Global supply chain visibility provider project44 has confirmed the company went through an organizational restructuring, eliminating approximately 130 jobs, about 10% of its total global workforce.
Leadership at project44 told FreightWaves Thursday night that the restructuring move comes as the industry and economy face various headwinds, vastly challenging FreightTech startups with venture capital backing to showcase profit over growth.
“In the height of the technology boom, startups could secure millions in funding in mere days. With increased market volatility, we’ve seen a broader shift in the [venture capital] landscape as investors become more cautious,” said project44 founder and CEO Jett McCandless. “Investors have shifted from a growth-at-all-costs mindset to focus on the path to profitability and scalable growth. No startup, not even the rocket ships of logistics technology, will be immune to these trends.”
The leader — and investor in the space — is correct, as the industry has witnessed a number of layoffs already this year as FreightTech providers adjust to unfavorable economic conditions.
Digital freight forwarder Flexport eliminated 20% of its employees in January. Digital freight platform Convoy announced restructuring and layoffs in February. Autonomous trucking company startup Embark Trucks laid off 70% of its staff and legacy load board provider Truckstop.com cutback its workforce by an undisclosed amount in March.
Economic headwinds
McCandless pointed to market headwinds, including falling truckload costs and decreased global demand for goods, as the reasoning behind this shift in investor sentiment.
As seen in the FreightWaves National Truckload Index, which measures the average dry van spot rate in the U.S., rates have consistently fallen since the beginning of the year. Coupled with slowing global demand for goods and domestic economic uncertainty, the second half of 2023 shows no sign of demand recovery.
These conditions have led businesses to restructure their contracts with logistics service providers and carriers to rightsize their transportation costs.
“Logistics technology startups are reevaluating their approach to growth and reducing their cost structures to be responsible stewards of their businesses, meet the evolving customer needs while achieving scalable growth and efficient capital allocation,” McCandless said.
Project44 is not immune to the market headwinds, despite recently becoming the first vendor to be positioned highest on its “Ability to Execute” and achieving the farthest right position for “Completeness of Vision” in research firm Gartner’s Magic Quadrant for Real-Time Transportation Visibility Platforms.
McCandless believes there will be more FreightTech layoffs to come.
“This trend toward logistics tech companies reassessing their growth strategies is likely to continue throughout 2023 as the market rewards sustainable growth,” he said.
Watch now: The State Of Freight: May 24th, 2023
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Joe Smith
Maybe hiring a CFO and a Chief People Officer within the last month wasn’t the best idea.
Robert
Good Day,
Interesting article, I have also heard J.B. Hunt has ended their relationship with P44 as well. I have always believed that just like in sales the “ABC” rule is critical to a business, with that said I without question believe “ABR” Always be recruiting is more important than the “ABC.” If we look back at the pandemic period many businesses struggled, why? It was all about recruiting and once that pipe line is dry you will need some good fortune to get you out of that hole.
Stay Safe
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John C, correct. carriers hate being called to be sold a load for their truck because someone sold their tracking data. imagine a poor small carrier or owner op getting 50 or 100 calls from brokers just because his tracking data shows he’s in a hot area and every broker desperately wants the truck. that’s why carriers prefer to search for their own loads on the boards or to call the brokers they prefer when they do need a load. if p44 is selling their location data to brokers the carriers will refuse p44 or anyone else doing that. the tracking data is only for the load they are on for ETA or pick/delivery purposes and not to be hounded as you get to your destination.
this is where tech helps. let the driver or carrier get matched in their TMS or on their preferred load apps and then they can choose and book the load they prefer and not get 100 broker calls or texts. if you’ve ever been a driver and get lots of calls or texts from desperate brokers you know what I mean. i just turn my phone off.
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companies will need to cut cut cut until they can reach profitability or slow their cash burn to a trickle. This is not a time to expand it’s a time to reset and to assure your survival.
John C
Of all the competitors in the segment, P44 has the weakest protections for carrier data.
Right or wrong, carriers are associating unsolicited calls for loads based on position with P44 selling data.
There are carriers that have no issue with tracking that will not agree to P44 tracking. Maybe brokers are starting to feel this challenge.
Also, companies like Highway are making huge progress with complete tools that in a modern, better designed, complete solution that replaces RMIS, P44, and C411, …
Not sure that McCandless is being completely forthcoming with his assessment.
For sure the industry will feel the challenges, but companies that were first movers that have underlying issues like P44 are going to feel it more than others.