Categorizing the uncategorizable LogTech industry
Welcome back to the seventh edition of The LogTech Letter, a weekly look at a particular aspect of the impact technology is having on the world of global and domestic logistics. Last week, I got a little spicy by addressing something that I called the $10T logistics market myth. Today, I’m taking aim at another problematic aspect of the industry: company categorization.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@ihsmarkit.com or on Twitter at @LogTechEric.
I recently came across a graphic from CB Insights that put the following logistics technology companies in the same category:
ClearMetal
Haven
FourKites
Project44
Shipamax
The name of the category into which these companies fell was “Supply Chain and Logistics Analytics.” I scratched my head for a second and thought, “am I missing the connective thread between these five software providers?” Of the five, I can affirm that project44 and FourKites compete directly and aggressively with one another. ClearMetal, in theory, might compete with FourKites and project44 for customers wanting predictive cargo visibility, but they mostly operate in different realms.
Haven and Shipamax, however, compete with none of those other three, nor with each other. They are outliers in this group. Haven offers a global TMS more analogous to Infor Nexus than to the visibility tools FourKites, project44 and ClearMetal offer. Shipamax, meanwhile, sells to forwarders that need help structuring data from emails and documents.
Why do I point this example out? I’m not trying to blame CB Insights for what I’d call an unhelpful grouping of early stage companies. I am trying to highlight how difficult it is to categorize the cavalcade of technology companies addressing even something as niche as the international logistics market. For further context, the Supply Chain and Logistics Analytics category was one of 13 in a bigger CB Insights graphic called the Supply Chain and Logistics Tech Market Map.
I’d also take issue with comparing “supply chain” and “logistics” as co-equal functions, as logistics is a part of supply chain. Sort of like having an infographic about all the varieties of apples and calling it the Apple and Apple Core Market Map. But I’ll save that discussion for another day.
I suppose if I was tasked with categorizing these companies I’d put them in four buckets:
Predictive visibility (multimodal): project44 and FourKites
Predictive visibility (container): ClearMetal
Global transportation management: Haven
Data digitization and automation: Shipamax
The situation gets more convoluted when you look at the companies’ respective target customers. All of ClearMetal, FourKites, Haven, and project44 target shippers as customers, though each tends to target different types of shippers and different functions within those prospects. Shipamax, as mentioned above, targets forwarders.
I’ll quickly relate today’s thought to the one I shared last week: as there is a cottage industry is sizing the logistics market, there’s also a cottage industry in producing graphics that help people understand how to contextualize different software companies. I do it too.
The key, from my perspective, is that wide-ranging categorization of logistics tech is pretty unhelpful from the system buyer’s perspective. It’s not so helpful to a global logistics director responsible for freight to have a business-to-business containerized cargo management solution offered in the same graphic as an app enabling delivery of prepared food from restaurants to homes.
Those graphics are, apparently, helpful to investors. This article says CB Insights apparently gets its clients - primarily banks, venture capital firms, and large technology providers - to spend an average of $70,000 per year on subscription to its data and services.
But categorization on a more granular level is important to technology buyers. It’s especially important to group not just the emergent technology providers with one another, but also with incumbent providers that offer similar products. Those are the comparisons that help buyers, not investors, make decisions.
But putting those market maps together is hard - they’re moving targets. For instance, this infographic we produced on how TMS providers are partnering with domestic freight brokers offering instant quoting capability was obsolete by the time it ran because more connections emerged week by week after we posted it.
New companies come on the scene all the time. Companies pivot (like Kontainers, which moved from being a digital forwarder to providing SaaS front-end tools to other forwarders). Companies are acquired (like Kontainers, which was acquired by Descartes). These categorization graphics almost need to be living lists, but the value of producing them is sometimes lost by the time they’re produced.
Did CB Insights inadvertently mis-categorize five companies it tracks? Does it provide a more nuanced categorization of these companies to paying clients? Or is the degree to which it categorizes these companies fairly inconsequential to its clients and the companies that view this chart?
Not sure. But I think it’s part of my responsibility to help the people I write for understand that Flexport, Freightwaves, CoLoadX and Xeneta are all vastly different companies offering different products and targeting different customer bases (they were all in the “Digital Freight Shipping” category in the same graphic).
Here’s a roundup of pieces on JOC.com the past week from my colleagues and myself (note: there is a paywall):
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Shameless plug, part deux: I gave an outlook for the liner shipping industry at the Container xChange Digital Container Summit in early September. Check out my presentation in full here: https://container-xchange.com/digital-container-summit/eric-johnson/
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.
Hi Eric, great read..
There are several cases where services required are referred to incorrectly and this causes the general public or businesses to contract out the work to incorrect parties..
For example, even to date there are a large number of customers who think a Freight Forwarder and Clearing Agent are the same people and do the same thing.. Or that a Shipper and Exporter are the same..
So work could be given to a clearing agent but the customer expects them to do what a Freight Forwarder does and vice versa..
In my opinion, the incorrect categorisation you have mentioned could also be because a lot of tech people may not have had a solid grounding into the business of freight transportation and tend to classify themselves as one or the other based on what they know and what they think each sector in the industry does..
There is a big distinction between the businesses of Shipping, Freight, Maritime, Logistics, Supply Chain and Trade.. For those interested, I have written about it here (https://www.shippingandfreightresource.com/difference-maritime-shipping-freight-logistics-supply-chain/)..
For those who may be interested, you can read the differences mentioned above here (https://www.shippingandfreightresource.com/freight-forwarder-and-clearing-agent/) and here (https://www.shippingandfreightresource.com/difference-between-an-exporter-and-a-shipper/)..