Is 'Experience' in Logistics Overrated?
Welcome to the 48th edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I examined the extent to which logistics is complex versus complicated. This week, I look at the role logistics technology providers can play in defining the experience of a new importer or exporter.
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.
The weight of experience can be a good thing or a bad thing. As I wrote last week, logistics is a business where layers of experience create a foundation for decision-making as the context of the moment changes. Founders entering the space long ago discovered this. They tend to either be freight vets who need to add outside perspective, or outsiders who need a freight veteran’s experience to ground the business.
Experience is a good thing when it sincerely informs what does and doesn’t work in an industry. But it can be a weight around a business’ ankles when it doesn’t enable that business to entirely rethink a problem. As Janan Knust, CEO of the Latam digital forwarder KLog put it to me this past week, “AirPods are an innovation – you’re removing the wire from an existing product. But that’s not a disruption.”
So that got me thinking about this not from the technology provider’s perspective – ie, “how can I create a product that’s actually disruptive by freeing myself from the shackles of existing presumptions” - but rather from the user’s perspective. In that case, the more relevant question is “how can I create an entirely new experience for the shipper through the use of my technology?” To be absolutely clear, this is insanely hard, for two reasons.
First, logistics is generally run by a team of people with experience that’s very hard to compartmentalize, much less erase. There is no way to do an “Eternal Sunshine of the Spotless Mind” here, no way to wipe away memories and biases and preferences. Second, there is the existing technical infrastructure that simply can’t be thrown out the door in favor of shiny new cloud-based tools.
So, in that context, it makes sense that logistics technology providers are focusing on segments of the market that don’t have the weight of experience and presumptions (or at least less than cynical veterans do). In many cases, these segments are so new they literally don’t have any logistics infrastructure – they are building it up or relying on various e-commerce platforms to build it.
I used to think that it was simply the volume of SMEs in the long tail of global trade that made the market attractive to certain logistics technology providers. But now I think it’s just as much about the utter lack of legacy clutter that these businesses have that make them so attractive. I have seen no data that suggests newer shippers are easier to convert than established ones. And, in any case, it would be hard to isolate whether the newness of the business is the defining variable, or whether it’s just, for example, online sales channels that are themselves more successful.
But I have to think that sales cycles shrink and conversion rates soar when there’s no clutter to clear out for the buyer. There’s a reference point in the domestic TMS space, where vendors have long told me it’s easier to sell to a company using Excel than it is to convert them from an existing TMS.
Aside from the theoretical attractiveness of higher sales conversion rates, I think the really attractive aspect of targeting companies without legacy clutter is the ability to essentially define what logistics even is. If you’re an importer just getting started in 2021, your expectations of what the totality of that process looks like are almost incalculably different than if you started importing in 1981, 1991, 2001, or even 2011. The ability to form the expected customer journey in 2021 seems like a terribly exciting prospect to me if I was a technology provider today, or an investor into the space.
🚨LogTech Market Map update
Last week, we has released v1 of our LogTech Market Map, and we’ve gathered a ton of feedback and new companies to include the next version, which we’ll be coming out with soon. Thanks to everyone who has shared this around and given us their thoughts. Still time to register your company with us via this link.
🚨TPMTech is coming to Long Beach Feb. 24-25!
I’ve lost track of the number of times I’ve been asked if we’re holding our LogTech conference in Las Vegas this year. While the answer to that is no (as far as it being in-person), the good news is we’re holding the first ever TPMTech in advance of TPM22 next year. You can think of TPMTech as a sort of hybrid of LogTech and El Dorado, the concurrent tech event we never got a chance to hold in Long Beach during TPM20 due the onset of COVID-19. More news to come on TPMTech in the coming weeks, including how to register, hotel options, programming, and of course demos and networking. Can’t contain my excitement about this.
Here’s a roundup of pieces on JOC.com the past week from my colleagues and myself (note: there is a paywall):
The Latam logistics market is red hot right now, and Nowports’ $16 million series A earlier this month is just the tip of the iceberg. I examined a few other players building digital forwarders or empowering existing forwarders in the market.
Similary, I took an expansive look at how electronic payment vendors and automation providers are targeting forwarders to help enable efficiency. Again, a huge round into PayCargo was the impetus, but there are loads of other companies with their eye on this space.
8VC has been as active as any venture capital firm in the area of supply chain and transportation. And this week, it formalized a partnership with cold storage giant Lineage Logistics. Lineage has invested into 8VC’s latest fund as an LP, is an investor into startups itself, and wants to accelerate usage of startups into key areas of its business.
Blockshipping started out as a blockchain-based registry of containers globally, but that never got traction. So it has pivoted toward solving specific container terminal pain points, starting with helping terminals avoid so-called shuffle moves, an inefficient process where a box has to be restacked multiple times.
My colleague Bill Cassidy wrote about digital broker Uber Freight’s foray into LTL, via a partnership with Blue Grace Logistics, a broker that specializes in LTL. Expect more of these partnerships to come to light soon.
And here are some recent discussions, reports, and analysis I found interesting:
Speaking of Bill, last week he started his own Substack on the trucking industry, and you’re clearly going to want to subscribe to it.
A few weeks ago, Jonah McIntire of TNX Logistics was the guest author of this newsletter. And this past week, he spoke with Boris Felgendreher’s Logistics Tribe podcast. Needless to say, this is a must-listen. Jonah has a refreshingly contrarian view of many sacred ideas in logistics. I took many notes.
Great thread here from Raghav Viswanath, CEO of forwarding technology provider Freightify.
It was great to chat with Eytan Buchman at Freightos to celebrate a year of his Future of Freight video series. This was so much fun and could have gone on a lot longer. Thanks to everyone who tuned in live.
It was fantastic to chat with Harshad Kanvinde of the consultant Slalom about a range of technology issues in the logistics industry. You can catch the whole discussion here.
Found this piece very insightful, especially in light of what everybody (including VCs themselves) is describing as a market where investments are getting away from fundamentals. One VC this week decried the role of hedge funds “effing with our turf,” and of LPs in family offices creating their own funds as driving more demand too.
Since everyone is moving back to NY and SF, now I’m going to be moving to Texas or Florida*.
*I’m not moving to Texas or Florida.
Some upcoming events I’ll be involved in:
I’m moderating a JOC webcast at 2 pm July 29 on how technology can play a role in improving freight invoice accuracy. In a year of, as one tech provider put it, “duplicate freight invoices, previously negotiated surcharges re-emerging without cause, new surcharges on international ports that weren’t properly disclosed, and heightened detention and demurrage charges,” this hardly seems more relevant. Register for the free webcast here.
My new monthly show on the Let’s Talk Supply Chain network premieres 10 am EST Aug. 6. It’s called LogTech Live and our first guest is Rachel Premack, intrepid reporter at Business Insider. I’ll be discussing tech topics of the day, which buzzwords are meaningful or not, with a healthy sprinkling of dadjokes. Count on it being fun and informative.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.