An Expedia for freight?(Read article summary)
An Israeli start-up is trying to modernize the antiquated world of freight logistics with tools inspired by Internet travel sites, such as instant quotes and automated bookings. But the company's innovations face enormous inertia within the industry.
There are many problems in Jerusalem these days, few of which are getting resolved. But in a hopping office on the edge of town, there’s a start-up making good headway on a global problem: how to modernize the world of freight shipping, which brings Western consumers everything from iPhones to fashion apparel.
The value of imports and exports being shipped annually has quintupled to $19 trillion over the past 25 years. But piecing together a hodgepodge of air, sea, and land carriers – all with Byzantine regulations and seemingly infinite variables – can still take days. Price quotes are inaccurate as much as 20 percent of the time.
“Freightos is poised to revolutionize the trillion-dollar freight industry, introducing the same efficiency and transparency that Priceline brought to consumer travel,” said Robert Mylod, who helped turn Priceline into the giant it is today as its former head of global strategy. Now a managing partner with Annox Capital, he helped Freightos complete a $7.6 million round of investment in October.
Freightos is just one of a number of start-ups seeking to innovate various aspects of global logistics and freight shipping. While they haven’t approached a tipping point yet, some see them as the kind of game-changers that very well could – and are willing to put money on it. Investment in logistics start-ups has increased tenfold over the past two years to $1.8 billion.
In the past year, Freightos has seen a 600 percent increase in online quotes. A company called Matternet, which envisions delivering medical supplies via drone in developing countries from Bhutan to Lesotho, may well beat Amazon to making delivery-by-drone a reality. And in the US, Echo Global Logistics, which created an online portal to let shippers fill empty space on trucks, is on track to exceed $1 billion in revenue this year for the first time.
“The Uber-ization of trucking … just really floored me,” says Stephan Brady, chief executive of Pennsylvania-based consultancy Supply Chain Innovations Today, referring to the crowd-sourced ride-sharing app that is challenging traditional taxi companies.
It’s too soon to tell just how soon global freight shipping as a whole may be “Uber-ized,” given a certain inertia among freight forwarders, which are the rough equivalent to travel agents in the world of freight shipping, arranging routes and prices.
Large freight forwarders “developed a mousetrap that worked well for them across their traditional customer base for decades,” says Joel Clum, president of CarrierDirect, a freight transportation and logistics consulting group headquartered in Chicago. “But there’s a new segment of the market … that has begun to ‘out-innovate’ the large players by utilizing technology to connect the extremely fragmented global transportation marketplace,” he says, making special note of US-based logistics firm ExFreight.
He adds that these tech-laden logistics companies have enabled companies in both developing and developed countries to do business on a global scale as never before.
Back in Jerusalem, Freightos CEO Zvi Schreiber senses a readiness among freight forwarders to change, and an opportunity to help.
“I haven’t met any freight forwarders who say, ‘No, no, no, we’re going to be doing this the same way for the next 20 years' … but very few have actually started the change on their own,” he says. “So I feel like we’re knocking on a door which is ajar, but we have to show them what to do.”