The Next Frontier in Global Shipping Logistics: A Look at (Techstars ’18) Qwyk
Over the next several months, I’ll be highlighting some of the “non-sexy but important” companies from Techstars Kansas City which are solving problems that are real everyday issues affecting the world. With an imminent economic downturn soon to come, we continue to be excited by companies that are optimizing expensive and indispensable industries. One of those, which was part of our 2018 class, is Qwyk. A company which is digitizing the shipping and logistics space.
Let’s begin with first understanding an early disruption in international shipping: the Panama Canal. The Panama Canal is a 48 mile long man-made waterway that uses a number of locks on each side to lower and raise ships to allow them to pass between the Atlantic Ocean and the Pacific Ocean. The Panama Canal was built to lower the distance, cost, and time it took for ships to carry cargo between the Atlantic and the Pacific Oceans.
Before the canal, ships had to go around the entire continent of South America. A ship traveling from New York to San Francisco saved around 8,000 miles and 5 months of travel by crossing at the canal. The canal cost $375 million to construct 一 over $8 billion in today’s dollars. The Panama Canal is considered to this day to be the largest physical feat of engineering. This effort was well worth it as economists estimate that the canal’s benefit to the world economy is $6 billion annually 一 and we’ve reaped those benefits for the last 100 years.
International logistics is a huge, expensive lift.
And while we have a way to cut between the two oceans, much of the rest of the industry is not operating so differently than the days when shipping lines sent ships all the way around Argentina. Today, freight brokers who work to bring a shipping container from China to San Francisco rely heavily on old technology, paper, and handmade spreadsheets from thousands of data sources to connect their clients to cargo, space, and scheduling information that exists, but in a very fragmented market.
Traditional logistics companies make money primarily by exploiting information asymmetries, such as knowing how to combine shipments to load a full container rather than a partial one. This leads to high labor costs and limited transparency in the market.
By now, we expect to know who is picking us up by car and how much the ride will cost. We want to know our risk ratios on a mortgage with much more accuracy than we did in 2007. Meanwhile shippers are still struggling to get the visibility they need from their logistics providers, with about 40 percent of inquiries made to logistics companies’ customer services desks relating to shipment tracking. The shipping industry is today where taxi services and mortgages were a decade ago.
Qwyk is changing this.
Qwyk’s current products gather data from multiple sources and allow subscribers to construct data that their customers require. They leverage the data that would otherwise only exist in PDFs or Excel files bringing greater visibility to logistics and reducing the need for redundant and time consuming communication between parties.
Between a wealth of data and industry expertise, Qwyk is well positioned to create new, and optimize existing, communication channels used by logistics market participants. Where much of the market still operates as though this is a massive zero-sum game, Qwyk believes that by optimizing the buy and sell experience, and everything that follows after, every participant will benefit, and ultimately the end-consumer will be better off.
Much like Priceline made it possible for consumers to book the best flight by seeing and comparing schedule, price and reliability information, Qwyk makes the logistics market more informed. Markets that incorporate more information at a faster pace, tend to be more efficient, and efficient markets benefit the economy, reducing waste and missed opportunities.
Qwyk is a great example of a startup solving big problems within an industries we all take for granted but are the backbone of our global economy. And, already Qwyk’s customers include Maersk’s Damco Logistics and DHL, two powerhouses in the industry.
The global logistics market is valued at over $8 trillion and through continuing globalization, is expected to grow to over $15 trillion in the next 5 years. And with an economic downturn possible in our near future, the economy requires transparency of price, quality, time and environmental impact to keep trade effective and competitive. Like the Panama Canal, it’s time for the next 8000 mile shortcut.
