General Electric Co. is turning its full attention to the supply chain software sector, snapping up the cloud-based, rail shipment reporting company ShipXpress Inc. in an effort to incorporate digital technology into its traditional industrial operations.
Boston-based GE already has considerable assets devoted to business software, but the latest move shows that the 124-year-old manufacturing giant is doubling down on its strategy to become an information-management company. The acquisition could help GE create new revenue streams by helping its customers handle data, analytics, and digital collaboration long past their initial purchase of equipment.
GE said August 30 that it had acquired Neptune Beach, Fla.-based ShipXpress, with plans to fold the business into its Chicago-based GE Transportation unit, and combine ShipXpress' cloud-based collaboration and rail-shipment reporting software with GE's Predix data analytics platform for monitoring industrial assets.
That combination will give users in the industrial rail shipping industry an information advantage by delivering assistance with rail operations, car accounting, and interline settlement, GE Transportation spokesperson Mailee Garcia said in an email.
Over the long term, GE plans to leverage the acquisition to grow beyond its current range of logistics services in rail. "The combined business helps us provide new outcomes to modes beyond rail. We expect to have offerings in truck and intermodal, too," Garcia said.
GE already makes products to help rail shippers manage inventory by tracking railcars; managing the operations of transloading terminals and rail yards; connecting shippers to railroads; managing the billing process; and providing management information.
"Many customers would welcome a solution to improve efficiency and effectiveness in their logistics network, because a lot of in-transit inventory is carried on rail and a lot of safety stock is kept to protect against delays," said Lance Saunders, an assistant professor in the Department of Supply Chain Management and Analytics at Virginia Commonwealth University. "GE has all the data surrounding the growth and importance of supply chain in the economy, and sees an opportunity to expand this strategy into a rail market that, on the surface, seems to be behind other transportation modes in terms of the maturity of information flow."
As the behemoth continues to build its ability to support the flow of information, GE's next challenge will be facing the nuts and bolts of making the merger work. Over the course of the next 12 months, ShipXpress will become a part of GE Transportation's Digital Solutions business, led by Seth Bodnar, chief digital officer at GE Transportation and president of GE Transportation Digital Solutions. Within that division, ShipXpress will be integrated into the Optimization Solutions team, led by executive general manager Kirk Knauff. ShipXpress co-CEOs and cofounders Seth Maerowitz and Raghu Misra will also join GE, reporting to Knauff as they continue to manage the company's 200 employees in Florida and Colombo, Sri Lanka.
The company will continue to support ShipXpress' current products and customer base, and over time will accelerate development of enhanced offerings for rail shipping logistics, Garcia said.
GE declined at this time to disclose the terms of the deal. The purchase price and other details will be disclosed when GE releases its next quarterly earnings report.