2023 Freight & Supply Chain Technology Predictions — and the Startups Changing the Game
As 2023 kicks off, I’d like to take a moment to share some emerging trends and innovations in FreighTech that I’m seeing and make some predictions about what we can expect in the coming year.
You can read my 2022 predictions here: What we can expect in FreighTech, LogisticsTech, and SupplyChain Tech for 2022 and a few of the companies coming for their piece of the prize, 2021 predictions here: Top Trends in Supply Chain Technology for 2021 and the companies leading the way, 2020 here: Top Trends in Logistics Technology going into 2020 — How companies are keeping up with Uber, and 2019 predictions here: Top 4 Areas of Interest in Logistics Tech going into 2019.
The end of 2022 has shown a swing in the opposite direction in terms of venture capital investments. During the height of the pandemic, when the supply chain was at its worst, supply chain technology was in high demand. Now that global trade is beginning to even out, investments are starting to cool.
Q2 began the descent in funding enthusiasm for supply chain startups with a 19% drop. In Q3, venture funding fell 56% year-over-year, down to $3.3 billion, according to Pitchbook.
Funding for supply chain tech start-ups was growing by a few billion dollars per year, pre-pandemic, for close to a decade. In 2021, investors surged and spiked growth by 80% year-over-year. 2022’s investment totals will likely fall somewhere in the middle of the spike and the measured growth of years past.
I believe there is going to be a reckoning of sorts in terms of what technology we see getting funded. For 2023, tech start-ups that reduce the number of people needed to keep the supply chain moving are going to be the big winners. The pandemic has shown us, more than once, that human labor is a major uncertainty in the supply chain, and uncertainty creates weak spots. Startups that can digitize documents and automate mundane tasks and help companies do more with fewer people will be in the spotlight.
Interestingly enough, companies are willing to pay more for software with that kind of capability. The crisis has highlighted both problems as well as opportunities in the supply chain which means we should be seeing a lot of legitimate innovations in technology going forward.
With that in mind, I’ve chosen the following categories that I predict will be big areas of growth in FreightTech in 2023: managed logistics networks, financial infrastructure, API aggregation, and port terminal/rail depot visibility.
Managed Logistics Networks
One of the biggest weaknesses revealed in recent years was how over-extended many supply chains were. As a result, many companies are in the process of restructuring and shortening their supply chain wherever possible. Managed logistics networks and technology services that help automate logistics and smooth out supply chains are going to be in high demand as restructuring continues. While much of the focus has traditionally been on final or last-mile delivery services, we will likely see more attention being paid to the middle miles in the coming years.
WARP provides a customizable transportation service that is centered on the middle mile, picking up loads from a customer’s distribution center and delivering them to stores or wholesale partners. In addition to offering different vehicle sizes, ranging from sprinter vans up to a full-length 53’ trailer, as well as reefer services, WARP shines by connecting customers to cross-docking facilities, which can help consolidate loads and cut down on fulfillment costs and delivery times, while adding a suite of automated and digital tools that focus on supply chain optimization.
A pioneer in supply chain start-ups founded WARP: Troy Lester, founder of Covet Shipping. Partnering with, Daniel Sokolovsky, who created Berkeley Delivers as well as AxleHireWARP has hit on middle mile technology.
“What we’ve done is we’ve built a software platform that connects cross-docking facilities, and different sizes of trucking companies and different sizes of trucks, to stitch together a digital LTL network. And so basically, what’s happening is we’re putting tools — back-office tools, front-office tools, logic and optimization, and things like that — into the hands of everyday operators,” Sokolovsky said.
ClearJet offers customers a zone-skipping network by utilizing airline capacity. The software reads the customer’s address and then secures the ideal flight path to that location on either freight or passenger planes. By eliminating the number of touches per package, overall transit time and cost are reduced, as is the need for multiple LTL shipments to distribution centers or warehouses. Additionally, package visibility is increased due to fewer moving parts, allowing for more accurate ETA predictions for customers.
While it’s not necessarily direct-to-customer, it makes a fair approximation and can be immensely helpful for companies with diverse customer locations or inconsistent product volumes. Because of the zone-skipping via airfreight, the overall length of the final mile is reduced. ClearJet has a “BYOC” (bring your own carrier) policy, meaning the system works with all final mile carriers and can be easily integrated into current logistics networks and operations.
ClearJet services also include sorting packages for the correct destination and customer and applies to both domestic and international shipments.
Perishable shipping networks have been gaining in popularity due to the rise of meal kit delivery services. Cold chain, in particular, can be notoriously difficult to execute profitably and is more prone to issues than typical supply chains and shipping. Grip brings something different to the table. Labeled a “smart logistics engine,” Grip automates much of the shipping process by connecting ecommerce stores to 3PLs and carriers. Grip has created a dynamic logistics solution that assigns various shipping values, such as carrier, shipping service, warehouse location, box sizes, etc., based on current network conditions.
One of the most interesting capabilities of Grip is that it will automatically adapt and adjust itself to customer feedback in real time, effectively closing the logistics feedback loop holistically. Users can monitor KPIs and track delivery, transit times, and failure rates which, when combined with customer feedback, can be used to create a root cause analysis and effectively adjust and improve overall service levels.
Additionally, the Grip dashboard provides adverse weather event tracking and can keep customers informed in the event of delayed shipments. Grip successfully raised $2 million, pre-seed, in early 2022.
Blue Truck offers a different take on logistics and final mile deliveries, specializing in large, bulky items like furniture, offering furniture sellers the opportunity to “have the same ability their peers selling parcel-sized items have” without the concern of the logistics necessary to sell furniture online. As most e-commerce brands can rely on parcel carriers, a managed logistics network that specializes in furniture is a niche market that will be rife with opportunity.
With a background in Uber as well as other tech companies, founders Peter and Johnathon Hsu have created a logistics network that has a built-in differentiator. What sets Blue Truck apart from the competition is that they focus more on the customer experience as part of the delivery service. The White Glove Delivery provides customers with enhanced communication from the driver as to the exact delivery time in addition to assembly and set of the new furniture in the customers’ home.
Founded and backed by some legendary folks from the final mile space, FetchGoat is building technology tools and applications to support small final mile delivery providers in an effort to aggregate the capacity so desperately needed by today’s brands and 3PLs. Following the successes of players like OneRail and Grand Junction, the team at FetchGoat aims to arm mom and pop couriers with the most modern tech stack available today so even the smallest players can compete with regional and national couriers like Veho, FrontDoor Collective, Ontrac and more.
While FetchGoat is starting with the tech tools needed to run a courier business, eventually it plans to aggregate the small and midsized players its supporting, and offering that capacity to larger, more established players that need flexible, reliable capacity.
Financial Infrastructure
FinTech is already a cornerstone of the modern supply chain. So much so, that everytime a shipment travels in one direction, money travels in the opposite direction. In many instances, the speed of the supply chain is dependent not on the speed of the cargo carrier but on the speed at which they get paid. Add that to just how quickly things can change; take spot rates for example, and it’s easy to see why automated payment systems are going to be in high demand. Financial infrastructure has several possible venues, from lowering operating costs to reducing the number of people necessary to handle payments and invoice processing, all of which will play a vital role in streamlining the supply chain.
If you’ve followed my previous predictions, it should come as no surprise that OpenEnvoy has made the list for a third consecutive year. OpenEnvoy allows companies to audit invoices before they are paid and is one of the only solutions on the market today that eliminates wasted spend without the need for expensive consultation services. The system audits invoices in real-time before the payment is issued, eliminating overpayment due to audit mistakes which are quite common. As a traditional audit process can take anywhere from 30 days to six months before producing actionable findings, OpenEnvoy’s real-time solution has been revolutionary in the industry.
Moreover, OpenEnvoy provides transparency into spend issues through a user-friendly dashboard that can be used to track metrics and invoice disputes as well as track the billing performance of individual service providers. To this day, OpenEnvoy remains one of the few cost-effective means of audit processing through an out-of-the-box solution instead of relying on a consulting firm.
“We created OpenEnvoy to address the fact that there wasn’t a fixed-cost, tech-first freight audit provider which provided white-glove service. OpenEnvoy was built out of a personal need, with each of the founding team members having been directly responsible for auditing billions of dollars in spend. The global pandemic created an acute awareness that finance departments lack the tools required to scale their operations, and invoices are an immediate opportunity to increase cash flows,” said Matt Tillman, founder, and CEO of OpenEnvoy.
Originally known as Quali, Loop is a payment infrastructure for logistics companies that utilizes technology to digitize contracts and other transactional documents, such as inspection tickets and bills of lading. Loop is designed to prevent errors and exceptions from happening and does so by organizing users’ data through an application programming interface (API) that meshes with several third-party service providers. Using that data, shipping invoices can be matched to payment agreements, allowing for precision cash flow tracking and real-time invoice audits.
Under the hood, Loop uses both AI and machine learning, but rather than using optical character recognition; it works via a combination of computer vision and a natural language processing system. All of that to say, the Loop system can be adapted to work with any template, making it universally applicable, regardless of the document type.
Co-founded by Matt McKinney and Shaosu Liu, both of which helped create Uber Freight, Loop raised a total of $6 million through seed funding and approximately $24 million through a Series A round. In its first year, Loop has handled over $1 billion worth of transactions.
Fuel cards aren’t new to the trucking industry, but OnRamp goes beyond providing just a fuel card service. The OnRamp solution helps trucking companies maintain expenses through digital, tax-compliant expenses solutions, which can help keep track of driver expenses and control overall spend. The fuel cards provide real-time security features in the event the card is lost or stolen for added peace of mind.
OnRamp also offers payroll services that streamline driver payments while providing flexibility on a case-by-case situation, which was designed with driver retention in mind. The biggest draw for OnRamp is that it is focused on drivers specifically, which isn’t typically common among most FreightTech companies. The team is comprised of some amazing technical talent, well established executives from the trucking industry (specifically fuel cards) and the CEO is from the credit card processing/payment space, making this group very special and uniquely positioned to make a difference in 2023 and beyond.
Founded by supply chain veterans Scott Deerwester, Andrew Jillings, and CEO Mark Baines — the team at Buzzpay knows well the cash flow challenges that can be created by changing supply chains. Originally focusing on building digital tools to automate global trade for freight forwarder, the team at Buzzpay recently pivoted to trade finance because it was the single most attractive element of the platform they were building.
“All the forwarders cared about was cashflow and getting paid so we asked ourselves, why would be build anything else?” Baines comes from a supply chain and finance background while Deerwester and Jillings have both held several executive roles in global transportation companies like Tigers, BAX Global an UTI. This team of high powered founders is among the best I’ve seen and is a testament to the horsepower entering the logistics tech space over the past several years.
API Aggregation:
API aggregation is becoming a necessity rather than a nicety. It tends to be fairly common throughout the industry that companies are operating with a number of disparate systems, especially those that are still operating on legacy systems and dated ERPs. There are some new FreighTech startups that are helping bring a little cohesion to these systems and creating tools that allow for higher levels of functionality.
Axle API is an interesting premise that is still in early access. Designed for the trucking industry to integrate and onboard electronic logging devices (ELDs), the Axle API allows developers to integrate telematics data from several different sources. Once coded, Axle will transform all data into a singular, unified schema.
In addition to the sandbox approach for development, users will have more options in how they choose to manipulate or utilize their data. Using the Axle system, developers can essentially create their own applications and create custom programs tailored to their company.
The ‘Expedia’ for load board searches, Newtrul aggregates spot loads from different sources, simplifying the process of booking loads and saving time for shippers, brokers, and carriers. Shippers and brokers can easily post and update loads and can choose to work with their preferred carriers or select a vetted carrier from Newtrul’s network. Carriers, on the other hand, benefit from avoiding deadhead miles and have wider access to available loads.
Newtrul was something of a pioneer in the digital freight marketplace as they were among the first to integrate its API with transportation management service providers, which eliminates the need for brokers and shippers to leave their TMS portal. Newtrul also has an excellent track record in its choice of partnerships, like McLeod Software in 2020 and MercuryGate in 2021.
In 2022, the company received another $5.3 million in funding.
“We are going to be investing heavily in the software that carrier reps and truckers used to find each other, and that will be ancillary to our marketplace,” said Newtrul CEO and co-founder Ed Stockman. “The marketplace is where the transactions happen — there’s a lot of free software that we can provide to both sides to make their lives easier, make communications easier, and those are the tools that we’re going to double down on.”
The BlueX API essentially allows carriers and freight forwarders to expand their business through an integrated ecommerce platform. By utilizing the API, carriers can create a user-friendly digital booking platform, making it as easy to book freight as it is to book a flight with a specific airline.
For freight forwarders, BlueX can create branded portals that allow the forwarders’ clients to browse through their carriers, rates, and available dates through an automated and digital platform. This hands-off approach to booking can expand service hours and provide a higher level of service to customers. Built-in analytics can help both carriers, and freight forwarders get a better insight into their customers.
BlueX has also simplified the payment process — a pain point for shippers operating internationally. The digital wallet allows for payments to be made to service providers around the world in a matter of minutes. BlueX also allows shippers some flexibility when it comes to paying for freight transportation. With the “Pay-it-Later” option, shippers can choose to delay a payment for a period of time for better cash flow management.
Port Terminal & Rail Depot Visibility
Visibility has long been touted as a cure-all for the logistics industry. While it might not fix every issue, better visibility could have a profound impact on the way freight moves, especially at ports and rail depots. Through the course of the pandemic, ports were inundated with containers which effectively clogged supply chains moving inland. Despite the relief in congestion in our ports and rail depots in America, many think (myself included) that these critical pieces of infrastructure represent the “final frontier” in visibility for North American transportation.
OpenTrack is a port and rail visibility system that was designed to be integrated into existing tech stacks. As an all-in-one platform, the system combines all available carrier, terminal, third-party, and proprietary data sources, providing a complete view of international freight shipments.
OpenTrack covers 97% of all global shipments and is integrated with all major carriers, terminals, and railroads. Exception notifications can be set for shipments that provide ample warnings in the event of delays or stops in movements which can be used to prevent detention and demurrage charges.
Where this system is especially viable for intermodal shipments as freight can be tracked from the port to the railyard as containers make the journey inland.
Rather than focusing on general shipments and freight, Gnosis instead focuses on container lifecycle management by labeling, tracking, and prioritizing containers from the initial load to the return of the empty equipment. In particular, Gnosis breaks the container down into three macro-cycles; booking, tracking, and scheduling. The Gnosis Freight platform is likewise broken down, with each macro-cycle specifically laid out for a holistic view of freight movement from start to finish.
The main draw of Gnosis Freight is the end-to-end visibility created within the supply chain. Gnosis supports intermodal transportation and has the capability to track rail and air freight in addition to containerized ocean freight.
Additionally, Gnosis Freight provides a suite of “bolt-on” options that increase functionality and utility, offering a range of services, including (but not limited to) ISF filing, invoice auditing, and cost optimization software.
Shipzzer is an all-in-one solution for rail depot management. Railyards can manage every aspect of their depot through a singular dashboard and can benefit from a wide array of automated processes.
Automated report generation is of particular interest from this company. With 600 pre-generated reports, many rail depot processes can be streamlined and simplified, including repair tracking and scheduling and container entry/exit.
Shipzzer is one of the only platforms on the market that has a pay-per-use option, as opposed to a fixed cost or CAPEX, providing a little more flexibility for users in terms of cash flow management.
In summary, investors and venture capitalists are still making deals, but they are looking for systems that specialize in automating or enhancing technology that is already out there. While many of the supply chain disruptions from the past two years are still lingering, the dust is beginning to settle, and we are seeing the global supply chain being restructured towards resiliency and efficiency. As such, we will continue to see growth in these areas and plenty of opportunities for innovation.
