Watch Now

Freightos makes public debut on Nasdaq as SPAC market tanks

Digital freight booking platform raises $80 million via merger

(Updated January 26, 2022, 11:15 a.m. ET)

Freightos, a digital freight marketplace that instantly connects ocean, air and truck carriers with shippers, was publicly listed on the Nasdaq exchange Thursday morning after combining with a blank-check company to raise $80 million, taking a route less traveled since the SPAC market fell out of favor.

Even during the pandemic boom, few alternative initial public offerings involved freight transportation companies. Last month, Turkey-based MNG Airlines also entered an agreement to be publicly traded on the New York Stock Exchange by combining with a special purpose acquisition company.

Freightos, which will be listed under the ticker CRGO, agreed last May to merge with shell company Gersher Acquisition Corp. The Securities and Exchange Commission recently completed its review of the deal, paving the way for the initial public offering.

Founder and CEO Zvi Schreiber highlighted the achievement by ringing the ceremonial opening bell on the Nasdaq trading floor.

“Twelve years ago I was managing just one of millions of companies that import and export. We would wait days for a simple price quote for air and ocean freight and the price quotes were complex and non-binding. It was inefficient and opaque. . . . I realized that the trillion dollar international freight industry was overdue for digitalization,” he said, according to his prepared remarks describing the company’s start.

In an interview, Schreiber insisted the Freightos funding path is advantageous because of guardrails that prevent original investors from pulling out their money if they get cold feet. The Gersher shareholders are long-term investors who visited Freightos’ headquarters in Jerusalem and agreed to a clause that locks up their shares for two years, which prevents them from dumping shares immediately after listing and putting downward pressure on the stock.

“When the SPAC brings that kind of quality investor to the table with a long-term commitment, that’s actually superior to what you can normally get in a traditional IPO, where you normally have a lot of investors just coming in for the short-term IPO pop,” he told FreightWaves.

The enterprise value of the Freightos SPAC has increased since inception to $500 million. Schreiber expressed confidence the value will increase over time.

“Obviously, markets are soft and volatile. I don’t care . . . what happens to the share price in the short term,” he said.

SPAC investors include M&G Investments and The Prudential Assurance Co., which contributed $60 million, and Qatar Airways, which pitched in $10 million. Existing shareholders in Freightos include FedEx (NYSE: FDX) and the cargo division of International Airlines Group (British Airways and Iberia), and LATAM Airlines.

“The company is the only pure-play global freight platform with publicly-traded securities, enjoying positive unit economics, high gross margins, a strong growth trajectory, impressive customer retention, and a vast total addressable market,” Gersher CEO Ezra Gardner said in a news release.

SPAC risk

SPACs are investment vehicles set up by sponsors who recruit investors and list publicly with the purpose of seeking out a target company to acquire and negotiate a buyout. They were designed to make it easier and faster for smaller companies to access public markets without going through large underwriters that typically discount the price paid by institutional investors to reward them more if the public shares rise in value. The idea was that startups and other firms can have more certainty in funding availability and get to market faster because they were merging with a company that was already public, while dealing with less regulatory scrutiny than with IPOs.

SPACs exploded during the pandemic, reaching 613 transactions in 2021. But the bubble burst last year, with only 86 deals, according to

Investors soured on SPACs after many sponsors overvalued target companies to close deals and stock prices crashed immediately after listing. They took advantage of provisions allowing them to recoup their money before the merger closed, leaving target companies with a fraction of the expected proceeds. Meanwhile, sponsors had trouble attracting secondary investors to cover for the original defectors while a more skeptical SEC began to treat SPACs like IPOs, slowing down the process.

“The market fundamentally didn’t believe that stock sponsors were valuing these assets properly. They recognized that there was an inherent conflict of interest,” said Derek Liu, a law partner at Baker McKenzie who specializes in mergers and acquisitions. 

With few willing participants and little appetite for IPOs in general because of the market downturn, many SPAC companies are closing and returning money to investors before reaching their two-year deadline to consummate a deal.

Digital cargo sales increase

Supply chain is one of the last big industries to go through a digital revolution, with many companies still utilizing manual, low-tech processes.

Freightos is a multiparty freight booking platform where carriers sell their capacity and thousands of freight forwarders can conduct real-time rate comparison, book space, make payments and manage shipments in one place. The system, which is primarily used for unplanned shipments, also enables forwarders to share pricing and service to their import and export customers.

A shortage of available aircraft to carry freight during the pandemic accelerated the adoption of online sales technologies that are common in other industries. Forwarders realized they needed access to the latest spot-market rates and ability to make instant bookings because the space could be gone by the time they confirmed details by phone and email and checked with their customers for permission to execute the transaction. Digital connections also reduce the administrative burden at a time when companies are having difficulty hiring and make it easier to switch routes and carriers when shipping difficulties arise.

Airlines are increasingly investing in software tools that allow their back-end systems to automatically communicate with customers’ applications and multiparty platforms that sell air cargo capacity as part of an omnichannel strategy. And many are offering their capacity on more than one digital marketplace, where logistics companies are able to quickly comparison shop, in an effort to extend their reach and find new customers.

The advantage of automatically connecting forwarders’ transportation management systems with airline reservation systems is more predictable, transparent pricing and capacity information that can be confirmed instantly, as passengers are used to when booking tickets.

The 33 airlines that participate in Freightos’ WebCargo distribution platform represent half of the global cargo capacity. Schreiber said Freightos has more transaction volume than other airfreight booking engines, adding there is huge room to grow because digital transactions represent only about 2% of all bookings. 

Major carrier additions in 2022 included American Airlines, Air Canada Cargo, China Southern Airlines, Emirates SkyCargo and LATAM. The company also acquired 7LFreight, a U.S.-based FreightTech company that provides digital rate management and booking for less-than-truckload carriers.

Freightos has live connectivity with two companies in the container shipping industry, which has been slower to adopt an omnichannel sales approach. Many shippers use Freightos data to help negotiate long-term contracts with ocean carriers. The platform also provides carbon-footprint estimates on each route.

The 10-year-old startup also provides static pricing, rate management and quoting across hundreds of other air and ocean carriers.

In 2022, Freightos facilitated 668,000 bookings, a 154% increase from the prior year. Gross booking value of platform transactions reached $611 million, nearly double from 2021 despite a drop in freight rates. Freightos makes money through a combination of flat fees and a percentage of each transaction. Revenue last year was $21 million, according to Pitchbook.

The IPO capital will be invested to further develop technology, as well as sales and marketing to attract more customers. Freightos is consuming about $24 million in cash reserves per month, Schreiber said last summer. A key goal is growing gross margins, according to the company.

“With the money that we’re raising, now, we’ll have plenty of cash to get through to breakeven. It will take another two or three years … to get us through to cash flow profit positive,” Schreiber said. Operating the platform generates a gross profit, with R&D costs keeping the company in the red, he explained.

“Bookings on our platform are growing fast and consistently, but turning our growing transaction volume into massive revenue and profit will take time,” Schreiber acknowledged in a blog post.

Freightos changed its request to be listed from FROS to CRGO (a take on cargo) when it realized the ticker was available, said spokesman Eytan Buchman.

More FreightWaves/American Shipper stories by Eric Kulisch.

Subscribe to the American Shipper Air newsletter.


Freightos unit adds digital booking for N. America LTL freight

S. American cargo airline joins Freightos e-booking platform

Instant booking is competitive necessity for forwarders, says Freightos CEO

Freightos agrees to SPAC merger, reveals FedEx and Qatar Airways investments

Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, Eric was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. He has appeared on Marketplace, ABC News and National Public Radio to talk about logistics issues in the news. Eric is based in Vancouver, Washington. He can be reached for comments and tips at [email protected]