To kick off 2022, supply chain visibility providers announced record-breaking investment rounds, strategic acquisitions, expansions into new markets and new product offerings.
In spite of the first-quarter energy, the real-time visibility industry was satirically unsuspecting of a slowing economy accompanied by less import volume and inventory misjudgement.
These fluctuating market conditions led to multiseason, FreightTech industry layoffs and Q3 investment deals that dropped 40.7% from the past five-year quarterly average, according to PitchBook Data.
Entering 2023, shippers of all sizes will turn to their visibility partners to provide an even deeper understanding of their supply chains, hoping to reverse the previous year’s inventory mistakes and provide better on-time experiences for end consumers.
The question is: Are visibility leaders up for the challenge?
Layoffs: good business or value distress?
Employee dismissals were seen from FreightTech providers including GXO Logistics, Amazon, FourKites, project44, Tive and Flock Freight throughout 2022.
However, visibility executive leaders contend that industry layoffs showcased smart business during economic turmoil as opposed to problems with providing solutions to their customers.
“I do not think we can assume [layoffs] around visibility tools is in isolation,” said David Warrick, executive vice president of enterprise at Overhaul. “For example, [in] the banking sector, mega cap stocks and in big pharma, there have been downsizing efforts across the board. I think the opportunity for visibility tools now is around making it incredibly clear how they add value to a business problem, how they can show a real return on investment and are positioned to support a business working through tighter budgetary constraints.”
Rather than viewing industry layoffs as a threat to visibility’s long-term goals, founder and CEO Krenar Komoni of Tive, a visibility hardware and software provider, believes these lean decisions will generate more innovation.
“Lean is not a bad word,” Komoni said. “Many scrappy companies stayed lean for a long time. It gave them a DNA of longevity and they continued to innovate even when times were lean.”
Project44 founder and CEO Jett McCandless explained that in this environment companies focus on staying lean, make less risky bets and look to focus on the services bringing value to their customers.
“Some analysts say the economy is going to bounce back quickly, and some people are saying it’s going to be a 10-year recession,” McCandless told FreightWaves.
Moving beyond the ‘blue dot’
FreightTech experts expect to see that innovation come to fruition in 2023, even with visibility providers leveraging lean business practices.
While Ryan Schreiber, vice president of industry and growth at technology consulting firm Metafora, acknowledged the economy downtown provided opportunity to visibility providers to make lean decisions, customers will want more than the location of their shipment, or what he calls a “blue dot,” from these providers.
“I do see pressure on these companies to do more,” Schreiber said. “… Visibility is absolutely more than the blue dot of where the trailer is. You’re seeing other companies deliver on that promise in the visibility space — not by building another blue dot company but by building companies that leverage the blue dot to do more.”
Schreiber pointed to companies like Convey, acquired by project44 in September 2021 to use visibility data to prompt workflow automation in the e-commerce space, and Paxafe, an insurance tech company he is invested in that uses visibility data to predict issues in transit.
“I think you see more acquisitions by these legacy visibility providers of some tools,” he said.
McCandless echoed Schreiber’s predictions, calling simple, blue dot visibility “little V” and executing solutions with the blue dot data “big V.”
“We are the only company in the world that can do big V at scale,” he said, calling attention to project44’s 23 global offices that give the company the ability to leverage global shipping data in various modes of transportation from the supply chain comprehension of different cultures.
“The world isn’t homogenized,” said McCandless. “With collaboration, we can have a central place where all of these companies can resolve issues. That is really what big V is about.”
McCandless said the company is working on a big V solution to be released in 2023 that will allow customers to forecast and resolve issues without having to leave project44’s software.
Overhaul’s Warrick also recognized this was the future of visibility and that those just entering the market with blue dot ambitions won’t last long.
“The industrial metaverse paints a picture of a fully operational, three-dimensional digital twin with real factory output and real transportation networks functioning digitally mirroring real-time operations,” Warrick said. “Future solutions will be able to understand what a disruption looks like and avoid it, and the supply chain will transform from a set of static nodes to a dynamic environment where everything is visible and aware and will optimize continually by leveraging technology. … Supply chains and associated technologies will have to keep up.”
With an eye toward making these tools available to clients as soon as possible, visibility company leadership is in agreement that there is more collaboration that needs to be done. Having unique visibility providers in your network, as Schreiber mentioned, will help visibility go from an industry buzzword to a significant capability.
“The supply chain is a team sport,” said Tive’s Komoni. “The beauty of having a plethora of technologies in the supply chain is that it has helped usher in a tremendous era of interoperability and integration.”
Komoni discussed the Open Visibility Network, a group of visibility providers including project44, FourKites and FarEye that have agreed to share its shipment insight data through application programming interface exchanges to reach true end-to-end visibility.
One area in particular that each leader interviewed said was at the top of their product list were emissions calculators. The U.S. Securities and Exchange Commission is weighing implementation of an emissions reporting mandate that could be approved as early as 2023.
As the SEC continues to take comments from investors, trucking companies and others related to the industry, visibility providers have already started building out the technology that many shippers maintain will be difficult to compute.
“As a service provider in the industry, we absolutely have a role to play in helping our customers not only understand environmental impact but to provide analysis and guidance to enable the opportunity to lower the impact,” said Warrick. “We have been working with industry experts to fully understand the potential of new legislation as well as what will work best for the supply chain industry, in particular as it relates to transportation and scope 3 emissions.”
“Sustainability for us will be a combination of build, buy and partner,” project44’s McCandless said. “It requires a lot of nuances and different modes of transportation in different geographies of the world that have different rules and regulations.”
McCandless noted that the company is working with Amazon on a beta test in Europe, processing data from telematics companies Amazon’s carriers use to gain access to its fuel consumption to calculate over-the-road emissions.
In March, project44 also announced a partnership with emissions tracking technology provider Tracks, acquired by Transporeon in August (Transporeon was acquired by Trimble in December), giving its customers the ability to track emissions in their Visibility Operations Center.
New year, same strategy
For the most part, visibility leaders and technology experts don’t expect visibility providers to pivot too far off their 2021 approach toward business. That means keeping operations lean, focusing on ease-of-use solutions and partnering with companies that fill in their value gaps.
“Businesses will continue to focus on staying lean for as long as the market demands it,” Overhaul’s Warrick said. “I would expect to see a reduction in capital expenditure from big corporations. However, the best visibility solutions are built as a service, are quick to deploy, easy to integrate and provide value back to the business — both in economic downturn scenarios and times of growth.”
Tive’s Komoni reiterated that sentiment, contending a weaker freight market will continue to “force many companies in the supply chain and visibility logistics space to ensure they are providing solutions that solve problems, improve the overall efficiency of supply chains, reduce waste and continue to introduce innovations that drive supply chain performance going forward.”
Furthermore, if the economy does bounce back quicker than expected, McCandless sees collaboration remaining a key focus for those looking to excel in the visibility space.
“Supply chains are well on their digitalization journey,” he said. “It may take several years, maybe even a decade for full adoption, but that tipping point has happened. Now that starts to open up all these doors for innovation. Collaboration [among innovators] will solve a lot of the challenges within supply chains. That’s what gets me excited.”
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