Dive Brief:
- DB Schenker, a logistics firm founded in 1872, has invested $25 million for a minority stake in uShip, an online freight marketplace, the Wall Street Journal reported Wednesday.
- The acquisition pairs a senior logistics provider with a startup offering new technology within the shipping industry. The deal follows a partnership between the two companies last July, where uShip agreed to develop "Drive4Schenker," an online trucking platform for the logistics provider.
- uShip notes the investment follows a trend of logistics providers acquiring or investing in technology startups, with 26 such deals having occurred in the last two years. Logistics tech startups were reportedly on pace to raise $5 billion for their technology in 2016.
Dive Insight:
Online platforms and cloud-based software are the latest effort intended to simplify transport bookings, one which may shatter previous tactics relied on by shipping middlemen and their customers. Yet, recent deals show technology start-ups need not always be perceived as disruptors within the logistics industry. Instead, they provide an opportunity for expansion and growth, when sought as collaborators.
Technology increasingly serves the needs of customers used to working with third-party logistics companies, improving the providers' standing within the industry. Rather than rejecting change, old-school logistics companies that seek to adapt can achieve a double-tier level of success: combining reputation with readjustment of method. Updates are viewed as positive growth by customers, and can fuel an uptick in a business whose old model was no longer serving.
In fact, that's the strategy many like DB Schenker are pursuing. UPS has signed deals with Coyote Logistics and Optoro; Maersk Line cites digitization as a top priority for 2017, bringing on a former SAP CEO as chairman of its board and signing deals with Alibaba and Riverbed; the list could go on, and on. Logistics startups are thriving in the highly fragmented, traditional and competitive world of logistics.
