Investment in Technology, Innovation Is Changing Business of Logistics

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The combination of technology and innovation is changing the business of transportation and logistics in ways that are both potentially disruptive and critical to improving existing processes.

And the changes are coming from inside and outside of the industry.

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XPO Logistics, which rode a string of high-profile acquisitions to become the largest third-party logistics company in North America in 2017, is investing $450 million in technology, and CEO Bradley Jacobs said he sees it as the key to maintaining the company’s position in the market.

Jacobs

“The logistics space is wide open for the development of exciting technologies,” Jacobs recently told investment analysts. “We view our technology as being critical to continuously improving customer service, controlling our costs and leveraging our scale.”

At the same time, investors are pouring money into startups and groundbreaking new technologies that have the potential to radically alter the landscape of the industry.

Firms such as Uber Technologies, Alphabet’s Waymo and Tesla Inc. are pushing the frontiers of self-driving vehicles, for example, while global players such as Deutsche Post DHL and UPS Inc. are testing the use of robots as part of a move to automate warehousing and distribution activities.

Since 2013, investors have poured $14.4 billion into equity financing for new companies in the transportation, logistics and supply chain management sectors, according to data from CB Insights, a New York-based research firm that specializes in tracking investment in technology and new business startups.

In Chattanooga, Tenn., a group of local business executives have teamed up to provide seed capital and mentoring for entrepreneurs with ideas for improving the business of transportation and logistics.

So far, logistics venture fund Dynamo has funded 13 companies, including Steam Logistics, which provides ocean and airfreight forwarding. Another Chattanooga-based fund, Lamp Post Group, has funded Bellhops, Bellhops, an Uber-like on-demand moving company, and Reliance Partners, an insurance brokerage firm.

One of the first beneficiaries of Dynamo’s investment is 20-year-old Jacob Boudreau, who ran a web marketing business while still in high school in Atlanta and who now with his partner, 21-year-old Sean Henry, heads up a company called Stord that helps warehouse operators market underutilized space.