Asian logistics start-ups are pushing hard for Europe
High-volume logistics start-ups and offshoots of giant Far East trading companies are getting ready for the leap to Europe. According to an analysis by strategy consultant Oliver Wyman, USD 12 billion of venture capital was distributed globally in the logistics industry in 2018. This is more than a tripling compared to the previous year.
At USD 7.1 billion, more than half of the investment was spent on only three companies: Go-Jek from Indonesia (online courier service) and JD Logistics and Manbang digital freight exchange (both from China). âThe young companies are thus rapidly achieving financial resources at the level of established players,â says Joris DâIncĂ , partner at Oliver Wyman and co-author of the analysis.
With their expansion strategy and their often superior technological know-how, the new suppliers threaten the business of European freight forwarders. To keep up and retain existing customers, established companies need to accelerate their digitization initiatives â and make the most of their existing assets.
Despite current home market challenges, JD.com, an emerging online retailer from China, is planning a gradual expansion in Europe; Billions in investment should lead to success. This development challenges not only distributors, but also logisticians, as the competition from China wants to handle their consignments via their own transport companies â and also open them for orders from other companies.
For the traditional forwarders, these are explosive news for two reasons: âLarge logistics volumes will become unreachable for established logistics providers because the new competitors from the Far East will handle them internally,â says Max-Alexander Borreck, principal and logistics expert at strategy consultant Oliver Wyman. In addition, these companies are using state-of-the-art technology to strive to discard market share from established providers.
Eight Asian agents, six US companies and a Brazilian start-up are among the top 15 list of companies that received at least USD 100 million in 2018. European companies are not represented. In the DACH region, investments in logistics start-ups have grown to USD 73 million (2017: USD 58 million). Overall, Europe is investing just USD 200 million.
The attackers from the Far East have a number of advantages compared to the classic forwarders, says Joris DâIncĂ : âThey were founded as digital companies and play that strength from day one. They also have access to the Chinese import and export market and fast-growing Chinese technology and consumer goods companies.â
Well-established logisticians have started the competition with high resources. So far, the focus has been on the digitization of the customer interface through online and app solutions as well as the automation of operational processes, for example using robots.
The digitization experts from Oliver Wyman outline a possible target image for established logisticians. âThe rapid digitization and occupation of the customer interface by the logistics experts is absolutely the right way,â says consultant Thilo Grunwald-Heinrich. However, it is important that the digitization does not end there, but will be extended to all processes in the company.
And that requires external partners: âLogisticians must build up technology competence for core processes and the overall architecture. For many important future activities such as payment, data visualization or tracking, there are external solutions that can be integrated using modern interface technology,â recommends Oliver Wyman.