is completely offline,” marvels Zvi Schreiber, boss of Freightos, a digital-freight marketplace. “You would expect that shipping a container would be just as digital as booking a flight,” he says, “but it is not at all.” Just getting a quote can be a headache. “For 90% of the freight-forwarders today it still takes one or two days to come back with a price,” says Mr Wax.
This is starting to change thanks in part to whizzy new software platforms designed to streamline the process of shipping freight overseas. Flexport, a digital freight-forwarder based in San Francisco, automates many of the supply-chain processes that were traditionally done manually, including getting quotes, filling out documents and co-ordinating with shippers and carriers along the supply chain. The nine-year-old startup, which earned $3.2bn in revenues in 2021, was recently valued at more than $8bn. Project44, a supply-chain visibility platform from Chicago, lets retailers and brands monitor milestones in their cargo’s journey, such as when it is loaded onto a ship, leaves the port or arrives at its final destination—all in real time. They can also make adjustments or reroute shipments if needed.
One common feature of such platforms is the ability to glean insights from data. Big shippers and logistics providers typically manage their shipments in software known as a transport-management system (TMS), which tracks shipments as they make their way along logistics networks, from the factory to the port and finally to the customer. Such systems, which have been around since the late 1980s, are useful databases of information, says Evan Armstrong, president of Armstrong & Associates. But they are not clever. “The first step was getting everything onto a TMS. Now the next step is taking those TMSs and making them intelligent.”
Although recent supply-chain snarl-ups have played a part in boosting demand for logistics software, they are not the main force behind the boom. That, industry-watchers agree, would be Amazon. The e-emporium “is the absolute number-one catalyst for supply-chain transformation, no question”, says Julian Counihan of Schematic Ventures, a VC firm. Whereas the supply chain has historically been seen as a cost centre, Amazon has turned it into a money-maker. With the rise of next-day and same-day delivery, consumers’ expectations have changed dramatically. As shipping times plummet, logistics requires “way, way more supply-chain technology”, says Mr Counihan.