Online shipping marketplace vendor uShip Inc. said today it has landed a $25 million investment from global logistics service provider DB Schenker, and will use the funds to accelerate the development of its freight automation software platform.
Austin, Texas-based uShip provides freight-matching services linking truckers with individual shippers, small to mid-size companies that ship less-than-truckload (LTL) freight, and high-volume enterprise shippers.
Schenker's investment deepens its ongoing relationship with uShip. Last year, the Essen, Germany-based logistics firm inked a five-year agreement with uShip to adopt its Ship PRO software in order to create an online trucking platform called "Drive4Schenker."
Drive4Schenker, which launched Feb. 1, allows Schenker to automate its road freight business, which includes managing 25,000 approved carriers and delivering 10,000 loads per day throughout Europe, according to uShip.
Schenker has no plans to take uShip off the market and use it as a proprietary platform, uShip CEO Mike Williams said in a phone interview. Instead, Schenker decided to make the deal—which it calls its largest equity investment in a digital company to date—as a vote of confidence in changes sweeping the logistics and transportation sectors, Williams said.
"The old way of doing business, where people had to fill out paper forms, then look for a fax machine, now can be accomplished with a couple taps of your thumb," Williams said. Williams took over as CEO just a week ago, replacing interim CEO Jim Martell, who is now executive chairman of uShip's board.
Until recently, it was unusual for logistics providers like Schenker buy venture stakes in startup firms. However, the appeal of e-commerce has drawn billions of dollars in funding from logistics firms as well as the traditional sources like venture capitalists, according to a recent report from the consulting firm Accenture.
Logistics firms may expand their financial investments in startups, either to claim exclusive ownership of a new technology or to buy an ownership stake in a growth market, said Jeff Smith, a supply chain management and analytics professor at Virginia Commonwealth University.
In the latter model, large corporations are increasingly using their investment capital to speed the development of new technologies by small firms, he said. By providing working capital for these "sandboxes," corporations gain by keeping a tight connection to basic research and a direct link with potential end users, Smith said.