The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
The supply chain industry has faced a series of challenges over the past few months, including Convoy’s shutdown and the recent layoffs at FourKites. While these events create an impression of widespread instability in logistics technology, that’s not the case — there’s plenty pointing to how the industry is continuing to grow.
I have encountered more innovation across the entire logistics ecosystem this year than I have ever before. It shows how supply chain companies are digitizing their processes from procurement to payment and how picking the right log tech partner is vital.
A recent study by McKinsey shows that technology investments in logistics continue to grow.
“Some 87% of shippers reported maintaining or growing their technology investments since 2020, and 93% said they plan to maintain or increase their spending over the next three years,” the study says. The study also shows that shippers and providers are moving beyond foundational technology into the next frontier of productivity which come from leading-edge solutions such as real-time transportation visibility, robotics, network digital twins and real-time insights.
And although we read negative news stories daily and we see occurrences of events in the logistics industry such as strikes, bankruptcies, layoffs at tech firms, security incidents, weather events, etc., there are also many positive things that occurred in the last year. The logistics industry, now more than ever, is an incredibly connected network of companies and individuals who are extremely passionate about this industry and will work countless hours to move this industry forward.
Private equity (PE) and venture capital (VC) money might not be as accessible as a few years ago, but there are plenty of opportunities where these companies will continue to invest in new technology as witnessed by a continuously increasing number of startups. These FreightTech startup founders are equally passionate and motivated to create new or improved solutions to improve the efficiency of the industry and to create capabilities we have not seen before.
This has become abundantly clear when talking to both investors but also to founders of startups.
As for the larger VC- and PE-backed tech companies, we have seen several close shop such as Convoy or Slync. But we have also seen the same in the non-tech side with companies like Yellow Corp. Most recently, we saw leadership changes at Flexport in which the CEO got ousted. Similarly, we saw a management shakeup at FourKites with several executives being made redundant and a 15% layoff in its global workforce. This all creates the perception of a lot of instability in the market even when others are continuing on their growth trajectory.
It also increases the importance of picking the right solution partner or what I like to call the right “value creation” partner.
No longer should tech vendors think in terms of selling solutions but rather think of selling value creation mechanism enabled by their platforms. But equally important, as companies start this journey with this partner, are other factors such as the vendor’s financial stability, its workforce that can support the project, its culture, its ethical standards and its physical global presence.
What is equally important to investors is the moral compass of the CEO, the ability to attract the right talent, being able to execute on strategic sales plans and the partnerships with key technology providers and trusting that the right leader is in place long enough to see those plans through. The right log tech partner won’t rely on gimmicks to sell your product but will prove its value in droves by helping you overcome the obstacles you’ll inevitably face.
End users should continue investing in technology to enable their supply chains to attain a higher velocity. This in turn will help with the many points of friction that exist today and the increasing new events that will occur in the future. Visibility will remain a key to providing not only transparency but create insights that will go beyond supply chain execution and will assist companies in better overall planning.
The key to success of these technologies is picking the right partner that will walk alongside your digital transformation with the vision and the runway to be around for the long run.
About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.