Are Freight Startups the Next Big Thing?

Are Freight Startups the Next Big Thing? 

Freight forwarders are getting the Silicon Valley treatment, but some shipping veterans aren’t too thrilled with the attention the industry is getting from California’s technology corridor.

According to the Wall Street Journal, investors are staking their claim in the $160-billion cargo business by funding startups that use high-tech software to automate the global shipping process. Venture-capital firms have invested more than $1 billion into freight-forwarding startups since early 2014, according to the WSJ.

Freight forwarders coordinate all aspects of international shipping, acting as agents for exporters and moving cargo from dock to door by train, plane, ship or truck, according to the U.S. Department of Commerce.

However, some freight veterans and analysts believe freight forwarding is too complex for new players, says the WSJ. Automated platforms may not work for shippers with special needs. Plus, the industry relies heavily on long-established relationships, and startups can’t compete with that, according to the WSJ article.

Companies such as Freightos, Flexport, Cargobase and Shippabo say they are simply upgrading technology in an industry that has been stuck in the past for far too long. For example, many orders are currently placed via phone or fax, and they are tracked using emailed spreadsheets, according to the WSJ article.

“We saw an opportunity to dramatically change an industry — and for us, nothing is more exciting,” said Zvi Schreiber, CEO of Israel-based Freightos. “We empower supply chain companies to demand instant, all-inclusive price quotes for moving cargo from points A to B to C. We are bringing freight vendors into the 21st century with web technologies and big data algorithms to automate and expand their business.”

The new technology includes online platforms and web apps with real-time tracking, analytics, and online quotes and booking. Some also allow customers to complete customs paperwork online.

Some experts say these new companies are merely positioning themselves for acquisition by larger freight forwarders that lack the new automation technology.

It will be interesting to see how it all plays out as these startups try to gain market share from small freight forwarders and industry titans.