The Golden Era of Logistics Technology that never happened.
Anthony Miller
Making sense of logistics tech and processes | Helping good businesses become great | SaaS, Tech, Logistics and Supply Chain | Go-to-Market and Product | Content Creator
"We've always done it this way."
Now if that isn't the most dangerous phrase in business, I'm not sure what is.
What we've seen in the logistics technology world over the past decade is deeply rooted in that one phrase. This has proved costly for those providing the funding, and the companies signing-up to use the end result with high hopes. Aside from shattering many a supply chain professional's dreams of tech that actually helps them get their job done, what else has this era of lacking innovation done?
The VC money has dried-up, and interest in logistics seems to be at its lowest point since 2015 (according to McKinsey), but is all that about to change?
In case you missed the recent findings by McKinsey, here's a reminder.
In the entire year, there was less investment in logistics technology than what Project44 received in 2022. That's not just a decline, someone started pulling the rug and have kept running away with it firmly in their grasp. I doubt that 2024 has been much better, with down rounds a common theme and VCs struggling to find winning ponies to bet on. And no, venture capital is not supposed to resemble gambling, but when you look at the recent track record in our industry, you cannot help but wonder if some people got lost on the way to the horse track.
Lacking innovation has consequences
There's only so much disappointment that customers can take before they decide to look for alternative ways of solving their pain. What should be the "Golden Age" for logistics technology is rapidly turning into a period of extended stagnation, after what can only be described as an overeager start. The money flooded-in, as did founders and executives from other industries. And yet innovation did not follow.
领英推荐
If the McKinsey numbers are correct, then logistics technology has received an average of 10% of logistics VC funding over the past decade. Where did the money go? Can you name one highly innovative, VC-funded, logistics technology success story? Tough one.
The Covid-19 pandemic increased logistics technology spend, as a wave of founders from other industries cycled-in to logistics and supply chain in an attempt to find fortune and solve problems with what they probably imagined were transferable skills and solutions.
Oh you sweet summer children, this industry provides for its people with enough work and potential to last a lifetime, but treat it like any other industry and you will end-up shell shocked.
Is it all down to hubris?
In a recent Everything Marketplaces interview, Flexport's rebound CEO Ryan Petersen launched into an opening salvo that I believe illustrates why we're seeing a huge lack of innovation and a large number of failed attempts at building logistics technology.
In the space of ten minutes, Ryan managed to cram in the fact that freight forwarders are expensive, have no technology, and that their people are mediocre...
Want to find out what will drive logistics and supply chain tech innovation and where the money is going?
Click below to read the full article and to access all previous articles:
While you're there, please sign-up for the fortnightly newsletter, it is completely free and goes a long way! Alternatively, you can click here to sign-up directly!
Group Chief Commercial Officer at DSV A/S
3 个月When trying to solve a problem firstly try to gauge what the problem is. A lot of tech has been developed without a clear understanding of the customer and the customer’s customer and hence it has brought little to no value. A lot of tech advances are made by the traditional players in the industry - 3PLs focused on Courier, Road and Contract Logistics simply haven’t got a choice not to due to the slim transactional margins available on that side of the industry. The Air/Ocean side may lack slightly behind on the efficient use of technology to drive productivity and customer service, but to assume this is not a focus area would be naive. They understand the complexity of the challenge and are not waiting for others to find a solution.
Global COO/CCO
3 个月It’s the result of not talking to customers and understanding what fundamentally drives the industry. Technology is merely one out of many components comprising an end2end logistics value prop and these guys tried to make it THE value prop in itself. And even worse, in the course of trying to do that, they also turned it into a commodity and guess what; people dont pay extra for a simple commodity - they pay extra for the human touch = service. Mostly surprised that people are now surprised…
CEO @ AxeGlobal | Outsourcing | BPO | Logistics & Transportation Companies | Europe & USA
3 个月This is a bold and thought-provoking post. The logistics industry has undoubtedly been a hotbed for investment and innovation, but it seems the results haven't quite matched the hype. I'm particularly interested in your insights on the top 50 forwarders and where investors might focus next. Can't wait to dive into the newsletter! #logistics #supplychain #logtech #freightforwarding
Too many created “end to end solutions” vs understanding the “end to end problems.” Overall technology strategies go “people, process, technology” and it holds true. Logistics technology providers that haven't achieved their expected success often prioritized technology first, followed by processes defined by tech experts. They assumed "all logistics people are the same" and overlooked the primary purpose of the technology: to move freight efficiently.
Risk Intelligence Strategist | Founder | Bridging Military Precision with Business Acumen | Driving Innovation in Complex Environments | Enabling Resilient Decision-Making
3 个月Anthony Miller great post. As well as VC funding withdrawing I always feel that increased mergers and acquisitions is a real sign of lack of innovation. if your product truly brought value there would be no need to buy the competition ? Consolidation is normally a sign that companies are more interested in the business they providing meaning solutions. However the flip side of consolidation is that normally a new innovative start up with no sunken costs appears to transform the industry ? I don't see the logistics tech industry being any different. The VC's will be a bit more weary though.