Making It Big With A Tech Startup In The Logistics Market
Startups in the logistics industry witness unique headwinds to traction, even as the industry prepares itself for disruption unheard of since post-containerization.
A hearty welcome to the 21th edition of The Logistics Rundown, a weekly digest that aims to put some perspective on what’s brewing within the logistics industry. This is a space where we religiously dissect market trends, chat with industry thought leaders, highlight supply chain innovation, celebrate startups, and share news nuggets.
Over several editions of this newsletter, we’ve seen how microeconomic consumer trends can impact the general course of supply chains, forcing them to meander and jump through hoops to stopping them from a breakdown.
Then again, consumers cannot be made scapegoats for a system that thrives off such complications. Logistics operations and stakeholder interactions have been anything but precise over the years, spurring off the need for ‘freight-tech’ to make its way in the market. Several technology startups have mushroomed, attempting to plug the gaping visibility holes brought about by friction in inter-tier operations and troublesome legacy software.
While there’s a lot of certified potential within the industry for tech-facing startups to capture, the devil lies in the details. Being famous for its market fragmentation, the transport industry requires startups to tread carefully in their early stages—be it getting product-market fit or finding those ‘right’ early adopters.
TLR spoke with Nishith Rastogi, co-founder and CEO of Locus, a supply chain visibility startup, to understand how tech-centric logistics startups are faring within the industry. He pointed at the TMS segment’s Magic Quadrant and reflected on how different it was in terms of market incumbency compared to other software segments. “In the Gartner TMS Magic Quadrant, the most recently founded company is 12 years old. Have you seen any software Magic Quadrant that has not had a new entrant in over a decade like in the TMS market?”
“Have you seen any software Magic Quadrant that has not had a new entrant in over a decade like in the TMS market?”
The moat around the transport logistics business is pretty sizable, which includes the software business that caters to the industry. While entry into the market is a pain, understanding the buyers’ perspective might also be a challenge. With Locus being a company that works exclusively with enterprise-scale clients, Rastogi saw that his buyers were usually CxOs looking for solutions to real-life problems. LogTech is clearly not just a ‘nice to have’ technology flex.
“If we fail, the CEO of that company will get to know about that on Twitter from their customers,” said Rastogi. “A lot of effort goes into making companies place such trust on a logistics tech startup. Building credibility is critical, and that takes time. You can’t run a three-week hackathon and create greatness.”
In some ways, the current market opportunity is conducive for startups. Rastogi reckoned that this is a two-decade event in a century, considering that the entire logistics market is amid heavy disruption.
“In our journey to finding our product-market fit, we took the call of being focused on the technology side and working only with Tier-1 clients. That’s a tactical tip I have for founders—building an enterprise product-market fit is rewarding, as interestingly, the top Tier-1 businesses are also the best early adopters of technology,” said Rastogi.
This is revealing, as there still remains a certain degree of public skepticism concerning the agility of enterprise businesses to adopt cutting-edge technology. For robust large-cap companies to stay afloat in the market requires clearly established protocols that cut across the organization, including strict guidelines governing pilot programs with startups.
For robust large-cap companies to stay afloat in the market requires clearly established protocols that cut across the organization, including strict guidelines governing pilot programs with startups.
“The more clearly defined these protocols are, the more confidence you as a startup will have over the proof of concept (PoC) becoming a full-scale project. What you want to avoid is to keep doing PoCs. It’s important to check for a few qualification metrics before signing on a client for a pilot—if there’s a budget, there’s an immediate need, this is the moment, and the person in charge of the association has the authority to make a decision on taking the project forward.”
Startups will also do well to actively listen to their customers and to create channels that streamline customer feedback. Rastogi explained that Locus looked to separate the data points from opinions, as data insights derived from feedback helped with sales calls and quarterly business review meetings.
Companies can integrate tools like Chorus.ai with their customer service platform like Zendesk, which creates a structured insight into every ticket being raised by the client. Rastogi mentioned creating a customer advisory board (CAB) and a customer soundboard, which would help accommodate more minor feature requests and transparently ask customers to vote on specific new features.
Next comes capital. While venture capital investment within the logistics space has seen a meteoric rise over the last few years, the number of startups vying for it has also simultaneously increased. Rastogi contended that investors are fundamentally looking for ‘customer love’ on the startup’s products or services, stating that reference calls that lead investors to talk with clients will help significantly in putting a startup’s future prospects in perspective.
Finally, recruiting good employees is key to scaling up any startup. Rastogi mentioned that the value system based on what Locus recruits put comprehension and work ethic attributes over the candidate’s pre-existing skill sets.
Recruiting good employees is key to scaling up any startup.
“When I’m interviewing, I always ask questions to see how they answer it, the level of detail, and discern how they truly feel about what they’re talking about. Being ambitious is important—are they looking to win big or lose small? Companies are not meant to grow at double-digit growth rates every year, but for startups to do that, we need people who are looking to do things that are worth failing at,” said Rastogi.
It is critical to make sure the initial crop of employees is equally driven, with a mentality that their individual success remains synonymous with the startup’s success. This will inevitably help set a cultural precinct within the startup that can continue to be fostered as the company scales up, whether while expanding its footprint or welcoming new employees into its payroll.
The Weekly Roundup
🚢 Maersk has set the ball rolling for a low carbon future in the maritime industry, ordering at least eight methanol-powered vessels even as industry opinions remain mixed on the move. While some believe this is the way forward, a few experts warn that the move into green technology might be damaging for the company, as the costs to failure are extremely high—both financially and in terms of market position.
🚚 Bosch, the world’s largest auto parts supplier, has stated that semiconductor supply chains are now not in a serviceable condition, meaning the auto industry’s search for semiconductor parts will continue to rage on. The company mentioned that longer lead times are part of the supply chain now, and that semiconductor supply chains need to be bolstered independent of the automotive market.
📦 Walmart is now providing delivery capabilities to other businesses as a service via a new vertical called Walmart GoLocal. This service includes delivering products across all levels of delivery complexity and across a range of timelines. Walmart’s delivery services have grown tremendously since its launch three years ago, with its fulfillment service reaching roughly 70% of Americans.
⚓ The Ningbo-Zhoushan port is now operating at full capacity after being shut down over two weeks and partially open over the last week, all on account of a solitary COVID-19 case at the terminal. The world’s third busiest terminal, Ningbo is a key port of call for shipping lines from the Ocean Alliance, like Cosco, CMA CGM, and Evergreen.
“Every container ship that floats is basically in operation already today. There are no ships to lease anymore.”
- Soren Skou, CEO of A.P. Moller-Maersk, while commenting on the capacity tightness that has taken hold of the maritime industry
Want to talk with us? Have something you'd like us to cover? Drop your thoughts to firstname.lastname@example.org
We are TruckX, the Internet of Things plug to logistics. Check us out at