Businesses seeking a vendor to provide real-time transportation visibility platforms (RTTVP) might have trouble gaining visibility into which potential partner offers the better mousetrap.
Take Shippeo, a 7-year-old French company that announced in early February its entry into the North American market. Shippeo, whose revenue today almost exclusively comes from Europe, planted its North American flag with the claim it will go where other RTTVP players haven’t gone before. In its Feb. 9 announcement, Shippeo said its prelaunch planning “uncovered an underserved aspect of the market’s visibility offerings: the customer-centric supply chain.”
Christopher P. Mazza, a logistics technology veteran who heads up the Shippeo initiative, was no less direct during an interview a few days after the announcement. Companies have complained to Shippeo that they get “crumbs” from their incumbent providers and want a more comprehensive RTTV alternative, he said.
Mazza criticized existing visibility providers for a “gross overreach of data collection” by using data generated by a vehicle’s ELD to track and trace the movements of trucks and drivers, a constituency that handles about 70% of the country’s intercity tonnage and whose onboarding is key to Shippeo’s success in building sufficient network scale in North America. Today’s visibility systems are too intrusive and “should only track moves that are related to a specific transportation work order — no more and no less,” Mazza said in response to an emailed question, adding that Shippeo is the “only visibility solution to offer this level of confidentiality and, frankly, respect to the carrier community.”
Mazza also touted Shippeo’s strengths in connecting its visibility platform to shippers’ TMS, a critical step in providing companies with real-time views into every supply chain scenario and improving the planning and reacting capabilities of supply chain practitioners. Asked if such functionality is considered table stakes in today’s more demanding visibility environment, he replied that “if it was, every provider would offer it. In practice, very few have bidirectional integrations with hundreds of TMS,” as well as warehouse management systems and enterprise resource planning systems.
Shippeo’s experience connecting to a “substantial” number of partners is a “game-changer with our customer base and, in particular, their carrier networks,” Mazza said.
Should Shippeo turn the talk into action, it could reap big rewards. The North American RTTVP market doubled in size in 2020 due to supply chain disruptions caused by the COVID-19 pandemic that led businesses to focus on end-to-end control of their supply chains, according to the 2021 version of the annual Magic Quadrant survey of visibility providers produced by Gartner Inc. (NYSE: IT). The global visibility market is expected to hit $1 billion in 2024 from $300 million in 2020, Gartner said. With supply chain dislocations expected to be closer to the rule than the exception in the years ahead, the only question for visibility demand is how far and fast it will grow.
Clothes, Emperor?
Mazza said that the North American market is far from saturated and that the growing pie will be enough to adequately feed a large table. Jett McCandless, founder and CEO of project44, the leading visibility platform in North America and Europe, said those comments miss the point. Huge enterprise customers focused on improving the customer experience are gravitating to visibility vendors with a global presence and huge carrier networks across all modes, McCandless said. This so-called network effect has taken project44 years and hundreds of millions of dollars to build, and represents a wide moat that Shippeo will have trouble crossing, he said.
Shippeo’s North American scale and resources wouldn’t pass muster with the visibility needs of big global businesses, according to McCandless. “I don’t think it would make it into the top two” of the candidates that a large company would choose, he said. Shippeo will instead garner share of small to midsize businesses that project44 and its nearest rival, FourKites Inc., currently avoid because of their low-margin prospects, McCandless said. (FourKites declined comment for this story.)
Shippeo would be more of a threat to project44 if it focused on its core strength of European road transportation and not spread itself so thin in an effort to cover the globe, McCandless said. Project44 became Europe’s leading visibility company following its December 2018 acquisition of Danish-based Gatehouse Logistics.
Shippeo’s North American aspirations may also be hampered by its lack of access to capital. In seven years, it has raised about $70 million, according to Mazza. By contrast, project44 has raised close to $900 million and FourKites $205 million. What’s more, Shippeo’s annual recurring revenue, a key metric for venture capital and private equity investment in the RTTVP world, is around $13 million, according to those familiar with Shippeo’s financials. That level of revenue may make it hard to attract outside investment, experts said. (Mazza would not comment on the figures.) McCandless noted that project44 is on track to generate far more revenue in its current quarter than Shippeo generated last year.
Shippeo’s modal and geographic scope may also be a headwind in competing in North America. U.S.-based enterprise shippers that have global visibility needs are less interested in the mode and more in obtaining granular information at the purchase order level to better manage inventory flow and build resiliency against supply chain disruptions. However, they do care about having as many carriers operating in as many modes as possible at their vendor’s disposal, as well as the reach of the carrier network.
Mazza said in his emailed remarks that Shippeo is strong in the truckload, LTL, parcel and ocean modes and that it has a global footprint with deep penetration in the Europe, Middle East and Africa region and the Americas. In its 2021 Magic Quadrant review, Gartner said that Shippeo did not offer visibility for air services and that it has “nascent functionality and small volumes in rail, intermodal and last mile, which could be a limitation for customers that ship heavily in those modes.”
The 2021 report lauded Shippeo for staying aligned with the needs of its customers, especially in Europe where it has one of the highest recommendation rates. The report said that Shippeo offers a strong transportation visibility product, although it cautioned that such qualities may become less relevant as the visibility model, pushed by customers to improve control of inbound and outbound networks, morphs into “supply chain convergence” and away from pure transportation coverage. The 2022 report will be published in May.
De Muynck said it will be virtually impossible for Shippeo to compete on its own in the U.S. with well-entrenched firms like project44 and FourKites unless it raises substantial amounts of capital or considers partnering either with a third-party logistics provider that has a large customer base or with a big TMS platform that will enable Shippeo to gain scale, De Muynck said. Shippeo “will need someone in America,” he said.