What's Old is New in Logistics Tech

Welcome to the 28th 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 looked at whether the ocean freight industry is ready for an electronic bill of lading (eBL). This week, I’m thinking about an issue at the very heart of the incumbent/startup divide in international logistics: the old vs. new idea issue.

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.

What’s the old cliche about there being only six basic plots for movies? I think the same basic theory applies to software applications in the logistics space. That may seem reductive, and maybe even insulting, to the range of highly intelligent founders working on serious technology problems in global logistics. But it’s at the heart of much of the tension that exists between incumbents and startups.

The examples of this tension are too numerous to mention, everything from Convoy being pilloried by incumbent freight brokers over a product to avoid the RFP process, to Flexport this week launching its version of a purchase order management system. My first thought, upon Flexport telling me about their forthcoming product release was this: I remember NVO legend Jon Monroe launching a PO management product at TopOcean when many of the Flexport team were, quite literally, in elementary school.

But this isn’t about Flexport or Convoy*, as much as they can dominate conversations in the international and domestic spaces. It’s about...everything. Every single idea a startup comes up with can seem like an idea that’s already been tried, recast with a new name or slogan. The differentiator, early stage companies generally tell me these days, is often related to something like their ability to process and contextualize data (insert your favorite machine learning drinking game here). That helps turn an old idea into something new, because of the possibilities available when connecting data or shunting data into another system to make it more useful.

That aspect of the old vs. new debate should not be minimized. Modern tech-enabled companies’ ability to turn vast troves of data from a seemingly arcane product idea into something to be used in related ways is really important in the grand scheme of things. That something could be capturing behavioral data around procurement, or the way a supplier likes to book capacity on a vessel, or anything really. Systems aren’t as rigid as they used to be, and so the possibilities are vast. The key is to look at old ideas recast as new versions as a vehicle to driving some other type of value. It’s misdirection more than misinformation.

All that said, incumbents usually have a point. Whether a software provider or 3PL, they were once young upstarts themselves, with ideas they thought would change the industry, fighting against the old cranks who told them they had already tried that and it’ll never work. In some ways, logistics is an industry that loves to turn its back on a good idea. And cycles tend to repeat (only with better underlying tech). It’s how Flexport filling their PO management gap in 2021 is actually news two decades after NVOs were building that type of system.

I tend to appreciate the perspective of Rob Garrison, CEO at the import management system Mercado, because he’s been around long enough to see the origins of those initial forays into connecting purchase orders with logistics, and he seen things from every angle: as an importer, as an LSP, and now as a pure software provider. He’s able to convey that new technology foundations actually change the game, even for a decades-old idea.

My ramblings today, in many ways, echo something I wrote about in summer: that there’s an asymmetry between the way a young company with little historical baggage can market itself versus a large, diversified company whose many successes far outweigh its setbacks, but for whom innovation is hard to see among the tall trees.

Startups and early stage companies have the benefit of saying that an age-old product is new to them and built differently because it was built by them. It’s much harder for a company with a 20-year-old system to say, we have a new version and it’s mindblowing.

All this circles back to a common theme of mine, that the market for logistics software right now is simultaneously enormously exciting and hopelessly confusing. The repackaging of old ideas in new contexts doesn’t make navigating that reality any easier.

*everything seems to always be about Flexport and Convoy

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

• A bumper crop of stories this week, but none more important in my mind than this piece on how mid-market forwarders are trying to better leverage their existing investment in CargoWise. Forwarders told me CargoWise is a system intricately woven into their operations, but it has gaps that startups and even Microsoft are better suited to fill. 

• A related piece on how RIM Logistics is focusing on piping internal data into its user interface to woo customers that have had their heads turned by Flexport and other digitally-progressive forwarders. 

• I wrote about the aforementioned PO management release by Flexport here, focusing on what the company thinks will be differentiators: embedded messaging between supplier and consignee, and the unified nature of data passing between the PO management part of its platform and the logistics management part.

• Cross-border technology-enabled broker (or TMS? or marketplace?) Forager continues to blanket this underserved market with more capability, this time an open load board for carriers serving both US borders. That fills a gap that the open load boards DAT and Truckstop really can’t.

• Container visibility is one of those six movie plot lines that gets repeated in international logistics, and another provider, Vizion API, has entered the scene with VC backing from the knowledgeable folks at Dynamo Ventures. 

• Mundi, which focuses on trade finance for SME exporters and forwarders in Mexico, nabbed a $7.8 million seed round this week. I’ve talked many times with founder Martin Pustilnick, so interesting to see his vision take shape. 

• Finally, I dug into the very niche area of lumper payments (unloading fees for trucks at receiving facilities) via a massive investment into the startup Relay Payments, which has shown that owning a finance-related niche can open up the wallets of investors pretty quick.

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

• I wrote today about Project Aviato, the irreverently named new fund launched by ex-Maersk Growth head Sune Stilling, and his colleague on the business side Peter Hove Hildebrandt. I spoke with Stilling in January about the new venture and he and Hildebrandt unveiled the vision for their fund more fully in two podcasts this week: first, a conversation with Eytan Buchman at Freightos, and second, a dialogue with Radu Palamariu.

• One for your post-TPM radar: I’ll be involved in Zuum’s virtual event March 11. Register here: https://zuumapp.com/from-paper-to-platform/

• Weekly moving update: still not moving to Florida. Giving Texas this week off because it’s been a week for them.

• Weekly Keith Rabois update: I say this as a proud Californian with absolutely nothing personal against Florida - at some point, pride comes before the fall.

  

🚨 #TPM21 starts in six days (!!!) with two days of #LogTech focused programming Feb 25-26. Registration is live, and so is the agenda. On-demand sessions go live this Monday. Each week until TPM, I’ll be highlighting a tech-focused session we’ll be hosting.

This week, to complete the Flexport loop from earlier, I’ll talk about the 1-on-1 I’m having at 3:10 pm EST Feb. 25 with Flexport CRO Will Urban. Will spent nearly two decades at Expeditors, and knows where the good and bad in both organizations. I’m going to discuss with him a range of issues, like what he thought Flexport was like before and after joining, whether digital forwarding is a curiosity or a legit business model now, and how Flexport fits into the world of multi-sided platform businesses like Amazon and Shopify. Don’t miss it.

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