Ship shake: Hanjin woes may help float tech, data start-ups
By Jeremy Wagstaff
SINGAPORE (Reuters) - The global shipping industry, ravaged by collapsing revenues, defensive mergers and the failure of major player South Korea's Hanjin Shipping Co Ltd 117930.KS, is slowly waking up to the redeeming potential of technology.
While sensor-laden containers, smart ships and 3D printing have grabbed the headlines, the start-ups making the biggest inroads are those working on something more basic - streamlining the interaction between shippers, freight forwarders, and those actually transporting the goods.
"This is way up there on the list of insanely complex systems with enormous impact on the global economy," says Trae Stephens of Founders Fund, which this week led a $65 million investment round in Flexport, a start-up focusing on providing logistics services and data.
"We believe doing this in a more efficient way can really move the needle on every part of the economy," said Stephens, who will join Flexport's board as part of the investment round.
Container ocean trade is likely to grow no more than 3 percent over the next few years - at a compound annual growth rate - compared to 10 percent in 2000-05, and 5 percent in 2005-10, according to Seabury, a transportation consultancy, and McKinsey predicts shipping oversupply will stay above 20 percent this year and next.
Zvi Schreiber, CEO of Freightos, a Hong Kong start-up that offers Expedia-like quotes for end-to-end freight shipping, says the shipping industry is "manual, inefficient and opaque."
KPMG found that a quotation for shipping freight typically involved 20 associated fees and, according to the Journal of Commerce, shippers each lose up to $150,000 a year when price volatility and staffing cuts force invoicing errors.
"This industry is broken, there's no question we have a serious issue," Jesper Kjaedegaard, partner at shipping and logistics firm Mercator International, told a recent shipping conference in Singapore. "Without technology, this industry is not going to move much further." Continued...