
Freight Startups Attract Silicon Valley’s Attention - shahryc
http://www.wsj.com/articles/freight-startups-attract-silicon-valleys-attention-1438875678
======
saosebastiao
I'm involved extensively in logistics, and although I'm not Flexport's target
customer nor involved in their specific space of logistics, I can easily say
that they are the most exciting new thing in logistics since the container.

The thing is, they aren't doing anything revolutionary. They are doing the
same exact things that a lot of companies have done for decades. What makes
them revolutionary is 1) They are doing, in one point of contact, a variety of
tasks that normally requires 3-10 points of contact. Tracking, quotes,
customs, forwarding arrangements, carrier connections, contracts, and
payments, all in one stop. 2) They are doing it faster, better, and cheaper
than anybody else around.

~~~
bluedino
Regulations are the hard part about freight. Each state has different rules on
things, it's really crazy.

~~~
calpaterson
That was true in the container revolution also. Malcom McLean (inventor of
modern shipping containers) had to sell his trucking business when he bought a
shipping business because because the regulator at the time did not allow
anyone to operate a trucking company and a shipping company at the same time.
There were also rules in the US at various times which prevented people from
operating a trucking/railroad company across multiple states as an anti-
monopoly measure. Madness when you consider that this means shipments have to
be unloaded at state lines!

~~~
patmcguire
I know that the history of shipping containers might not sound like the most
exciting thing in the world, but The Box is a great book
[http://www.amazon.com/The-Box-Shipping-Container-
Smaller/dp/...](http://www.amazon.com/The-Box-Shipping-Container-
Smaller/dp/0691136408)

Shipping rules used to be crazy

~~~
afarrell
This book had a profound impact on my life for a span of 1.5 years

~~~
eru
How so? I read it too, but I didn't see much impact..

It could have done with a few illustrations.

------
character0
"Many freight veterans and analysts are skeptical of these efforts, saying
forwarding is too complex and too dependent on longstanding relationships for
new online entrants to compete."

Because that's never been a problem technology has overcome.

Any industry with veterans stating this sentiment is ripe for change. Not
because an online app is going to solve all the worlds ills, but because there
are people resisting progress, keeping entire industries in a holding pattern.

~~~
kato
The veterans aren't "resisting progress", as much as protecting their own
interests by using their experience. It may be at the cost of other people,
but I think it's short-sighted to call them luddites. Currently, they have no
incentive to invest in tech in the way of a silicon valley startup backed by
VCs.

If the aim is progress to everyone's benefit, tech will make its mark once
it's in the hands of some of the established players through acquisition or
other means. Until then, I think startups will have a hard time winning over
customers from established firms, as their inexperience will cause errors,
which will cost their customers more than any markup of a less efficient
company.

~~~
Chinjut
For what it's worth, the historical Luddites also were protecting their own
interests, rather than fundamentally motivated to resist progress. (I mention
this with no judgement one way or another of their actions)

~~~
kato
Very true!

------
sleazebreeze
I work for a large NVOCC/freight forwarder that has a large IT department and
builds nearly all it's software in-house. My part of it has been building
migrated applications for various customer service functionalities and the
kinds of systems we're migrating from are beyond shockingly bad.

Today, moving a shipment requires the operator to go between 4-6 different
applications and fill out the same information in multiple places. The data
doesn't go anywhere and is often recorded in terse 3-letter codes that result
from ancient databases that can't be upgraded. In fact, it's a custom database
server running in an emulated environment because none of the hardware has
long since stopped being supported. It's pure insanity.

Flexport looks like they're making a lot of the right moves and I've been
following them with equal parts interest and trepidation for my company's
future with competitors like that on the rise.

If I lived in San Francisco, I'd apply there in a heartbeat because I think
this industry is overdue for some serious competition and I'd rather be the
disrupter than the incumbent. So many of the processes are done manually
because of 25-30 years of process cruft building up and the pain of doing it
differently isn't greater (yet) than building a proper system to do it.

The bigger the ship, the slower it is to turn and I'm not sure the solution is
more tugboats.

------
js2
I guess this is the next upheaval in shipping. I think the last upheaval was
with the introduction of the shipping container. A fascinating read on the
subject:

[http://www.amazon.com/The-Box-Shipping-Container-
Smaller/dp/...](http://www.amazon.com/The-Box-Shipping-Container-
Smaller/dp/0691136408)

~~~
ghaff
It's also interesting in that it touches on many of the factors that can
inhibit the adoption of new technologies: lack of standards, regulations,
entrenched interests like labor agreements, and limits imposed by existing
infrastructure.

------
jbondeson
I spent a decade working with and writing software for LTL freight and 3PL
companies on the receivables automation side and all I have to say is I hope
these companies are successful.

There are tons of opportunities for efficiency gains all over these companies
as they are some of the most low-tech back office operations I've seen.
There's a definite gap between the biggest companies and the rest. These
companies are notoriously conservative on all facets of their business, and
they are a very tight knit industry. They all know what each other are up to,
and they're leery of being the first mover on a technology.

This is one of many "old school" industries that are going to see some of the
biggest innovation in the coming years. That will only be accelerated if we
see fuel prices start to inch up again.

~~~
thedogeye
Wow, want to come in and take a look under the hood at Flexport? email me:
ryan@flexport.com

------
ThomPete
From this thread
[https://news.ycombinator.com/item?id=9799007](https://news.ycombinator.com/item?id=9799007)
I learned how hard it is to do anything in this field.

None the less, if someone find a way to solve it, it's truly going to be
transformative.

~~~
noir_lord
I think the trick will be to create a digital version of a _part_ of the
system that already exists and then gradually simplify down to something more
sane.

Otherwise it'd be really easy to drown in the almost endless complexity (a lot
of which doesn't need to be there but accumulated).

~~~
ThomPete
From what I understand a lot of the problem isn't tech dependent but rather
legal, standards, union etc related.

~~~
noir_lord
Absolutely, which is why if I was doing it I'd focus on a small part of the
industry until I had some traction then simplify that part before moving in to
the next.

If you try to eat the whole pie you'll choke.

------
rottencupcakes
Flexport's hiring for basically every role under the sun

If the idea of revolutionizing one of the most important industries in the
world interests you, reach out!

[https://learn.flexport.com/want-to-revolutionize-global-
trad...](https://learn.flexport.com/want-to-revolutionize-global-trade-
flexport-is-hiring/)

------
shanev
My dad ran a freight forwarding business for 25 years. They still use paper
and fax. Half the office space is dedicated to cabinets of storage for paper
files. Their main technology is an ancient IBM mainframe. Flexport is really
going to change things.

~~~
thedogeye
Last year a job applicant then employed by a competitor told me the reason he
wanted to work at Flexport was that he was sick of using a typewriter at work.
For real, not making that up.

------
dfraser992
I was the entire IT staff for Linescape (linescape.com) for its first 4 years.
I was somewhat flabbergasted at the level of IT the industry was at in 2008 -
1990s at best. The industry was still trying to decide if XML was useful vs
EDIFACT (straight from the 1970s) for transmitting shipping schedules. It was
interesting work though, I had some very good insights into where the industry
could go / was going to go and we could had made some bleeding edge
improvements in terms of IT (e.g. the use of graph databases to model shipping
routes and calculating various things) We could have been the first to market
with a SaaS / API for dealing with shipping schedules, but management fiddled
around and Maersk beat us to the punch.

Unfortunately the founders of Linescape have absolutely zero ethics and
ripping off customers (and those working for the company) was more important
than anything else. I only later found out about the criminal record of one of
them which explains the reluctance to go find investment money. It was a
classic cautionary tale about the startup ecosystem (vet the people you're
doing business with / working for very carefully) and the lack of business
ethics so prevalent (aka Uber et al) The CEO and his now ex-wife are now
fighting over the company...

The thing was, none of the drama was necessary! We could have really made
something of the company. But capitalism these days...

------
mks
I fondly remember interning at major freight forwarder during university. The
main input interface was paper which was them keyed into the mainframe
application. Only the biggest partners have been integrated via EDI. So just
putting sensible API in front of all this sounds like good idea.

I have been working on operations data mart most of the time (and saving cca
30 000 dollars on carrier volume discount on shipped containers) but I always
felt my most appreciated contribution was stitching together few Excel macros
to make Request For Quotation evaluation easier.

So here are my two free ocean freight startup ideas:

\- precise container reporting for carrier disputes (10 FCL 40 footers from
HKG to HAM), including error detection when port is incorrectly filled in just
because it has similar code

\- RFQ evaluator - as simple and accessible as excel, but capturing the
specifics of ocean freight (tens of port pairs, container specifications,
splitting price to freight, terminal and surcharges etc).

Did you know you could have your container shipped for free - only for cost of
terminal handling (on certain routes, at certain times)? Fascinating industry.

~~~
deanclatworthy
Re: last point. I did not know that. Could you provide some more information?

~~~
mks
Sorry for the linkbaity cliffhanger.

Occasionally there exists a situation when there is huge demand for shipments
in one direction (e.g. Hong Kong to Singapore) while there is not much traffic
the other way round.

Shipping companies then need to get those containers back to origin, so the
prices go down (better ship full container where at least handling is paid
rather than empty container where carrier has to cover all the costs).

Not sure how often this happens currently, I got the information from friendly
trade lane manager few years back.

------
carbeewo
This could be pretty huge. I've dealt with several freight forwarding
companies while building a previous startup of mine and it definitely struck
me as an antiquated industry (this was 2007ish). Maybe a good benchmark for
"disruptable" industries is that you have to actually make a telephone call to
get something done. Time to get out the yellow pages and do some research!

~~~
bernardom
> Time to get out the yellow pages and do some research!

The.... what?

:-)

------
mark212
An oddly written story. Claims significant money invested in these companies
("$1 billion since the start of 2014") and proceeds to name only two --
Flexport and Freightos. The latter of which doesn't seem to fit the central
disruption-of-established-industry theme because they sell software to the
incumbents.

~~~
thedogeye
Yeah that confused me too. The $1B must be referring to the money raised by
XPO.com from private equity backers to roll up a bunch of old school freight
forwarding businesses. There's no tech involved in that play though, so it's a
bit misleading to call it venture capital. In fact it was mostly done as a
private investment in public equities (PIPE) deal, where PE funds put cash
into a listed freight forwarder.

------
gargarplex
Flexport's prices look too good to be true .. truly disruptive technology

------
shahryc
"Since the start of 2014, venture-capital firms have pumped over $1 billion
into startup freight-forwarding companies, twice the amount invested in the
five years before that..."

~~~
thedogeye
I have no idea where they got that stat but it's not true.

~~~
thedogeye
Ah, it includes XPO.com -- hard to call a leveraged buyout firm doing a
private equity rollup a "venture capital investment" but okay

------
andor
Here's a list of startups in the logistics market:

[https://www.freightos.com/the-ultimate-list-of-top-
logistics...](https://www.freightos.com/the-ultimate-list-of-top-logistics-
startups-blog/)

------
wehadfun
Is this like an Uber for freight?

~~~
seanlinehan
Bloomberg called us that[0], but the ocean / air / rail freight business has a
fundamentally different set of constraints and challenges.

[0]
[http://www.bloomberg.com/news/articles/2015-05-11/flexport-w...](http://www.bloomberg.com/news/articles/2015-05-11/flexport-
wants-to-be-uber-of-the-oceans)

------
dmnd
Flexport is hiring engineers:
[https://jobs.lever.co/flexport](https://jobs.lever.co/flexport)

As an engineer starting at Flexport in a couple of weeks, here are some more
interesting resources that shaped my thinking:

Interview with Ryan Petersen (Flexport CEO)
[https://theblueprint.com/stories/ryan-
petersen/](https://theblueprint.com/stories/ryan-petersen/)

Office hours at startup school 2013 with pg & sama
[https://youtu.be/syoqjYLDs48?t=1167](https://youtu.be/syoqjYLDs48?t=1167)

I also happened to have recently read Zero to One.

Plus, Flexport has an appealing mission. Removing friction in something as
basic as shipping makes pretty much everyone in the world better off.

~~~
vskarine
How do you differentiate yourselves from FreightOS?

~~~
thedogeye
FreightOS is a software company building tools to make incumbent freight
forwarders more efficient--so it's more of a supply-driven marketplace.

Flexport is a freight forwarder that builds our own software, with the goal of
providing better customer experiences with lower transaction costs--so it's
more of a demand-driven marketplace.

Probably we will meet them in the middle someday and have to compete with them
for customers. They founders seem very smart and accomplished, and they appear
to have solved many hard problems already, so it will be a fun challenge when
it happens.

