Digital Logistics Startups Are Both Challenge And Opportunity For Industry Incumbents

Digital Logistics Startups Are Both Challenge And Opportunity For Industry Incumbents

Every five days a logistics startup is born.

Or at least so it seems given the numbers. In a recent study, we identified more than 400 of these disruptors worldwide that have sprung up particularly over the last couple of years working on every aspect of logistics – from freight forwarding, brokerage, and long-distance transportation, to warehousing, contract logistics, and last-mile delivery.

Along its entire value chain, the logistics industry is facing disruption. It’s gradually being digitalized by agile, innovative startups capitalizing on the industry’s high number of transactions and large amounts of data, and large logistics incumbents will no longer be able to fight back using their size and global breadth alone.

But is this a threat or an opportunity for the industry? While admittedly the business models of these upstarts are poised to eat into the revenue of established giants, the technology-driven solutions they are developing also represent a springboard to fuel next-generation growth and innovation strategies in an industry long in need of a 21st century upgrade.

  

The Race to Invest

Five major startup clusters dominate the landscape: online platforms, asset management solutions, robotics/autonomous vehicles, shipping execution & tracking, and data and analytics solutions. While funding is still not at the level of leading business-to-consumer and sharing-economy disruptors, these new logistics enterprises are attracting serious investor interest – more than $11 billion in investments over the past decade. While the total number is significantly below funding for B2C startups, the amount has been trending upwards in recent years, highlighting the acceleration path logistics startups are on.

The largest percentage of new logistics businesses are focused on online platforms and data-driven services – areas that are easily scalable and require little fixed-cost investment. But rapid technological evolution means that all identified startup clusters are seeing a steady stream of new entrants. In line with increasing amounts of funding for logistics startups, annual funding rounds have quadrupled since 2007.

Source: Forbes