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This $1 Trillion Industry Is Finally Going Digital

In our world of global trade, shipping cargo is one of the most complex tasks, and one of the least connected.
October 24, 2016

When Alexandre Millet books passage for cargo being shipped from China to the U.S. or from the U.S. to Europe, he does it much the way his grandfather Jean-François Millet did when the family freight forwarding business, Logfret, was founded back in the 1970s. Leveraging a global network of agents, and armed with an understanding of duties, taxes, penalties, and port requirements around the world, Millet negotiates rates with trucking companies, airlines, and ship owners, securing good deals based on large volumes of cargo, and then passes some of the savings along to his clients.

Millet aims to get quotes to customers within 24 hours, but across the freight forwarding industry it’s not uncommon for it to take two or three days just to come up with a quote on the cost of shipping. The $1 trillion global business of shipping goods and raw materials by rail, ship, or plane has lagged most of the modern economy in both transparency and speed, largely skipping the digital overhaul most other industries have undergone. Now a growing group of well-funded startups is pushing to change that.

One example is Freightos, an Israel-based online marketplace launched earlier this year that functions as a kind of Expedia for freight, allowing shippers to book online. The idea for Freightos came from founder Zvi Schreiber’s frustration with companies he’d used to arrange shipments of hardware manufactured in China to the U.S. and Europe.

Millet, who bids on business over the platform, sees it as a way to find new customers among the small and midsize companies his firm focuses on. On Freightos a company can get bids from multiple freight forwarders within seconds rather than days, and often for prices lower than offline alternatives offer.

Over 90 percent of world trade moves by sea, but once cargo is on a ship, it enters a zone with little information about the path ships are taking or the stops they are making. Only in recent years have the largest ships begun regularly transmitting location data, and even now, a ship may stop its transmission and “go dark” at any time.

Another Israeli startup, Windward, is combining this location data with other information about each vessel’s size, owner, and other factors to map the paths and behavior of ships at sea.

To make sense of hundreds of millions of fragmented and unstructured data points coming in from each ship, Windward’s computer scientists have built artificial-intelligence systems relying on natural language processing and other techniques to identify curious or important patterns of behavior. The result is maps like the ones on this page, which might show ships meeting mid-ocean to transfer cargo, or crossing in and out of a country’s territorial waters in patterns that can be associated with illegal fishing or other behavior.

So far most of Windward’s customers are fishing authorities, coast guards and navies, and other government groups, but it sees this information as important to cargo owners and insurance companies as well. The company aims to become “the Google of the oceans.”

Indeed, digitizing shipping seems to be off to a strong start. Logfret’s Millet says his company’s orders through Freightos have grown 66 percent a month since it began participating this past summer, offering a way to tap into new business. But others in his company worry that Freightos has become a middleman between them and the customer.

Millet thinks his company’s long-developed global network and expertise in local rules and processes gives him a hedge, especially among large customers that have complex shipping needs, and argues that the company must find its place in a system that will inevitably move toward a level of service and speed that online systems like Freightos can help provide. “The future of shipping is someone using an app and booking whatever he wants on his phone and making it fun to do, even,” says Millet. “Very mobile, less human interaction.”

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