Chicago – A Merging of Technology and the Transportation Hub
Written by Justin Sorto, TCC Education Committee Co-Chair
When many people think of the merging of transportation/logistics and technology, they quickly think of Uber and Lyft. However, over the last few years our industry has seen startups disrupting all aspects of supply chain and transportation. Chicago has been known as a transportation hub since the 1800s and more recently has been transformed into an innovative city, leading the way for many technology startups. Chicago ranked #5 on the Innovation Cities Index 2018 for most innovative cities in the U.S. This has made way for new transportation related startups that emphasize proprietary technology, customer service and simplification of transportation management. Some of these startups include Coyote (2006), FourKites (2014), Project44 (2014), Echo (2005) and ShipBob (2013), and they not only disrupt the industry, but create hybrid companies that infuse technology into logistics companies and force existing companies to be more competitive into the future.
When we talk of a modern company that is merging technology and logistics, Amazon always comes to mind. All companies are feeling the pressure that Amazon has created for shipping. Once again, we hear about the “Amazon Effect”, which, in this case, refers to that requirement of companies, whether selling B to C or B to B, to provide superior customer service, including accurate ETA’s and tracking information. It will be interesting to see what this increased competition pushes companies to do next. We are already seeing a push for timely transportation, greater visibility and insight, more accurate/predictive shipment tracking, alerts/notifications, and more effective track/trace and freight management. Large established companies are purchasing startups or partnering with them to gain an edge or be able to offer something that their customers are demanding. Venture Capitalists are investing in these transportation startups at a record pace, seeing the potential value of taking advantage of this disruption in the industry.
Project44 is a Chicago based visibility platform for shippers and third-party logistics firms across all modes and multiple geographies with proprietary technology, including Parcel, Final-Mile, LTL, Truck, Rail, Ocean. Partnerships with majors, like J.B. Hunt, FedEx and Schneider, give Project44 industry clout. Not only can they track shipments in real-time, but through their predictive analytics, companies can provide accurate arrival and pickup and delivery information, with an ability to set alerts. Venture Capitalists are seeing the value in the technology, with a recent capital raise of $45 million (raised $35 million 6 months ago). Startups like Project44 require funding to add people, a greater variety of modes of transportation and to add to their proprietary technology.
ShipBob, another Chicago based startup, helps e-commerce companies automate their fulfillment process and inventory management. They help small and midsize companies with their fulfillment needs, offering shipping within 1-2 days, and are a competitor to companies like Amazon. Their technology not only helps to power all aspects of their warehouses, but also makes the fulfillment process seamless for their customers. This is no small feat for the growing number of fulfillment centers that the startup owns and operates, which currently includes six facilities across the U.S., including Chicago, Brooklyn, Dallas, Los Angeles and San Francisco. Having facilities as close to the final customer as possible has become increasingly important in order for firms to be as “Prime” like as possible. In their latest round of funding, the startup raised $40 million which will help them to continue to expand their employee count and footprint throughout the U.S.
The excitement surrounding these disruptive startups in the industry continues to draw and offer opportunities for those established companies to adapt to the new environment. To stay competitive and offer superior customer service, automating supply chains and using technology to modernize is not just an add-on, but a necessity to stay relevant. Large, established companies that deal in supply chain are investing in these startups to compete and better serve customers. Whether it is through capital investment or via a partnership, this trend is expected to continue. It will be interesting to see how the landscape of the industry will be shaped in the years to come, but for now it seems that working together with these young companies is of benefit to both parties. It appears that, due to Chicago’s central location, strong history in the transportation industry and interest of investors in technology, startups will continue to bring new ideas, technology and opportunities to the area.