The Compelling Argument for a Digital Freight Platform — Be valued like a Tech Company
How an effective Freight-Tech investment can give an ROI of 10 times your company value
Digital is the word on everybody’s lips in freight forwarding, from demanding clients to the obvious cost savings, the impact of technology on freight forwarding has moved on from marking your company as a differentiator and is now rapidly evolving into a barrier to entry.
When considering an investment in ‘Freight-Tech’, it should not be seen as a cost overhead but instead, should be seen as a simple and effective way to increase the bottom line value of your business with immediate returns.
A great real world example of that is how freight forwarder Flexport and their good use of technology is received by the market:
Based on public information, Flexport moved over 70,000teu last year and have a value of over $900m. Compare that to a former Top 5 Trans-Pac forwarder, Apex Maritime, who sold to Kerry Logistics at a sale price of $175m (Kerry bought 51% for 87m) in 2015 having moved over 270,000teu.
Flexport can therefore command an implied value of $12,850 per teu moved versus Apex at just $650.
The difference of 1875% (19 times market value of a traditional freight forwarder) is a combination of the cost savings to transact each shipment using technology but also — and even more importantly — the scaling cost of a forwarder with a strong digital strategy is consistently decreasing versus the traditional norm of always increasing.
Even taking Flexport’s wider freight offering into account (compared to that of Apex), it is not unreasonable to state that a digital strategy coupled with a compelling digital platform could increase market valuation by a factor of 10.
Ten times the share value, ten times the value to you of a potential sale or merger, ten times the leverage with banks and financial institutions, ten times the bargaining power.
It is well worth considering this, as a Freight Forwarder, when you weigh up the importance of having a client facing execution platform to delight your clients.
Kontainers is a customisable, client-facing, execution platform for Freight Forwarders, deployed in an unbeatable timeframe, and with a proven track record of multiple on-time deliveries for top20 Global Groups
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