In the heady days of the Internet boom, a number of venture capitalists invested in Internet logistics startups, while others chose more traditional logistics service providers.
In the heady days of the Internet boom, investors hoping to cash in on the dot-com craze couldn't sign checks fast enough. Even the comparatively staid field of logistics attracted its share of interest. Lured by the prospect of high returns and profitable resales, a number of venture capitalists invested in Internet logistics startups—primarily exchanges of one form or another—while others chose more traditional logistics service providers.
Despite confidentiality agreements, some of the funding details leaked out over time. And when they got wind of the size of these investments, many of those familiar with the companies acquired were left scratching their heads and wondering if the due diligence had been conducted by a team of experts from Mars. Anyone who knew anything about the industry, they agreed, could have warned the investors that there was no way they'd ever achieve the returns necessary to justify these investments, particularly in the warehousing industry.
Unfortunately, when this finally sunk in, the new owners reacted by tightening their purse strings and attempting to jack up prices. The inevitable result was a further erosion in returns and in many instances, massive defections among customers. As a result, many did not survive. Casualties ranged from the 75-year-old Burnham to newer entrants such as Webfreight, Translinx and SubmitOrder.com. Others managed to keep their doors open but are hanging on by a thread. There are some who would say that investment bankers are the worst thing that's ever happened to the logistics industry.
Of course, not all logistics acquisitions or investments have been disastrous. Some companies have become more stable under the new ownership. Particularly successful have been the intra-industry acquisitions such as Exel/Ocean Group,UTi Worldwide/Standard Corp. and Kuehne & Nagle/USCO. There is every indication that these acquisitions, which expanded the partners' global and domestic capabilities, were both strategically and financially sound. UTi Worldwide, in particular, benefited from its alliance with Standard Corp., which allowed it to expand into areas beyond its core freight forwarding business.
The investors themselves generally fall into one of two categories of buyers—strategic and financial. A strategic buyer usually is one seeking to serve new markets or new industries and provide different kinds of services that fit its overall corporate logistics strategy.
A financial buyer, on the other hand, is one who knows a good deal when he or she sees it. To me, this is the best of both worlds. Assuming there is some strategic logic to the acquisition, buying a company with good returns at a fair price generally results in a successful, productive transaction.
As the economy continues to improve, there've been some signs of life in the acquisition arena. Outsourcing once again is on the upswing, and there appears to be a resurgence of venture capital interest in the logistics industry. Recently, I found myself talking with a representative from an investment group-owned company that is attempting to sell it for the original purchase price, despite heavy losses and serious erosion of its customer base.When I asked who would buy it under those circumstances, he indicated that it would have to be a strategic buyer. Since the strategy of such an acquisition escaped me, I pressed on until he finally admitted that they simply had to find "the greater fool."
In spite of its age, the logistics industry still has plenty of challenges to grapple with, new technology and new customer demands among them. We need wise men and women at the helm—not fools. Let's hope that as our industry gears up for its long-awaited recovery, it's not derailed by people trying to make a fast buck.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.