Freightos’ Chief Executive Officer Zvi Schreiber told American Shipper in an interview Monday that the company’s success has primarily come from helping freight forwarders better manage their rates and speed to quote by compiling a repository of their contract and spot rate data, and making it more accessible to them in discussions with their shipper customers.
The latest round of funding, $14 million in so-called B shares from six separate equity groups, comes as Freightos works its way through beta testing on the new public marketplace, a departure of sorts from its existing model. The public marketplace will allow shippers to parse rates from China to the United States (in the beta phase) made available by Freightos’ catalog of forwarder customers.
Among its biggest clients are CEVA Logistics, Hellman Worldwide Logistics, and Nippon Express.
Schreiber emphasized the rates available on the marketplace are solely at the discretion of the forwarder. A forwarder could choose to release some rates publicly, while keeping its contract rates with key clients out of the marketplace. Likewise, shippers using the marketplace can specify certain forwarders with whom they want to work in their search.
“The whole organization should understand the rates they have,” he said. “And they should be able to constantly compare it with other rates that are available.”
He gave an example of an ocean freight buyer who might have purchased capacity in the first quarter of 2015 not wanting to overpay in the fourth quarter. Procurement cycles are getting shorter and more frequent, according to Schreiber. Or perhaps it’s more accurate to say that a larger proportion of ocean freight is being procured in more frequent cycles.
“The once a year thing is losing dominance,” he said. “Annual tenders is only for part of what (shippers) do. People’s supply chains are dynamic. No one can sit down and predict their shipping one year ahead. Product cycles are quicker. Suppliers change. You have to respond to disruptions."
Schreiber noted that “shipping isn’t different from other industries,” citing the example of how generators of electricity have a base load they have to produce, and then they have to adjust further production based on dynamics like weather patterns, or the time of night people tend turn out their lights
It’s that growth area that Freightos is targeting with its marketplace. It requires no registration to peruse rates, but to get detailed information about the forwarder providing the rate (and to book the rate), users do need to register. Registration is free and bookings are confirmed within 24 hours.
Freightos’ approach, along with those from a host of other startups, is revolutionizing the way some people view the forwarding industry. Whereas forwarding has long been dominated by major global players with multi-continent footprints and local or regional forwarders that provide niche services, a handful of technology-minded companies have sprung up in recent years aiming to make the entire global shipping process more efficient.
The Wall Street Journal reported in August that Silicon Valley investors alone have pumped more than $1 billion into startup freight forwarding companies since the start of 2014.