What are (some of) the transport and logistics incumbents up to?

I was really pleased to see an “Incumbent” category in the Top 5 Digital Contenders from the TPM 2018, because in the media the high profiled startups get a large part of the attention. Flexport, NYSHEX, Freightos and the like are grabbing headlines, however, despite exponential growth, they still only touch very few customers compared to the large incumbents.

This is not to say that this won’t change, and their thinking definitely also impacts what the incumbents are doing, but as a shipper, you will more likely to experience the industry change through their day-to-day dealings with the “regular” names such Maersk Line, MSC, Cosco, Kühne+Nagel, DHL, Expeditors, Nippon Express, INTTRA…to name but a few. None of those are standing still either (and they as a minimum all involved in “something with blockchain” as highlighted by Lars Jensen).

So, to start with the most used “interface”, INTTRA, it has been growing steadily and now process 45 million container orders annually. It has launched new products, such as C-FAST, but perhaps more interestingly has also acquired the empty equipment handling platform, Avantida, last year. A clear signal that INTTRA is looking to expand beyond the pure ocean transport.

The second most used interface is actually Maersk Line‘s website, but although it was a digitally torrid 2017 with the Petya-cyber attack, close 100% of all bookings are still processed electronically and the website share is growing. Søren Skou has often stated the aim of continuing to remain at the digital forefront, but has also taken action to support this by creating a new “Growth Unit”, as well as an engaging in an increasing amount of external partnerships, such as with the accelerator, Plug and Play, the JV with IBM or building a new insurance platform with EY and Microsoft.

One aspect of the cyber attack I think people overlook is that there is no faster way to clean up all the legacy systems that every large organisation has. It is a painful way of doing it, and you would never choose that path yourself, but once it has been chosen for you, you do get benefits from it, which ultimately could mean that you can work on a platform much closer to that of the startups. Of course, this does not mean that your decision making processes also speed up, but at least you are not slowed down by your system platform.

CMA CGM is also aiming for the same space, launching a new mobile platform, improved web site functionality etc, and partnering externally, perhaps most notably through the launch of Ze Box, a startup incubator based in Marseille. Whether this (or Maersk Line’s version it) will work is still too early to tell. Other industries have had mixed success with it, but the signal effect is strong, and you won’t know if you don’t try.

From a shipper perspective though, although the ocean leg is (somewhat) interesting, the bulk of time is spent on trucking/short haul, which is perhaps unsurprisingly seeing the majority of investments as well, both from a startup as well as a corporate perspective.

The best example is probably XPO, who is investing USD 450 million in developing new digital solutions in 2018 alone. The first delivery of the year is an API interface allowing for web integration of LTL cargo. To me that kind of movement makes perfect sense. APIs allow a completely different level of integration with your customers than the traditional EDI protocol, tying yourself closer together and using one of the main advantages that incumbents have over startups: existing (long term) relationships with actual customers.

Perhaps not considered an incumbent, but a player that could have a huge potential to change how customers and suppliers interface is WiseTech. At its peak in February it was valued at USD 3,7B (February). It has since dropped, but its CargoWise remains one of the most popular back end software for freight forwarders – an obvious partner for some of the new startups who can provide a tested, appealing customer frontend.

Looking at the startups is exciting, and stories of funding rounds and cryptocurrencies will dominate the media, but at the end of the day, what the customer chooses is what wins – and you are as much, if not more, in danger of being disrupted by your existing competitors as you are by people just entering the industry with passion, a good idea and a bag of cash. Although that isn’t a bad start 🙂

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Jesper E. Thomsen

Jesper is the owner of e-thomsen, and you can read more about his activities under "about".

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