Making the LogTech Products You Buy Better

Welcome to the 56th 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 wondered aloud whether logistics tech was like the string quartet on the deck of the Titanic. This week, I’m revealing a brand new category in the logistics technology space.

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’ve started mentally building a catch-all category for logistics software companies that cuts across virtually every mode, process, and buyer type in the industry. It’s a way of thinking about the purchase, use, and output of the product in a way that helps me segment a massive constellation of providers in the market.

To be clear, not every company qualifies for this category, and that’s fine. What good is a category if most or all entities in a market belong in it? The idea here is to delineate a type of software provider or product that functions differently from the rest of the market.

So here goes…I call this the BASF category. In other words “we don’t make the products you buy, we make the products you buy better.” If you’re too young to remember the ads, here you go.

The companies that qualify for this category generally seek to go against the grain of the “digital transformation” narrative. They are, by definition, not selling large suites of products, and they are not execution platforms. It’s a loosely connected group of companies that are characterized by two traits: the manner in which they interact with existing systems, and the processes they enable.

Let’s look at the first trait. “BASF LogTech” companies typically aim to interact with existing systems in a non-adversarial way, generally through an application programming interface (API) or robotic process automation (RPA). The products are designed to be minimally invasive, the software equivalent of keyhole or laser surgery. They use fancy architecture and processing power referred to as microservices or edge computing, to ease the computing power needed to run them, and so they don’t interfere with ongoing programs upon which companies rely. They retrieve data from emails, they optimize procurement, audit freight bills, pipe data into a TMS, and they do so in a machine-to-machine manner. Humans and existing systems are, by design, to not be involved in the process. Another way to think of these systems is like a Navy Seal team, dropping into a location in the dead of night, extracting a bad guy, and leaving without a trace.

Now for the second trait, the processes that “BASF LogTech” companies address. These products are not necessarily designed to replace existing systems or displace data flows, but rather to improve the investments that have already been made. In some unique cases, a “BASF” provider might allow a process to be executed, but those are rare in a logistics world where machine-to-machine execution is still the exception, not the norm. In most cases, tools are designed to either fill in gaps, connect two systems that were previously disconnected, or alleviate people from doing information processing or data entry work humans are ill-equipped to do.

Part of the “out of sight” nature of a BASF system is in not being competitive with systems that companies are currently accustomed to using. Part of the value of a BASF system is getting around a bit of the change management hurdle that most software providers face. Marketing and selling software into the logistics world is only the first challenge, especially in an environment where cloud-deployed, subscription-based solutions are preferred. Getting people to adopt the product and then depend on the product, which leads to customer retention, is just as big a challenge.

Let’s be clear: not every buyer in the logistics industry is interested in a “BASF” product. Some want unified platforms, some need and want to embrace wholesale change. Some just need a new TMS. But the rise of minimally disruptive solutions, based on enabling architecture, is likely to continue. It allows small technology providers to go deep in a niche area, get traction, and not compete directly against bigger platforms and their large sales teams. Instead it allows them to say, we won’t replace your system, we’ll make your system better.

Here’s a roundup of pieces on JOC.com the past week from my colleagues and myself (note: there is a paywall):

• Biggest LogTech news of the week was Magaya snapping up Qwyk and SimpliShip, moves that further up the ante in the race to provide the most complete forwarding software platform in the market, especially around self-service digital enablement tools like quoting and tracking. In discussing the deals with Magaya, it seems like integration of the solutions are farther along than most acquired companies are at this stage.

• Two funding rounds this week – identical amounts, in fact – highlight both the continued fragmentation of the global visibility market and also the need for really good container milestone data in this crazy cargo environment. First Singapore-based Portcast announced its round, and earlier today, Vizion did likewise.

• Last week I wrote about allocation management in ocean freight, and this week, Slync.io released its Booking and Allocation Management product for LSPs that tethers booking requests and carrier confirmations to space allocations. Very interesting concept, especially a scenario that Slync.io executives walked me through in which forwarders can pool bookings and confirmed vessel space and make more in-the-moment allocation decisions.

• My colleague Mark Szakonyi examined how technology investment has, in part, helped the Port of Virginia manage record volume.

And here are some recent discussions, reports, and analysis I found interesting:

• Santosh Sankar at Dynamo.vc had my colleague Peter Tirschwell and I on his podcast to discuss the ocean freight environment, including why spot rates are so high, why the spread of rates has gotten so wide, whether tech is helping, and the looming ILWU contract negotiations on the US West Coast next year.

• Nice blog here from technology provider FreightFriend about trucking procurement strategies.

• Chain.io CEO Brian Glick opines on why legislation won’t fix broken supply chains.

• My colleague Ari Ashe is the latest to start a Substack (cleverly called Please Haul My Freight). Obviously worth subscribing and here’s a link to his first post.

• Not strictly logistics, but an interesting examination of how some of the biggest brands in the world created moats.

• Great tweet and perfectly encapsulates the reality of the logistics market.

👨🏻‍💻☕️ @hunterwalk

2000s: core principle of software investing is each market will have one dominate winner, w majority marketshare. & competitors will be worth only a fraction of that alpha co. 2020s: each large market will have multiple multi-billion $ companies, sometimes even per geo 🤯🤯🤯

• C’mon Steph, this is lazy research.

Stephen Curry @StephenCurry30

Just getting started in the crypto game...y'all got any advice??

Some upcoming events I’ll be involved in:

• Big TPMTech news this week. The program agenda for our event in Long Beach Feb. 24-25 is up. Reach out if you have thoughts or want to be considered for any speaking roles. Attendees can register separately for TPMTech or as part of a bundle with the main TPM event.

• I’ll be speaking at the Container xChange Digital Container Summit, held virtually, at 8:30 am EST/14:30 CET Sept. 15. I have the honor (or challenge) of being wedged between Lars Jensen and Patrik Berglund on the agenda, so good luck to me! Use this code to get 30 percent off the registration fee.

• I’m leading a session (in-person!) at CSCMP Edge at 2 pm EST Sept. 20 in Atlanta. The panel, How Leading Retailers use Technology to Effect Supply Chain Transformation, includes logistics experts at The Home Depot and Carter’s. Please stop by if you’re at the event – I have 18 months of in-person catching up to do! Details on the session can be found on the agenda page.

• This will be very cool. Along with Lisa Morales-Hellebo, I’ll be moderating the REFASHIOND Ventures Quarterly Executive Salon Series session Sept. 21 with a seriously heavy-hitting panel, including the WSJ’s Christopher Mims, Transport Intelligence founder John Manners-Bell, and my colleague Peter Tirschwell. More details on the invite-only event here.

Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.