We need innovators and investors to level up the global supply chain.
If there’s one thing we’ve learned over the past year, it’s that we’re all connected. If a factory in China hits pause due to an outbreak of COVID-19, or a freighter gets jammed halfway through the Suez Canal, it can have enormous knock-on consequences for manufacturers, assembly plants, retailers, and other downstream industries all over the world. Given the stakes, you’d think that the logistics industry — which, by definition, is a truly global industry that touches every corner of our economy — would be the focus of endless investment and innovation.
The reality, though, is that surprisingly few tech startups and investors focus their attention on reimagining the global logistics industry. Silicon Valley is home to countless startups seeking to disrupt everything from dogwalking to drinking tap water, all promising to solve a problem which may, or may not exist. But few tech industry insiders pay much attention to the world of ocean freight, shipping containers, intermodal, supply chain visibility, and last-mile fulfillment.
That means that in today’s crowded startup ecosystem, the logistics space remains chronically underserved — and an enormous potential opportunity exists for investors and entrepreneurs that have the vision and determination to shake things up.
Too big to innovate?
It’s worth asking why, exactly, the logistics industry hasn’t seen more innovation. It’s true, of course, that many entrepreneurs simply don’t pay much attention to global supply chains. But it’s also true that because of its sheer scale, the logistics industry is an incredibly hard sector to understand, break into, and then attempt to change.
After all, it’s easy to understand how the dog-walking industry works; easy to imagine how tech could make that process better; easy to build an app that realizes that vision; and easy to convince individual dog walkers or dog owners to cough up a few cents apiece in order to streamline their experience.
When it comes to global supply chains, though, things get much more complicated. For starters, you need to understand networks of manufacturers, distributors, intermediaries, and end-users that span the entire planet. The sheer complexity of even local supply chains is difficult to grasp, let alone begin to transform through innovative technologies.
Creating and marketing infrastructure or software to serve this industry is tough, too, because the stakes are so high. Rolling out new technologies across the logistics industry is expensive, and the businesses that power our supply chains are necessarily highly risk-averse, so it’s hard to build momentum for major changes.
That doesn’t mean the logistics industry has no appetite for innovation. In fact, there’s plenty of competition in the logistics space, and companies are constantly looking for new tools that can help them get an edge. The problem is one of supply, not demand: there simply aren’t enough investors and innovative startups bringing new technologies to market.
Don’t fly solo
Fortunately, that’s now starting to change. Venture funds and other providers of capital are realizing that the logistics space is ripe for disruption: last year, investors poured $11.3 billion into supply chain startups, almost double the amount invested in 2020 and over five times more than was invested in 2017. We’re also seeing startups bringing compelling new technologies to market, from supply-chain visibility platform project44 to freight-focused AI provider Expedock or route-planning startup Searoutes.
Bringing these transformative technologies to market will take more than just a great idea or a smart algorithm, though. It will take a deep understanding of the industry, an ability to win the trust of top stakeholders within major global corporations, and a willingness to refine and adapt innovations to serve the industry’s changing needs.
At ZEBOX, we’re forging new paths by connecting global logistics leaders and innovative startups. By doing so, we’re giving logistics companies access to some of the world’s best and brightest innovators, while also giving entrepreneurs access to the industry expertise and connections they need to create viable, scalable solutions for the logistics industry of tomorrow.
Many top logistic companies are now also running their own R&D programs, and fueling in-house innovation by investing in startups, acquiring new technologies, and hiring new talent. Both approaches, however, are predicated on the power of partnerships between innovators and the industry they’re working to reimagine. The supply chain depends on connectivity, and disrupting the supply chain will also require us to forge new connections in order to unlock the power of innovation.
Change is coming
As everyone knows, an ocean freighter can’t pivot on a dime. It takes time, effort, and plenty of planning to change a ship’s direction. But once that change does come, and the freighter builds up momentum, it’s pretty much unstoppable.
We’re going to see something similar happening in the logistics industry in coming years. As more investors and innovators realize the scale of this opportunity, we’ll see a new wave of startups and disruptors seeking to use advanced technologies such as IoT and AI to make global supply chains more resilient, responsive, and efficient. And as more industry leaders realize the power of those innovations, we’ll see new partnerships forged that will bring these new technologies to scale more rapidly than ever before.
That’s an exciting proposition. In recent months, we’ve seen both the resilience and the potential vulnerabilities of our global supply chain. New technologies and ideas are needed to ensure our industry continues to serve the world’s businesses and consumers effectively, and to provide more cost-effective, robust, transparent, and sustainable solutions for our global society.
Not every startup will succeed, of course. But in an industry long dominated by a handful of giants, there are now real opportunities for small disruptors to gain traction, forge partnerships, and find a path to scalable success. The opportunities, for both established logistics giants and new entrants to the sector, are enormous. It’s time for investors and innovators, in Silicon Valley and beyond, to climb on board.
Charley Dehoney is the Vice President of ZEBOX America, the global incubator and accelerator for the supply chain, logistics, mobility, and Industry 4.0 sectors. Initiated in 2018 by Rodolphe Saadé, Chairman and CEO of the CMA CGM Group, ZEBOX has supported in less than 4 years nearly 80 startups. Headquartered in Marseille, France, ZEBOX also has established innovation hubs in Arlington, Virginia, as well as Guadeloupe in the Caribbean.