WiseTech's Next Steps (Bonus TLL)
Welcome to a bonus midweek edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. On Friday, I used Anchorman to explain why shippers are really competing against other shippers, not container lines. Today, guest contributor Anthony Miller is writing about whether WiseTech Global might jump back into the M&A game.
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.
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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 email@example.com or on Twitter at @LogTechEric.
Editor’s note: Anthony Miller has made a big name on LinkedIn in recent months providing salient, provocative, and no-holds-barred takes on the logistics industry and, more specifically, the logistics technology space. He’s currently a marketing strategist and content creator (“with a passion for logistics"), but previously spent seven years with WiseTech Global through February 2021, most recently in a corporate development role. In today’s TLL bonus post, he writes about WiseTech’s recent history and next steps ahead of its financial year earnings announcement tomorrow.
Are WiseTech Global preparing a new shopping list?
That’s the total number of acquisitions made by WiseTech Global since 2015, of which 37 took place between March 2015 and December 2020. But all that ended rather abruptly in March 2020 when Covid-19 started making headlines and forcing lockdowns across the world. Since then, a single acquisition has been announced, in the shape of Bolero in July.
Are WiseTech Global gearing-up for another M&A drive, and will they show more restraint this time around?
Land and expand: buying global reach and functionality
If there is one thing we cannot say about WiseTech Global, it’s that they’re lazy. The sheer volume of product updates they put out (some arguably of higher quality than others) is a testament to their development processes. They are a product-focused company, in what has traditionally been a customer-focused industry.
Where other solutions have built every requested customization and agreed to every “want” issued by a prospect to win a deal, WiseTech started saying no. They set out with a plan to build what they believed the industry needed, not what individual customers wanted. Did they do a good job? Sure. Could they have done better? Of course, but every company should think that way.
This approach does have its perks, one of which is the ability to craft a well-defined strategy and the will to stick to it.
Included in this plan for global domination was an acquisition strategy that, according to WiseTech themselves “is centered on accelerating long-term organic growth, through either geographic expansion or adding to its technological capabilities.” The short version: land and expand.
With a focus on regulatory compliance, such as customs, and other adjacent solutions, such as rates, warehousing, and messaging, the approach was clear: identify the top geographies for logistics activity and acquire compliance (and a customer base or “foothold”).
Was it too much, too quickly?
As far as acquisition execution goes, you would be forgiven for calling WiseTech Global aggressive. At one time pre-pandemic, it felt like there wasn’t a month that would go by without a new M&A announcement coming out of Sydney.
But if you take a deeper dive into what they’ve achieved after making so much noise, you may come to the conclusion that they bit off more than they could chew. You could even go one step further and wonder if they are not still trying to put together the different puzzle pieces left over from so many acquisitions.
On the CargoWise website, you can find a handy map that illustrates their global customs footprint. With around 20 countries now showing native customs functionality, you’d be forgiven for thinking that they’ve also nailed the post M&A integrations strategy. But have they really? EasyLog was acquired in April 2018, with native customs taking about three years to finalize. Znet was acquired in January 2017, yet native German customs functionality is still not readily available, and the same goes for Bysoft in Brazil, which was acquired a few months later.
The impact of the pandemic
As many other companies did during the Covid-19 pandemic, WiseTech Global went through at least one round of global layoffs. Staff in multiple locations across the Americas, EMEA, and Australasia were let go at a time where many businesses were panicking and trying to reign in overspending.
They also saw a net reduction in the number of acquisitions, with SISA in Switzerland being the first and last acquisition to take place in 2020. Between January 2020 and July 2022…nothing. WiseTech had key staff in corporate development, such as Benn Bekic (now of Project44), leave in July of 2021. The head of corporate development changed roles to become the new chief execution officer in April 2020. They do still have a head of acquisitions and integration, who most likely has his hands full with finalizing the integrations of previously acquired companies that are still potentially posing a challenge.
Looking in on things from a different angle, you could argue that the uncertainty around Covid-19 gave WiseTech Global the opportunity (and time) it needed to reorganize an operation that was suffering from potential bloat. Multiple acquisitions led to an increase in the number of organizations to manage, including back office operations and development teams. Taking a look at the WiseTech Global careers page, you’ll notice that they are now looking for senior software engineers in a number of locations where they acquired customs-focused companies, including in Germany, Turkey, and France, to name a few.
Did they jump the gun when Covid started? Maybe.
Is the M&A machine coming back online?
“Join us” and “Careers” pages on company websites or LinkedIn are a great way to figure out what’s happening. WiseTech are clearly in need of some developers, but it doesn’t stop there. Recently, they’ve been looking for a business development/M&A profile with 10+ years experience in M&A and a “Big Four” consulting background. They’ve also listed a new role looking for a people operations profile to work with the corporate development and integration teams.
These two new job postings potentially mean two things: WiseTech are getting ready for some new acquisitions, and they may be approaching integrations with more resources and a better plan.
If M&A is back on the table for the Australian forwarding software giant, what would fit with their current strategy? There are still some geographies left in Asia to explore. This would make a lot of sense with the current shifts away from China: Thailand and Vietnam spring to mind, especially with Vietnam’s growth and shipping lines like CMA CGM and MSC investing in its logistics future. Mexican customs compliance is another potential left-over geography from the initial land-and-expand strategy, with reshoring becoming a buzzword and a recurring topic since strict Chinese lockdowns caused mayhem on a global scale.
Some other names have been thrown into the hat by Australian global financial services group Macquarie Group, who mention the likes of Orcoda, Yojee, and Generix Group. At this point, their guesswork is as good as anyone else’s.
Outlook and Conclusion: what’s next for WiseTech Global?
With global roll-outs taking place for Bolloré, Hellman, DHL, and others, WiseTech are keeping busy on the enterprise customer side of things. Moving forward, it’s hard to imagine who they could announce next as a big customer on a global roll-out. The FedEx news in December 2021 being rather underwhelming, shareholders are potentially waiting for something big.
On the product front, our industry is vast, and large solutions such as CargoWise have their faults. They are looking for UX/UI designers, which means the product may be brought into this century, a welcome change for users and shippers alike who have to interact via aging web portals.
It’s been a long ride since the pandemic started. It blew a wind of change into the logistics industry, and with it, WiseTech made some fast decisions. How they approach the next few years could be a turning point in their history, and mean the difference between remaining a leader, or becoming a legacy.
Anthony Miller can be reached at firstname.lastname@example.org or on LinkedIn.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.