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Investors pouring millions into maritime startups

CB Insights says while there has been a drop-off in funding this year, supply chain innovation is becoming a greater concern for businesses around the world.

   The research firm CB Insights says while funding for startup companies catering to the maritime shipping industry has significantly increased over the past several years, it foresees a slight pullback in 2018.
   CB Insights made that projection based on reports that startups had received $217 million as of July 12 and forecast a total of $411 million being invested this year in new tech companies catering to ocean shipping companies. That compares to $511 million in 2017, $286 million in 2016, $163 million in 2015 and $84 million in 2014.
   “The numbers essentially count all types of investments toward private companies in the space. This can include investments from venture capital firms as well as corporations and more,” Natan Reddy, an analyst at CB Insights, told American Shipper
   “While there was a drop-off in funding this year, supply chain innovation is becoming a greater concern for businesses around the world,” he said. “For example, many retailers are battling low margin and are seeking to optimize their supply chains to save money and increase their bottom lines. Other businesses are being impacted — or are worried about being impacted — by newly imposed tariffs, causing concern of the flexibility of their supply chains.”
    Last week, the global freight marketplace Freightos said it had raised $44.4 million in a Series C funding round led by Singapore Exchange. Other investors in that round included General Electric Ventures, ICV and Aleph. To date, Freightos has raised $94.4 million. Freightos said since its launch in mid-2016, it has expanded its scope from price comparison to instant booking, online shipment management, tracking and communication.
   Reddy also highlighted the online forwarder Flexport, based in San Francisco, which said in April it had received a $100 million investment from the Chinese courier company SF Express.
   “Not all supply chain innovation directly touches the maritime space. However, the connected nature of global trade dictates that this push for greater supply chain innovation will also drive continued innovation in the maritime tech space as international trade partners demand greater visibility, efficiency, transparency and security,” Reddy said.
   In a recent webinar, Reddy attributed part of the growth in interest in ocean shipping by tech companies to the 2016 bankruptcy of Hanjin Shipping, which he said called attention to the lack of visibility into the supply chain when shippers had difficulty finding out the location and status of their cargo.
   He highlighted companies such as Freightos, CoLoadX and the New York Shipping Exchange as examples of firms that use technology to streamline communication and connect shippers booking cargo with carriers and looking for the best freight rate or a reliable contract.
   CB Insights pointed to companies Flexport, iContainers, FreightHub and Fleet that are looking to displace existing players such as freight forwarders or other intermediaries with online services.
   Reddy said Flexport has partnered with Wells Fargo to provide speedier trade financing, which he said can be an advantage for small and medium-size companies, and has positioned itself as an alternative to using Amazon for freight forwarding.
   In the webinar, Reddy said since offering services to organize ocean freight shipments in 2017, Amazon has “more aggressively moved into the greater third-party logistics space in the last year. And the tech giant remains a threat to both incumbents and startups.”
   He noted traditional carriers are developing digital platforms to compete with digital forwarders, including A.P. Møller – Maersk’Twill. Earlier this month it transferred the brand affiliation of the digital freight-forwarding product to Maersk Line from its company-owned forwarding arm Damco.
   He also pointed to DHL’s MySupplyChain product, a platform introduced earlier this year that the company says is allows “customers to access track-and-trace data, inventory, operational performance and reporting, business analytics, customer service and more from any desktop or mobile device.”
   Reddy believes shippers should benefit from tech innovation in the forwarding industry.
   While some observers believe that the “relationships, knowledge and historical understanding” of traditional forwarders gives them an edge on new companies, especially as they add new technology, others believe new companies have a leg up on future technological innovation. 
   Another company highlighted by CB Insights was ClearMetal, which uses artificial intelligence and machine learning to help companies predict adverse events in their supply chains and plan proactively.
   Shippers such as retailers and consumer goods companies will “directly benefit from the influx of visibility technology into the freight-forwarding space, said Reddy, as they are “able to better manage and better quickly change different factors about their supply chain. This is of critical importance today. Because if you are dealing with macroeconomic issues such as tariffs, supply chain flexibility is incredibly important to maintaining profitable operations.”
   He also noted there are a large number of blockchain shipping initiatives aimed at increasing trade efficiency and improving security and transparency. One of the main obstacles to use of blockchain technology in shipping is “all the supply chain players would have to be on the same page regarding what type of distributed technology that they’re actually using” or different platforms being developed will have to be interoperable. 
    Other tech companies are developing products aimed at reducing the cost of operating ships. For example, companies such as Nautilus and We4Sea are aimed at helping shipping companies improve fuel efficiency and reduce emissions.
    Kongsberg, which acquired the Rolls-Royce marine division in June 2018, formed a joint venture with Wilhelmsen called Massterly in April to develop autonomous vessels. Kongsberg has partnered with the fertilizer company Yara to build an electric-powered containership that will operate along the coast of Norway. The Yara Birkeland is scheduled to be launched in early 2020. Initially it will have a crew, but the plan is for it to be fully autonomous by 2022.
    San Francisco-based Shone is working with CMA CGM to retrofit manned ships with autonomous technology to assist crews. 
    Reddy also noted that ports such as Rotterdam, Singapore and Hamburg have hosted accelerators that have assisted dozens of startups focusing on the logistics industry.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.