How Companies in APAC are Digitising the Supply Chain
Investments in logistics businesses grew sharply during the pandemic years, with McKinsey & Company pointing to start-up funding across the sector almost doubling between 2020 and 2021.
Some of those investments have been huge, such as the US$935 million secured by US-based Flexport at the start of this year. Others, such as the seed funding for visual logistics business SpaceDraft, reflect the nascent aspect of the opportunity they are chasing.
We looked at three companies tapping into the trend of the digitisation of supply chains.
Shippit
Shippit provides multicarrier shipping software for e-Commerce and omni-channel retailers that takes care of an online seller’s local and international shipping - regardless of whether they ship from a central distribution centre, from multi distribution centres or from stores. In addition to highly valuable analytics for spend and delivery performance, the Shippit platform allows online sellers to take more control of their final mile delivery experience, providing fulfilment automation to replace manual time-consuming and complex courier decisions. It also allows sellers to put their brands front and centre of the delivery, rather than in the hands of the carrier.
The business raised US$48 million as part of a Series B capital raising this year, and is looking to use the cash to expand into Southeast Asia, which currently accounts for 10 per cent of its revenues.
This is a classic example of a digital logistics business that has benefited from big shifts in consumption patterns during the pandemic. Last year it facilitated over 40 million deliveries. That was up more than 300 percent compared to pre-pandemic levels.
At the time of the capital raising, CEO Will On said there would be a focus on bringing carriers, retailers and customers together in the leanest way possible to reduce waste and inefficiencies across the supply chain. “In our evolving industry, standing still means moving backwards. This raise allows us to move forward, ushering in the future our industry deserves,” he said.
Andalin
Indonesian digital freight forwarding company Andalin raised US$4 million earlier this year. The business, founded by former executives from Shell, Sqiva System and Sea Group is looking to simplify the import-export process for Indonesian companies looking to trade internationally.
The local Indonesian logistics sector is on a growth path and is expected to be worth almost US$140 billion by the middle of the decade.
Andalin is another logistics business that has thrived during the pandemic, having seen its revenues grow almost 700 per cent off the back of a tenfold increase in the number of containers whose shipment it has facilitated.
Shortly after the capital raising earlier this year the company signed an MOU with Becamex IDC, a leading Vietnamese industrial developer. Andalin's Co-Founder & CEO, Rifki Pratomo said at the time, “We started Andalin with the vision of simplifying Indonesia's international trade by integrating its highly fragmented services ranging from logistics, finance, and other trade services into one platform. Indonesia's export-import value grew from around US$300 billion in 2020 to US$430 billion in 2021, a remarkable growth, especially during the pandemic.”
The deal is significant, both due to Becamex IDCs scale and because Vietnam is Indonesia’s fourth largest ASEAN trading partner, and a top 10 export market.
Ofload
Ofload, a Sydney-based logistics aspirant, collected US$60 million in equity and debt in a Series B funding round, led by Singapore-based VC Jungle Ventures. with existing backers King River Capital, Bay Grove, Maersk Growth and Foundamental all following on the round.
The debt, which made up a third of the round, was funded by Liquidity Group fund Mars Growth, with the Founder Geoffrey Henry telling The Australian Financial Review “The debt component is solely to be more cash efficient with our M&A strategy”.
The company provides a digital platform designed to address the issue of waste in the Australian road freight industry. It says it does this by connecting road freight to thousands of reliable carriers.
According to investor Chris Barter, co-founder of King River Capital, “In the post COVID global economy of surging online retail, where supply chains are seeing more demand than ever before, Ofload's technology is optimising supply chains and driving efficiencies like no other technology in Australia. It's proving to be a key competitive advantage for local and global supply chain operators."
So - what comes next?
We expect to see continued investment in companies across APAC in Supply Chain & Logistics tech, especially where technology-fueled solutions can clearly demonstrate system efficiencies beyond just cost savings, extending their value to reducing climate impact and waste. We’re already starting to see consolidation in the market - as is evidenced through Shippit’s two acquisitions since raising their Series B.
With Vietnam and Indonesia both vying to become major manufacturing hubs as companies diversify their production away from China, and with tensions in Hong Kong giving Singapore the opportunity to strengthen its position as a major logistics hub for both Sea and Air connecting East and West, there is room for optimism.
That said, we do not expect all the COVID-induced “new normals” to remain. With consumers still settling into post-pandemic norms, not all e-Commerce subsectors will benefit equally. For example, basket sizes will likely fall as people return to showrooms for big ticket items - or simply travel instead.