The wheels of global trade continue to turn, through wars, pandemics and economic downturns; and today a start-up company using a new technological approach to improve the performance of one of the older aspects of this industry – shipping – is announcing a large round of funding to double its growth.
Xeneta — an Oslo, Norway-based startup applying crowdsourcing innovation to the fragmented and often murky world of shipping to build transparent data and analytics for the industry — has raised $80 million, money it will use to build out its datasets and customers on more global routes.
Xeneta has already accumulated 300 million data points from “several hundred” of the world’s largest shipping companies, who contribute and subsequently extract output data from the Xeneta platform to understand whether they are paying market prices for their deliveries on certain routes. And mmore than $40 billion in public procurement that resides on the platform to date. However, all this is only the tip of the iceberg: Patrik Berglund, CEO and co-founder of Xeneta, said in an interview with TechCrunch that combined shipments by air and sea (the two channels that Xeneta covers today) total between 600 million and 900 million dollars depending on the season; and there are thousands More ▼ shipping companies and other participants in shipping.
“We believe we will have 1,000 of them on Xeneta in the near future,” he said. It aims for the biggest first: current clients include Electrolux, Unilever, Nestle, Zebra Technologies, Thyssenkrupp, Volvo, General Mills, Procter & Gamble and John Deere.
The funding values Xeneta at $265 million, the company confirmed.
Apax Digital, the growth equity arm of PE firm Apax, is leading the round, with Lugard Road Capital also participating. Lugard is an affiliate of the company’s previous backer, Luxor, and other existing investors include Creandum, Point Nine and Smedvig. Prior to this round, the company had raised about $55 million for a series on circles starting at 2013.
Innovations in e-commerce and fintech have accelerated the way the world finds and pays for goods and services, but when it comes to getting items from A to B to turn the wheels of this ecosystem, the journey is a little faster: delivery remains a fragmented and — subject to economic, climatic and social change — often unpredictable ecosystem.
Over the past few years, a number of technology startups have emerged, targeting opportunities to bring more modern approaches to the antiquated and unstreamlined world of shipping. PayCargo builds new payment products; companies like sender, Zencargo and Flexport have focused on freight forwarding; Flock Freight applies a carpooling ethos to trucking; Convoy also applies a new twist to logistics; Fleetzero believes electric freighters have range; and so on.
Xeneta is in yet another distinct category of freight and shipping services: business intelligence for companies operating in the industry.
As Berglund explained it, it’s a somewhat fluctuating and unstructured market: for starters, you have thousands of small and large shipping companies and the partners they use to do their work, as well as hundreds of thousands of businesses using these services. In addition, these interactions are often analog and influenced by multiple factors that can affect pricing and overall operations. Those looking to book a delivery job may not know what the current cost is for a particular route or whether it can be approached in a different, cheaper way. Those who have space on cargo ships do not know the best prices to offer potential customers.
Xeneta’s breakthrough was to build a platform where all these players could essentially share what prices they were paying at any given time for a particular route. His system then organizes that data and applies analytics around it to model how pricing is moving and what that might mean for connected routes elsewhere.
As with other crowdsourced logistics platforms (Waze is a good example here), the more data fed into the system, the more powerful it becomes. Today, Xeneta has definitely moved into the self-feeding category in this regard, although the previous years, when the company was just starting out, were definitely more challenging.
Initially, the company covered only one route – from a port in Norway to a port in China. But getting its first customers to take the leap to provide data on that one passage to prove Xeneta’s value proved to be a win-win: Berglund said things quickly improved as those customers entered more data, and others did too started doing it to get a better idea of how much they pay, what routes they use, etc. The data is now based on a 70/30 split between sea and air (doesn’t cover ground routes at this stage) and the data feed is active enough that when you visit the Xeneta site you see it ticking through as it updates as -more like a stock exchange. Interestingly, those who submit data appear to be less concerned about the competitive aspect of disclosing their own data to potential competitors: the value derived from knowing the bigger picture seems to outweigh this fact.
Interestingly, the company is not in the business of booking shipping routes, nor does it want to be, Berglund said.
“My background is in freight forwarding,” he said, so he knows the benefit of being someone who can provide this group with more data to do the job better. “Whether it’s a new digital shipper or an old player, they all need better data to run their business more efficiently.” He added that 95% of the market still mainly uses Excel spreadsheets to analyze historical and current data.
“I’m just amazed they still use that and fax machines.”
And just to be clear, it’s not the only one that has realized the potential to offer more smart tools to this ultimately modernizing industry. Others like Freightview we’re also building tools to make it easier for those booking delivery to get an idea of market prices.
“Cargo buyers and sellers are flying blind in a complex and opaque market. Xeneta’s world-leading dataset and cutting-edge platform provide unique access to detailed information and real-time insights, enabling data-driven freight sales and purchases,” said Mark Bate, partner at Apax Digital, in a statement. “This provides compelling value to their blue-chip client base – not just in sales or procurement, but also in budgeting and reporting, and increasingly in ESG monitoring. We are excited to partner with Patrick and the Xeneta team and help realize their vision.” Beith joins the Xeneta board with this round.