LogTech Industry Roundup: Q2 2016
Highlights from our quarterly review of disruptive logistics technologies are included below. If you’re interested in the underlying data, more observations and updates about Freightos over the last quarter, just download the full report!
The Big Picture
The global freight market contracted in 2015 by 1.6%. The market remains fragmented: the top 20 logistics players controlling only 58% of the market (via Ti Global Forwarding Report 2016). Reduced profitability and fierce competition are pushing logistics players to look towards technology, whether developed in-house or through partnerships, for efficiency gains. Salient examples include uShip parterning with DB Schenker in Europe and Kuehne+Nagel’s ongoing automation efforts.
“…the industry is likely to see more tie-ups between freight marketplace technology companies and 3PLs.”
Mid-sized forwarders, threatened by recent acquisition activity, are even more set to reap the benefits of freight technology. They are largely unencumbered by legacy systems, and more agile in other aspects. Cloud-based technology offers an affordable opportunity for them to stay competitive with the big players.
“..for SMEs to prosper they will need to become smarter in order to succeed, grow and lock in customers. This means they must exploit the opportunities that the democratization of technology has brought about.”
Logistics Startup Activity
The second quarter of 2016 saw increased activity with online freight marketplaces: Haven and Fleet both completing funding rounds. Online freight forwarder, iContainers, also completed a funding round. More companies joined the Uber-for-Trucking battle, including Convergo, which recieved backing from a former DHL Global Forwarding CEO.
While drones are still being tested for last-mile delivery, air and ground-based drones are playing a larger role upstream, whether by performing low-cost, automated inventory scans at warehouses or picking and packing goods for e-commerce fulfillment.
Amazon is expanding it’s rapid delivery capabilities, broadening the scope of pilot restaurant delivery programs, bringing same-day shipping into new regions, and adding more automation to it’s warehouses. In response to rampant rumors about an Amazon logistics play, both the company and major courier companies explicitly denied impending competition.
Alibaba’s Cainiao has set itself a mission to reduce China’s logistics cost, from 16% down to 5% of GDP. One way they’re setting out to accomplish this goal? Using a drone name Cao Cao to further automate warehouse tasks.
The rapid e-commerce fulfillment “arms race” continues, as WalMart changes its ShippingPass program to match Amazon’s two-day shipping. Meanwhile, eBay says it won’t be competing on delivery speed (despite the fact that it’s preparing a speedy shipping program of its own).
A slew of companies continues to compete in this increasingly-crowded space. Postmates has emerged as a leading candidate, with higher-than-anticipated profits reported. A number of other companies, including ShipBob and Lalamove raised funds. The food delivery space is really taking off – with Alibaba, the New York Times, and Finland’s Wolt expanding operations.