Kewill goes shopping
Logistics software provider Kewill plc has pursued an aggressive expansion plan fueled by a series of acquisitions dating back to 2003.
'Our mission is to be the No. 1 provider in the trade and logistics segment,' said Brian Hodgson, chief commercial officer of U.K.-based Kewill, in a recent interview. 'We have solutions that cover that end-to-end process including the shippers, forwarders and brokers.'
While the size of Kewill's deals remains modest when compared to those made by Oracle Corp. or JDA Software in the same timeframe, the impact is still significant.
To date Kewill's acquisition 'shopping spree' includes purchasing: TradePoint (in 2003), ShipNow (2004) Perwill and Interchain (2005), CSF (2006), IPACS and Innovate (2007) and Mini House (2010).
Likeminded logistics software firms such as Descartes Systems Group and Management Dynamics were also actively growing by acquisition making for a very eventful ' and competitive ' decade of consolidation in this market segment.
The combination of these technologies with Kewill's pre-existing assets has cemented the company as a player in the supply chain software market, especially in the compliance, global forwarding, reverse logistics and parcel shipping niches.
The acquisitions have also served to broaden the company's global capabilities and expand its customer base internationally. 'In 2007 we acquired a global forwarding solution with our acquisition of IPACS,' Hodgson said. 'Over the next two years we built out the functionality to take it to U.S. and Europe. We launched it globally in 2008 and are well positioned for Tier 1 global forwarders.'
Kewill aligns itself with a key account in each geographic market to help establish its capabilities in that new market. 'We have selected a 'lighthouse account' in each major region to help drive the platform globally,' Hodgson said.
In November 2009, Kewill raised about $12 million through a share placement that accounted for about 10 percent of the value of the company at the time. In a regulatory filing, the company cited the need to capitalize on acquisition opportunities as the key driver of the fundraising.
'Since that fundraising we acquired Mini House,' Hodgson said. Benelux-based Mini House provides automated compliance processes related to customs agencies across Europe. 'We've launched Kewill Customs Exchange which provides connectivity to all the customs authorities in Europe,' he added.
Hodgson believes the vision for the acquisition spree and complementary development has started reaping benefits. 'Take a manufacturer in the United States producing out of Asia and servicing customers in both European and American markets,' he said. 'What makes us unique is we have software solutions that manage the goods from origin through import in the U.S., delivery to U.S. customers, completing the U.S. export process and European customs filings, as well as delivery in Europe. Furthermore, we handle the returns process for high value products that need to get replaced, repaired or refurbished.'
Equally interesting is the company's value proposition for forwarders and brokers, many of whom continue to operate on systems they developed and invested in decades ago.
'We don't believe there's another player that has that breadth of software solutions, serving the shippers, 3PLs, freight forwarders and customs brokers,' Hodgson said.
Providers like Kewill are competing against a forwarder's own IT investments more often than they compete against each other. 'In the forwarding space it's consistently homegrown or fragmented technology,' he said. 'If they've purchased technology, typically it's not global.
'We have the opportunity as a provider for tier one, two and three 3PLs. In tier one we've done that work already and we're having success.'
Hodgson points to a few trends driving transportation intermediaries of all types to look for off-the-shelf programs from vendors like Kewill. 'The regulatory piece is always increasing, which causes increased workload. But brokers have to do more for not necessarily more revenue,' he said.
'Companies involved in international trade must have a lot of endurance to weather the ever-changing regulatory landscape,' said Jake Holzscheiter, president and chief executive officer at A. N. Deringer, a broker and Kewill customer. 'To stay compliant companies have to align themselves with nimble partners. Deringer uses Kewill's software to process customers' imports and exports. Deringer upgrades systems and processes proactively, ensuring that customers' shipments meet new regulatory requirements.'
Undoubtedly any forwarder reading American Shipper can relate. Government agencies across the world, particularly in the United States and Europe, have instituted more trade laws in the past 10 years than they have in the preceding hundred. This complexity-induced headache for forwarders creates an opportunity for technology providers like Kewill.
'The other pressure is in winning more customers,' Hodgson said. '3PLs are being pushed to offer more coverage and service to the customer.'
Since the Trade Point acquisition in 2003 Kewill's investments have focused on supporting its customers' international capabilities. However, that may be somewhat different in the future.
'We're really focused on international forwarding, but we see opportunity to expand into U.S. domestic forwarding and have a complementary transportation and customs solution in Europe,' he said.
Still Hodgson believes the company will remain true to its roots in international trade management, while building up its domestic logistics capabilities through acquisition, development and partnership.
'Classic transportation management systems providers don't see forwarding as a core focus; they're focused on the TMS,' he explained. 'With our expertise in forwarding and parcel/LTL (less-than-truckload), we're well positioned to bring value tier one through tier three forwarders. We do have a strong partnership with Oracle, dating back to G-Log. Our partnership provides full integration of Kewill parcel shipping applications into OTM.'
In announcing the Mini House acquisition June 14, Kewill signaled it would continue making similar deals. 'Looking forward, Kewill sees continued and significant growth opportunities in customs compliance, both on a standalone basis and as part of the broader Kewill global trade and logistics offering,' the company said.