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
Heading into the new year, I like to reflect on the emerging trends and innovations in FreighTech in the last year and share my predictions — what you can expect to hear more of in 2022. Read my 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 for 2019 & companies that are making the biggest impact — Hint — It’s all about keeping up with Amazon.
2021 was a year of high demand from investors to get in on FreightTech.
As of Q3 2021 for the third straight quarter, supply chain technology VC investment has exceeded $7 billion, up over 100% year over year, according to a recent report by Pitchbook. For pre-pandemic comparison, 2019 saw roughly $7 billion from Q1 and Q2 combined. This year has been characterized by higher valuations and larger checks, with the highest YOY growth from rounds in the late stage. We’re seeing new capital going after fewer mature companies to invest in, driving up demand.
2021 also had a theme of mergers and acquisitions in transportation and logistics. With this year’s fuel of cash enabling growth, one common strategy was putting it toward advancing supply chain visibility.
Then we had the continuing port congestion in US ports, particularly California, which had a moment getting mainstream attention this year, arguably much more attention than the supply chain issues of 2020.
It’s within this context — with some aspects of freight getting a mainstream spotlight plus a few niche aspects of FreightTech having their own industry spotlight — that we’re starting 2022.
I’ve chosen the following categories that I predict will be big areas of growth in FreightTech in the next year: computer vision AI, payments, capacity aggregation, TMS and OS, and eCommerce enablement.
Computer Vision AI
Computer vision (CV) is an area of artificial intelligence the freight industry is only beginning to explore. It has been estimated that the CV market in the U.S. will expand from $9.03B in 2021 to $95.08B by 2027. Anywhere we can take measurements or make decisions based on the visual world, there’s the possibility of using CV for that analysis and interpretation — in spaces such as warehouses, containers, trailers, roads, and curbsides and for objects such as boxes, dunnage, pallets, and more.
A voxel is a three-dimensional pixel — the word volume plus pixel — typically used in imaging applications like medical imaging. Voxel is a startup that uses computer vision to identify risk from security video footage. They are dedicated to reducing workplace injuries and improving efficiency in retail, manufacturing, oil and gas, distribution, warehousing, and transportation. Voxel was founded a year ago, and in Q4 2021, they raised a $3 million seed round.
This AI-powered solution connects to a facility’s existing security camera system, unlike other risk prevention solutions which require wearables and sensors on the person or equipment. With Voxel, companies use their camera footage that otherwise goes unmonitored. Voxel analyzes footage in real-time to detect problems and create an immediate alert. It can detect high-risk employee activity and unsafe work conditions — for example missing hardhats, vests, glasses, or footwear, operating forklifts incorrectly, blocked aisles, ergonomics such as poor lifting form, incorrect loading or unloading procedures, spills, and hazardous objects.
The goal of the solution is to reduce workers’ compensation, general liability, and insurance costs. Voxel does not track personally identifiable information or connect the detected behavior to the individual employee. It’s meant to alert someone on-site of a potential problem, correct behavior in real-time, and create a safer and more efficient work environment.
As eCommerce and the delivery economy increases the number of parcel and on-demand delivery vehicles on the road, cities have a growing need for a smart solution for curb space. Drivers circling for parking and double parking can congest traffic. These drivers contend with parking tickets, wasted time, and the greater chance of mistakes made while rushing to avoid a ticket. The problem is more complex than a parking spot management system; until now, curb space data has rarely been recorded, but it holds a wealth of information.
CurbFlow, headquartered in San Francisco, most recently raised $8 million in a seed round of funding in 2018. They have created their computer vision platform that turns video into data — counting vehicles or pedestrians, measuring wait times, and creating heatmaps according to usage. Delivery drivers can use the visualization tool curbMap to get a real-time reading of the availability of popular curb locations. With the positive results curbFlow has quickly seen — helping to reduce double parking in Washington DC by 64% (https://ddot.dc.gov/release/ddot-curbflow-research-project-finds-high-demand-pickup-dropoff-zones) — curb management is getting attention from other congested cities, (https://www.phillyvoice.com/philly-high-tech-solution-delivery-trucks-traffic-parking-streets/) and curbFlow will be making big impacts in the future.
Rabot is using video to build smart tools for fulfillment warehouses’ pack-out processes, the final step before packages are ready to be sent out. CEO Channa Ranatunga is committed to avoiding the common problem that plagues engineers — being so far removed from the end-user that the solution is less than ideal or introduces new inefficiencies. To prevent this, he spent three months working at a handful of fulfillment centers to learn everything he could about the pack station and the issues that workers experience.
Rabot designs robotics and software to help standardize the pack station, with the goals of reducing inefficiencies and errors, minimizing waste, and enabling transparency in the process that is often missing. Their solutions can help reduce the number of touches on a package or use visuals to measure the empty volume of a box and automatically determine the right amount of dunnage to use. With video data, Rabot uses AI for visual recognition to identify areas for improvement. Rabot, founded in 2018, had a pre-seed round of funding this year and raised $100K, and the company’s innovative usage of CV technology gives them the potential for growth in 2022.
Payments
Payers and payees of all kinds are demanding faster and cheaper methods of sending and receiving money, and the flames have been fanned by cryptocurrency and blockchain technology rewriting the rules for what’s possible. Various aspects of payments in freight are now getting their overhauls, from shipper payments to short-pay disputes to factoring.
BasicBlock was created to make freight factoring easier for trucking companies, inspired by Bitcoin and the ease of use for sending and receiving payments without a days-long delay. The goal is to solve the factoring problems of even the small carriers and brokers. Traditionally, the factoring process requires time and resources for manual invoicing, involves clunky interfaces, and lacks transparency on the payment histories of shippers and brokers. Smaller companies, those with a smaller cash flow as it is, find themselves with factoring limits and other barriers to getting paid quickly and seamlessly. BasicBlock is working to revolutionize the entire factoring process, making it simple and fast, without hefty fees. Their app is designed from start to finish for the convenience of the truck driver.
BasicBlock was founded in Omaha, Nebraska in 2018, when CEO and founder Taylor Monks learned about the cash flow difficulties that small carriers experience. New, contactless processes that came with the start of COVID have made it even more important for carriers to have streamlined, automated payments with document retrieval. BasicBlock raised $820K in its most recent round of funding in March 2021.
Founded in 2020 and reporting an impressive 3568% growth in 2021, OpenEnvoy is changing the way companies approach the accounts payable process and wasted spend. Typically, companies address AP automation with pricey consulting services. OpenEnvoy’s solution makes real-time automation easy and accessible, allowing companies to audit invoices before any payment is made and preventing overpaying suppliers due to mistakes. They offer the first of this type of solution made for freight audit. Shippers can avoid a delayed process for identifying payment errors, which might require multiple rounds of audits taking 30 days to six months before getting actionable findings. OpenEnvoy, on the other hand, works in real-time.
OpenEnvoy is the only AP solution that specifically helps companies eliminate wasted spend. Spend Insights gives transparency to spend issues through an easy-to-deploy dashboard to track metrics and disputes and show the billing performance of individual providers. OpenEnvoy brings essential analytics for a better-informed process that enables finance teams to scale their operations. In April 2021, they raised $6.5 million in a seed round. (https://www.prnewswire.com/news-releases/openenvoy-announces-6-5m-oversubscribed-seed-round-led-by-riot-ventures-to-capture-the-500b-financial-audit-market-opportunity-301267512.html)
Freightpay, headquartered in Los Angeles, is an early-stage startup that found its mission from the reported $140 billion that is disputed between shippers and BCOs and freight forwarders each year. The solution’s usability makes it likely to gain traction in 2022.
Freightpay’s solution handles accounts receivable and payable for forwarders and 3PLs by enabling automatic freight payments from shipping customers within their platform. The idea is to have an all-in-one place for transactions and payment data. Freight forwarders can request payments, either from the platform or simply by submitting an emailed form, and shippers can pay from the same solution with the link they receive. By simplifying this process, forwarders avoid chasing lost payments made with other payment processors. Users can create workflows to manage payments and reminders. Freightpay connects invoices to payments and manages the data analytics of those payments, including payment methods, payment intervals, and any short pay reasons from their customers. The solution helps forwarders and 3PLs save time, manage disputes, and gain access to data insights from these transactions.
Capacity Aggregation
Data analytics is driving a deeper understanding of inefficiencies and improvements that companies can make on their transportation spend. As a result, capacity aggregation is becoming increasingly an important strategy. It’s the reason for the surge in mergers and acquisitions this year. For the 12 months before November 15, 2021, there has been an 11% increase in the volume of M&As in transportation and logistics compared to the full-year 2020. (https://www.pwc.com/us/en/industries/transportation-logistics/deals-insights.html) These companies involved in M&A are responding by improving their reach, while the following three FreightTech companies are using technology to strategically pull capacity where it’s needed.
Newtrul is an aggregator of spot loads from different sources, essentially an “Expedia” for load board searches. They simplify the process of connecting shippers, brokers, and carriers while making it a better matching process that saves its users time. Shippers and brokers get a simple way to quickly post and update loads and can utilize their preferred carriers or expand to Newtrul’s network of vetted carriers. For carriers, the solution helps them avoid dead-ends that are common with load boards.
Newtrul, founded in 2018, was one of the first digital freight marketplaces to integrate their API with leading TMS providers, which eliminated the need for shippers and brokers to leave the TMS when trying to find capacity. Carriers get a free and easy-to-use search engine and booking tool. In 2020, Newtrul began working with McLeod Software, (https://www.prnewswire.com/news-releases/newtrul-announces-integration-partnership-with-mcleod-software-a-leading-transportation-management-system-provider-301185263.html) and in 2021, Newtrul announced their partnership with MerguryGate TMS. It is key moves like these that prove the growth Newtrul is headed for in the near future. In early 2021, Newtrul raised $2.25 million in seed funding.
Colony Freight has been around only a few months, since June 2021, but they already have the right strategy in action to bring reliable and quality service to their customers. They are an LTL freight partner out of New York City providing capacity in the surrounding states and Texas. More specifically, they are a network of carriers and cross docks designed to optimize capacity for LTL shipping, as powered by their platform. With this type of network, their customers get the benefits of competitive rates with a high quality of service from their carriers. Colony Freight also maintains transparency throughout the shipping process, providing real-time tracking and notifications.
On the other side of the freight transaction — carriers — Colony Freight stands out for their relationships with their carriers. They assist new entities with creating and growing a business as a carrier, taking care of paperwork and insurance through their own partnerships. They also offer a financing program for carriers to get running quickly with a new truck plus the opportunity for carriers to get consistent work. By helping new carriers get started, Colony Freight is creating a strong network for the benefit of their shipping customers. Much like Uber brought new car drivers to the taxi space, Colony is arming a new generation of over the road truck drivers with their focus on e-commerce rich, middle mile lanes. Colony has been able to find drivers operating in other areas (food and people delivery mostly) and entice those drivers towards box truck and sprinter van businesses, giving Colony first crack at engaging and hiring new truck drivers who are eager to grow their empires beyond a single vehicle. This strategy is unique and has already proven valuable for Colony who has attracted blue chip customers from the ecommerce and freight forwarding industries.
Pelicargo is a digital booking platform for air cargo that launched in late 2021 with origins in the MIT MBA program. Pelicargo helps match shippers and brokers with cargo capacity on airplanes. The same idea is used in trucking but had not previously been applied toward air freight, a $130 billion market where wasted available space is a common occurrence on cargo planes. Air freight is already significantly less efficient compared to other methods of shipping, in terms of fuel and other resources. Having the solution to match loads with capacity can cut back on waste, which has proven to be even more important since the start of the pandemic. Many small and medium-sized companies have difficulty securing capacity that is reserved for the biggest logistics companies first. Pelicargo helps smaller companies access capacity and provides rate transparency in the process, bringing an end-to-end digital solution to replace the outdated and time-intensive booking processes for air freight.
Pelicargo is currently in the pre-seed stage of fundraising and has begun testing with pilot customers as of the fall of 2021.
TMS / OS
As FreightTech innovations grow, there is more of a demand to design systems and platforms that are native to these new developments, that were designed for the technology in its current context. There are new, deep-diving systems designed for advanced capabilities while valuing simplicity for its users, and there are also new systems tackling wide, overarching needs for supply chain technology.
EvenFlow
EvenFlow is a demand-driven communications platform that eliminates age-old friction points between shippers, carriers, and other supply chain partners — in procurement, accountability, risk management, and loyalty. For many organizations, it’s taken the pandemic for them to realize their archaic planning and purchasing processes haven’t been able to keep up with changing demands, and these companies are only now establishing digital customer portals. The growing problem is, with a different tech stack for every supply chain partner, who has the time to become an expert in everyone else’s technology? EvenFlow answers by providing interoperable performance and resilience, leveraging standard intelligence streams to the leading ERPs, TMSs, and SCMs. They have a round table of industry leaders in retail, manufacturing, and transportation building a solution to break down old barriers and accelerate collaboration.
EvenFlow is currently an early-stage startup led by Joe Hudicka, who brings experience in global supply chain and logistics, ranging from the U.S. Department of Defense and later supporting Oracle as eCommerce was just beginning, helping the first online toy retailer navigate global direct-to-consumer delivery. He brings ambitious plans for EvenFlow, making it a company to watch in 2022.
Leverage AI was founded in 2018 and came out of stealth in 2021, positioning itself as the modernized supply chain control tower, delivering previously unattainable end-to-end purchase order visibility for companies.
Leverage eliminates the need to manually follow up with suppliers and freight forwarders to get purchase order status updates by automatically collecting those updates for every line item in real-time.
Leverage caters to companies that operate with a revenue-driven necessity for strategic supply chain management. Through AI-powered automation and white glove integrations with customers’ existing systems, the cloud-based platform covers an extensive number of workflows from purchase order lifecycle management, inventory visibility, shipment tracking, delivery status updates on bills of material and sales, supplier performance automation, and more.
Prior to using Leverage, supply chain and sourcing teams were spending an average of 50% of their time manually following up with suppliers and freight forwarders. With Leverage, they were able to eliminate repetitive manual tasks from their workload, spend their time far more strategically, and their companies reported an average of 7x ROI in the first year after implementing the platform.
Leverage is funded by a handful of well-known investors, including Mark Cuban Companies. The most recent funding was from a seed round in 2021, for a total of more than $4million in funding.
iON was created in 2018 to increase supply chain visibility and help resolve blind spots for small and medium-sized businesses. Typically, a business can expect visibility and tracking to begin once their goods are shipped, not any earlier. iON is the first supply chain company addressing visibility within the factory. There are production-line level tools that provide this information, but these are rarely utilized due to their complexity to integrate with. iON takes care of these integrations and provides a tool for monitoring the details of production and shipping. The result is a resource for every piece of the business’ network, from suppliers to customers, which helps reduce the chance of unexpected delays and reduce costs.
iON was founded by industry leaders with over 50 years of combined experience managing multinational supply chains. Their cloud-based visibility platform provides digital order records for easy management, a transparency dashboard for real-time reports, and interactive checklists to eliminate inefficiencies and errors.
eCommerce Enablement
eCommerce is on everyone’s radar in 2022, as it has been since the start of the pandemic. According to Adobe, U.S. eCommerce spending in 2021 will land between $850 billion and $930 billion. In 2022, that number could exceed $1 trillion. For a recap on the eCommerce growth since 2020, that year saw 42% growth compared to 2019. For 2019 compared to 2018, it was a much more standard 14% increase. Retailers are looking to meet the eCommerce demand and the accompanying consumer expectations for shipping, and these FreightTech companies are looking to help them get there.
Founded in January 2021, QuikReturn helps retailers manage reverse logistics for their local customers in the NYC Metropolitan area. They tackle what is typically a logistical nightmare, offering an end-to-end, streamlined return service. QuikReturn provides a courier service to pick up items for return on behalf of the customer. They aggregate these items to ship in bulk, which saves on shipping costs, reduces the number of trucks arriving at retailers’ warehouses, and allows retailers to more easily batch their returns processing. Retailers can see a decrease in shipping costs by over 30%, and this has the added benefit of reducing carbon emissions caused by inefficient freight usage.
Founder and CEO Ethan Susser created QuikReturn from his own frustrations with the traditional return process and out of a concern for environmental issues that wasteful returns contribute to. The QuikReturn solution integrates with eCommerce retailers’ websites, to provide a frictionless experience for the customer where they don’t have to contend with printing labels and remembering to drop off items for shipping. QuikReturn has raised $395K in funding so far, in a pre-seed round in July 2021.
Seattle-based startup FlavorCloud is a cross-border carrier network with worldwide shipping to over 220 countries. The traditional international shipping process has been riddled with complexities for global direct-to-consumer brands, where they have faced a high-cost and fragmented process to deal with any aspect of global trade, tariffs, customs, and their carrier network. Founders at FlavorCloud saw a need for streamlining this process from start to finish. They bring tracking and visibility, frictionless operations through automation and integrations, and optimization for every stage of transportation. When users need to estimate their landed costs, FlavorCloud helps calculate with 99.9% accuracy. As a result of the solution, the average user sees an international cart conversation rate of 11%, an increase of 80% on average, and a 140% year-over-year increase in sales.
FlavorCloud, founded in 2017, just announced they hired their first chief revenue officer, Mike Sanchez, and they plan to double their employee count by the end of 2022. Their recent growth looks promising, and they have the benefit of the explosion of eCommerce in the last year and a half working for them. Earlier this year, FlavorCloud raised $6.3 million Series A funding, for more than $10.1 million in total funding.
ShipHawk was founded to solve shipping problems for ERP-connected, high-volume retail, wholesale, and eCommerce companies whose needs don’t fit basic shipping options. For many retailers, shipping is the second largest cost after the cost of goods, and yet ShipHawk cofounder and CEO Jeremy Bodenhamer realized many retailers, especially those shipping large items with unique requirements, had no way of knowing their shipping costs in advance. ShipHawk created an all-in-one platform for shipping parcel, LTL, truckload, and home delivery to help retailers by taking care of the manual processes involved in managing shipping. They reduce shipping costs, errors, and time by automatically finding the right carrier and service, including comparing rates. Their automation extends to optimizing packing decisions and eliminating manual warehouse processes.
ShipHawk has secured $37.5 million in funding over seven rounds since its start in 2012. They recently brought in supply chain technology veteran Ron Riggins as CTO, announced December 2021. A funding round earlier this year raised $17 million, to be used for further developments of the platform and ERP and carrier integrations to support customers’ eCommerce needs for greater throughput.
In summary, 2022 will bring with it some new challenges and opportunities but will be very similar to 2021 in that, consumer demand will remain strong, keeping capacity tight and shipping rates high. These factors, along with low-cost capital, signal another banner year for FreightTech, LogisticsTech, and SupplyChainTech companies. There has never been a better time to launch a business in these categories and the world has never needed solutions more than it does now.
Cheers to another year and another batch of top-tier founders making their mark on the world’s most interesting and opportunity-rich industry!
