Skip to main content

Money is Funneling into these Freight Tech Firms

Institutional investors catching on to the importance of a smoothly operating supply chain are responding by putting their money into businesses that want to simplify freight.

Freightos, which operates as a digital marketplace for air- and ocean-freight booking and shipping management services, went public on the Nasdaq on Jan. 26 under the ticker “CRGO,” opening at $22.77 per share before reaching a high of $31.15 per share on the first day of trading. In the time since, the stock has dipped as low as $7.10 per share and sat at $9.20 per share as of 11 a.m. Thursday.

Freight rate management platform Freightify has secured $12 million in a debt and equity Series A funding round. The funding will be used to help launch new functionalities and expand the company’s product roadmap, global sales presence and channel partnerships, as well as strengthen its marketing and global brand awareness.

For Freightos, the company’s public debut was months in the making, after it first said in May that would skip the traditional IPO in lieu of linking with a special purpose acquisition company (SPAC). The company raised more than $80 million through its merger with Gesher I Acquisition Corp, and saw business boom amid concerns of capacity constraints and rising freight costs. Lead investor British asset manager M&G PLC contributed $60 million, while Qatar Airways put in $10 million.

Related Stories

In November, the company reported third-quarter revenues of $4.7 million, up 56 percent over the year-ago period. Freightos doesn’t expect to reveal its fourth-quarter and full-year revenue performance until April, but indicated that approximately 211,000 transactions were completed on the platform during the end-of-year quarter, up more than 117 percent from 97,000 in the year-ago period.

This brought total freight transactions booked across the platform in 2022 to 668,185, exceeding internal targets for both quarterly and annual targets and representing 154 percent growth compared to 2021. The platform transactions’ gross booking value (GBV) reached $610.8 million in 2022, up approximately 102 percent from 2021.

Freightos says it has experienced record platform transactions in each of the previous 12 quarters, continuing growth in the fourth quarter of 2022 despite the global freight market contracting.

The Israeli company’s number of unique buyer users that digitally book freight services across the platform grew 37 percent compared to 2021’s fourth quarter to approximately 15,600. Carriers selling on the platform, primarily on air cargo booking platform WebCargo, grew to 35 in Q4 2022, for 25 percent growth from the prior-year quarter.

After the company officially public, Freightos CEO Zvi Schreiber called for patience in a statement to shareholders.

“Bookings on our platform are growing fast and consistently, but turning our growing transaction volume into massive revenue and profit will take time,” Schreiber said. “If you are a patient investor who appreciates how digital platform businesses are some of the most valuable and defensible businesses on the planet, if you saw the impact of digitalizing retail, travel and financial services, and want to be part of the next big digital revolution, that of global shipping, and if you understand it will take years, I think we might be the right investment for you.”

The capital raised from the SPAC merger will be invested in further scaling the business, increasing transaction growth and revenue, further developing the company’s technology stack, driving additional value for customers and improving margins.

Freightify wants to be Shopify for freight forwarders

And for the newly funded Freightify, the growth numbers also seem promising—albeit vague—with the private company saying it tripled revenues over the past year.

More than 200 freight forwarding companies providing global logistics services across 45 countries use Freightify to digitize their business, with some of these customers having reported reducing processing time by more than 70 percent and a “substantial cost saving in doing business.”

Freight forwarders use Freightify’s platform to get rate automation solutions to digitize their rate procurement, rate management and quotation processes with ease.

The platform helps forwarders create a digital storefront for their customers, and also offers track and trace solutions showing the live location of vessels and automated milestones.

Freightify’s rate management and quoting capabilities equip freight forwarders to procure, manage and quote freight prices in less than two minutes, the company claims.

Instant Rates via the Freightify platform
Instant Rates via the Freightify platform

The $12 million Series A was led by Sequoia Capital India with participation from TMV and Alteria Capital. The round also includes returning investors Nordic Eye Venture Capital and Motion Ventures.

Founded in 2016 and based in Singapore, Freightify initially started as a marketplace where freight forwarders can search, book and track freight. This experience in automating sea freight paved the way to a pivot toward offering software as a service (SaaS).

“Various marketplaces around the world are attempting to become the Amazon of services for freight forwarders, which will help,” said Raghavendran Viswanathan, CEO of Freightify, in a statement. “We believe in empowering the freight forwarders and are taking the Shopify route by selling a SaaS product to enable them to manage and create their own communities.”

Both Freightos and Freightify are expanding their offerings in a time when much of the freight forwarding industry remains constrained by manual processes, often still running on paper, Excel sheets and phone calls to communicate a price quote for a shipment.

“For too long, freight forwarders have been restricted to spreadsheets and legacy processes to do business. We set up Freightify to remove the heavy lifting of manually providing quotations, accepting email/telephonic bookings, managing documentation, coordinating and tracking shipments,” said Viswanathan. “Freightify solves these challenges by giving them and their customers a live pricing platform like the ones used by travelers to compare airfares, showing real-time rates on a single screen.”

Viswanathan, a DHL alum, referred to freight forwarders as “the travel agents for global trade.” He added that the company is currently expanding in North America, and has been rapidly broadening its reach across Europe, Australia and key regions in Asia Pacific.

The true test for Freightos and Freightify going forward will be how they can weather the declining freight rates over the past year. According to the Freightos Baltic Index (FBX), the average cost of shipping container across all major global shipping lanes as of Thursday is $2,214, down 77.1 percent compared to $9,660 per container on Feb 4, 2022.

While some level of congestion lingers at U.S. ports across the West Coast, East Coast and Gulf Coast, the expected easing of capacity by the end of this year or next would spell pressure for freight forwarders that have made big money off the previously soaring consumer demand.

The investments come as the current consumer spending climate already impacted one of the supply chain’s most-discussed freight and technology companies. Digital freight forwarding giant Flexport cut 20 percent of its workforce earlier this month amid a reduced volume forecast.