Electrification of Things: By Sea

Cantos Ventures
Published in
6 min readJul 19, 2022


Why we invested in Fleetzero

The global economy runs on ocean freight. Ninety percent of goods travel by sea at some point in their journey. The dirty secret, though, is that shipping accounts for roughly 2.5% of global greenhouse gas emissions, produces over half of the smog in Los Angeles, contributes to tens of thousands of cancer cases from particulate matter emissions every year, and burns the dirtiest fuel on the planet. You can walk on bunker fuel at room temperature. Its sulfur content is often thousands of times higher than is allowed in the diesel used in trucking (that’s what causes the smog). If you’re reading this then we don’t need to sell you on the need to electrify this critical industry, so let’s talk about shipping’s other major problem, and why we think Fleetzero can solve both…

Diseconomies of Scale

Have you ever flown in an A380, Airbus’ double-decker behemoth? Chances are you haven’t, because the thing’s so big it can only fly on a limited number of routes, can only land and dock at certain airports, and while the impetus for its design was to achieve economies of scale, it turns out passengers prefer optionality to savings. The airline industry learned the hard way that not only are there diminishing returns to scale, but sometimes the curve bends the other way.

The largest container ship classes over time.

This exact phenomenon has been playing out in ocean freight over the last few decades. Ships got bigger, bloating from a maximum 8,000 twenty-foot equivalent units (TEUs) in 2000 to nearly 24,000 TEUs today. Transport costs improved but infrastructure didn’t scale with the ships, which has led to a few unintended consequences:

  1. Only a limited number of deepwater ports can host these large ships so cargo has concentrated on fewer routes. In the U.S., for example, 40% of all imports go through the ports of LA and Long Beach. As a result, small ports have lost business and laid off longshoremen.
  2. Until 2016 the Panama Canal could only fit ships up to 5,000 TEU, and now its capacity is 15,000 TEU ships. Larger ships have to sail around Cape Horn, some of the most treacherous waters in the world, which adds an average of a month and a half to a voyage.
  3. As we learned through the pandemic shipping glut, the biggest choke points in our supply chain are our ports. The rate limiter isn’t ship capacity, it’s cranes and trucks, or “turn time”. Ships used to take days to unload and load. Now they often take 2–3 weeks… as long as it takes to cross the Pacific!
Trucks at a literal choke point at the Port of Long Beach. Larger ships make this worse.

In an interview with Bloomberg last year, Flexport CEO Ryan Petersen laid out the case for smaller ships running more frequently as one potential solution to our supply chain woes. Boiling it down, smaller ships would result in a higher average rate of flow at ports (i.e. lower turn times), alleviating bottlenecks.

Enter Fleetzero

When we met marine engineers Steven Henderson and Mike Carter through a friend in September 2021 (thanks Max!), Fleetzero was only an idea, but we immediately recognized that they were trying to solve supply chain problems just as much as they wanted to decarbonize ocean freight. Both founders come from oil logistics but to them, electrification just makes economic sense. With Fleetzero’s technology these twin goals go hand in hand. That tech isn’t boats, it’s batteries.

Fleetzero’s heavy-duty, containerized battery packs.

We’ve seen a few attempts to electrify ocean-going vessels over the years, but if a ship has long-range batteries built-in then it doesn’t leave much room for cargo, so most electric boating companies are focused on leisure craft, inland waterways, and/or ferries. Mike and Steven didn’t want to build ships with a fixed battery capacity, and they knew charging would introduce another bottleneck, so they asked “Why not swap batteries the same way we swap cargo?” If your batteries were shipping containers then instead of running a giant power cord to a ship’s excessively large built-in battery you could use ports’ existing infrastructure to swap just as much energy capacity as you need for the next leg.

Even though Fleetzero’s ships might stop many times to swap batteries this doesn’t necessarily mean they’re slower. First, smaller ships can travel faster. Second, as we established, smaller ships have faster turn times at port. Finally, it turns out most ships don’t sail as the crow flies. Since they often make multiple stops and caution biases captains toward land (e.g. sailing from LA to Asia along the ring of fire rather than past Hawaii), ocean-going vessels spend roughly 70% of their time within 250 miles of shore. All-in, Fleetzero estimates their delivery times would be on par with larger ships taking more direct routes, and in some cases would beat them. Not to mention the fact that electrifying ships’ drive trains creates more room for cargo since combustion engines are so large.

Swapping batteries more regularly avails Fleetzero of some scale economies, since battery costs are amortized over more ships. Steven actually had this insight when watching his daughter play with toy ships and modeled it out on the playroom floor, but here’s how they see it now:

There are a few other reasons we believe smaller, electric vessels are the future of ocean freight — even if Fleetzero’s ships are eventually fission-powered:

  • It could revitalize smaller ports and surrounding communities that have been starved by ships’ scale.
  • Since electric engines have far fewer moving parts they are much cheaper to maintain — whereas engine maintenance today is one of a ship operator’s largest expenses. (For example, lubricant is typically ~5% of a ship’s operating costs.)
  • Life at sea is made worse by the noise and vibrations from combustion engines. It’s common for seafarers to stuff newspaper between any two hard objects to make it easier to sleep — and sleep deprivation is a major safety issue at sea.
  • Fleetzero aims to be one of the few American flagged, American crewed shipping carriers. (This is actually required by law for any US-to-US shipping.) Domestic crews are nearly three times as expensive as “flagging out” but Fleetzero’s fundamentally lower cost structure (at scale) could make economic sense of re-shoring shipping.
  • When ships burn fuel they take on ballast for stability, but they might release this ballast in a different part of the globe. This can create problems with invasive species.

Funding Fleetzero

For all these reasons and more, we were excited to invest in Fleetzero alongside lead investor Breakthrough Energy Ventures, as well as McKinley Capital, Founders Fund, MANTIS, Sam Altman, and John Doerr. We couldn’t be more grateful to be a small part of their journey and cannot wait for what’s to come.

Want to board this voyage? Fleetzero is hiring!



Cantos Ventures

A venture firm built for concept-stage startups building the near frontier.