It may not be sexy, but Freightos is tackling a wildly inefficient, trillion dollar business with its software-as-a-service (SaaS) pricing solution and a new Expedia-style marketplace. The question is, can it become the Expedia of importing and exporting goods and dominate the market as it moves out of the dark ages?
Founded by serial British-Israeli entrepreneur Zvi Schreiber and based in Jerusalem, the idea for Freightos came while he was heading up a previous company, the LED light driver manufacturer Lightech, which was acquired by GE Lighting in 2011.
"During those two years I learned about shipping and how manual and backward it is," Schreiber told Techworld. "It takes days just to get a price quote and there is no track and trace, it is really in the dark ages."
As a mathematics graduate from Cambridge and computer science PhD from Imperial College London, Schreiber was keen to get back into the software world. He sold one previous business, Unicorn Solutions, to IBM in in 2006. Now he wanted to create a platform to solve the problem he encountered in 2011.
"We spent the first four years of the company helping freight forwarders to automate their price quotes," he said. This SaaS rate management platform, called AcceleRate, now counts 1,000 customers using it to automate their pricing.
One of its first major customers was the multibillion dollar freight company Seva Logistics. "A company like Seva will work with thousands of carriers across ocean, air and trucking," Schreiber explained, "and there are no data standards, so we have to ingest thousands of Excel spreadsheets on a daily basis with all of the different prices."
By acquiring a Spanish company called WebCargoNet for air freight pricing rates, and creating a bunch of automated scripts for scraping those incoming Excel spreadsheets, Freightos was able to compile the first database capable of delivering automated price quotes.
Expedia for freight
Now that Freightos had this data set across the highly-fragmented international freight landscape it decided to launch an open marketplace, the "Expedia site" as Schreiber describes it, which would give commercial customers an automated price quote for their shipping needs. The typical customer is smaller e-commerce sellers on sites like Amazon and Etsy looking to import and export goods for manufacturing or reselling.
For example, a small business owner that specialises in importing Japanese anime comic books to be resold in the UK would need to import those goods from Japan before he is able to store and sell them on via Amazon.
So where "Amazon has solved some of the problems with becoming an importer," Schreiber explained, "by giving you a warehouse and a website to sell through, you still need to get the items from overseas into that warehouse. That is the biggest pain point which remains, which we are solving".
Before the Freightos marketplace these customers would have to phone up a freight forwarder, wait two or three days for a quote, and if they wanted an air and ocean option they would have to make two separate orders for that. Now it is all available in minutes online.
"I saw a lot of pent up demand for this, importers and exporters are frustrated with the old way because it is slow and cumbersome but also because it lacks transparency and they are overpaying and they don't even know," Schreiber said.
In practice, the user inputs what it wants to ship and to where into the Freightos platform. They are then delivered a list of price quotes which encompass air, sea and land freight options. Typically the results will display a price, and the time it will take for the container to be delivered.
This is the standard trade off with international freight, as air will tend to be the quickest but most expensive, sea vice versa and land connecting the dots. It's a free sign up and Freightos takes a two percent cut from the freight forwarder on any completed deals.
Freightos has pulled in $50 million in funding so far from GE Ventures and other venture capital funds. While the AcceleRate SaaS business "will probably be profitable next year", according to Schreiber, with the "marketplace business we're not even thinking about profitability".
This is because Schreiber and his investors view it as "such a big opportunity, the goal is to make sure we are the dominant marketplace, and our investors don't want us to be profitable, they want us to dominate the marketplace and worry about making profits later," he said.
So what about the elephant in the room: Amazon?
"Amazon isn't the elephant in the room as much as trampling all over you right now," Schreiber admits. So while Freightos currently partners with Amazon as a recommended service provider, "who knows? Could Amazon enter the freight forwarding industry themselves? Yes, it is possible, but right now they aren't competing with us."
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