Cargo.one takes aim at synchronised shipping
08 / 01 / 2019
There are many examples of ideas coming about by chance -— from penicillin to Post-it Notes -— but the airfreight sector can now lay claim to having its own serendipitous discovery in the shape of cargo.one’s real-time online spot market booking platform.
The platform’s story begins when its founders were exploring new business ideas and found themselves in the office of a freight forwarder.
While in the meeting, the forwarder received a request for a shipment and the cargo.one team witnessed the number hoops that needed to be jumped through as the individual tried to book space on an aircraft.
Moritz Claussen, who co-founded the booking portal along with Oliver Neumann and Mike Rötgers, explains that the forwarder in question had to send out 12 emails with various different departments and locations copied in.
Over the next few hours responses began to roll in, coming back in a range of currencies, some with an all-in price, others with surcharges separated out, and some completely unstructured.
“We were sitting there, coming from outside the industry and fairly inexperienced in air cargo, and were amazed by the amount of complexity and how offline the process was just to book one shipment,” says Moritz.
“At the time, our understanding of airfreight was that it needs to be quick -— although we now know there are other reasons for using aircraft -— but speed is still one very important factor, and it took more than half a day to get a quote.
“That was the tipping point where we decided there is a great opportunity for us to create a platform that really connects freight forwarders with airlines in a synchronised way so that the exchange of information is live and we don’t need to wait for anyone to add anything, we don’t need to look at different types of data, we can have it all in one place.”
That meeting took place in 2017 and cargo.one’s founders did not hang about. By early 2018 their team of developers in Berlin had begun building the platform and in June 2018 it was launched, with Lufthansa Cargo the first carrier to offer its capacity on cargo.one.
More recently, the company raised $3.2m in funding for the further development of the platform, with Lufthansa Cargo one of the investors.
As well as the German carrier, the other investors are Creandum and Point Nine Capital, which were early investors in Spotify and Delivery Hero.
The funding will be used to develop new services for customers and also expand internationally.
“We were very lucky with the financial round because there was a lot of interest on the tech investment side and we were very lucky to be able to choose our investors,” says Moritz.
“We believe Creandum and Point Nine Capital are top of their class and will really help us take this internationally and accelerate faster growth.”
Claussen also spoke about having Lufthansa Cargo as an investor, will this deter other airlines from using the platform?
He responds: “It is a great signal that one of the largest airlines actually thinks our technology is advanced enough that they are willing to invest.
“We discussed having Lufthansa as an investor and we are very positive about having them on board. Lufthansa becomes a minority shareholder with no operational involvement whatsoever and we are open for investments from other airlines in the future too.”
He adds that internal governance has been put in place to ensure separation between the operational and investment parts of the business.
Claussen says the team have been in regular contact with freight forwarders to discuss how they would like to see the platform develop.
One such investment is “station-wide views”, meaning that more than one user can view bookings to allow greater access to shipment updates when the person that made the booking is away.
Another is the ability to save quotes for a later date, although these will need to be re-confirmed when the booking is actually made.
On the airline side, the funding will help facilitate the connection process as more carriers come on-board.
“The money will allow us to go global,” Claussen says. “We started with European airlines but now we are starting to add more international airlines and that means we will need to scale operations to support global customers more effectively.”
Claussen emphasises that it is important to build the data connections with airlines as quickly as possible and it has done so in as little as seven weeks.
So far Lufthansa Cargo and virtual airline Leisure Cargo have signed up to the platform on the carrier side, while Dachser and Hellmann Worldwide are amongst the confirmed forwarders.
While these are all German companies, Claussen says that talks are underway with other European carriers as well as airlines from North America and Asia and he is confident that more announcements will be made soon.
On the forwarder side, Claussen says that cargo.one is being used by more than 75 freight forwarders, including Agility, Hermes, Emo Trans, Senator and Jas Forwarding, even though announcements have not been made.
“We are serving a lot of customers in Germany, but also neighbouring countries that use the euro, including France, Italy, the Netherlands and Austria,” he says
He adds that the company is also attracting small- and medium-sized forwarders -— the long tail as he describes them -— which have been traditionally underserved and do not necessarily have the technological capabilities to build data links with each of the airlines.
Meet the competition
While the cargo.one platform clearly meets a market requirement, there have been plenty of other products launched that offer similar services.
To name a few: Flexport, Freightos, Kuehne+Nagel FreightNet, Zen Cargo, Agility Shipa Freight and Upply, which is a price comparison service at the moment but will eventually have booking capabilities.
So how does cargo.one differ to these other platforms?
Claussen explains that many of the other sites have been developed by forwarders, or to offer a freight forwarding style service, and are catering for shippers.
Cargo.one, on the other hand, is targeting the freight forwarder, offering them a real-time spot market connection to multiple airlines without having to develop their own connections to the carriers, which can be an expensive and complex process.
“We are only focussing in on serving the freight forwarders more effectively, whereas others have focussed on digitising their connections with their customers. We are really focussing in on digitising their connection to the carrier and so far we are the only one actually offering them live spot rates with direct confirmation.”
He adds that the rates available on some of the other platforms on offer often do not reflect real-time prices, something that other contacts have also suggested.
He explains that with these services you have one price online, but if you pick up the phone to talk to the airline you can get a better deal.
There are no plans to target shippers, he adds: “It is our belief, and this is a bit different from others in the industry, that there will not be a ‘winner takes it all digital forwarder’ doing everything.
“We believe there is a good reason for forwarding companies to be there. They do a lot of the work and organise a lot of the transport.”
While some forwarders have already developed digital connections to carriers, which negates the need for a digital platform, Claussen does not expect this to limit cargo.one’s market opportunities.
“We are aggregating all the airline offers on one connection for the freight forwarders, which aren’t technology companies, they are really operational logistics companies.
“With us, they will only have to connect to one provider rather than having to maintain a connection to a large number of airlines to get the same result.
“It gives freight forwarders the ability to search across different airlines, compare different offers, not just on price but on routing and quality.
“We are in the process of adding quality metrics such as flight delays or if certain cargo has been offloaded more often than others.”
This is certainly one of the main reasons Hellmann Worldwide signed up to use cargo.one.
Bart de Vries, chief operating officer air and sea, Hellmann Worldwide Logistic, explains: “The digital booking platform will reduce the complexity of carrier APIs. The benefit for us is that Hellmann needs to develop only one API to connect to several airlines.
“Cargo.one is a very agile startup which fits perfect to Hellmann’s strategy of digital solutions along the supply chain. We believe our partnership will deliver faster and more flexible solutions than the ones with larger suppliers, which are also trying to sell other tools and market places.”
While many are expecting the proliferation of online platforms to continue unabated, others have pointed out that a disadvantage they have is that they won’t be able to fix problems when things go wrong or deal with more complex bookings, unlike a human contact at a more traditional company.
Claussen again points out that cargo.one is not aiming to replace the forwarder, just act as a tool to facilitate bookings, in the same way Expedia is used when booking a seat on a passenger aircraft.
“Currently we concentrate on facilitating the booking process,” he says. “We are in the process of enabling forwarders to re-book and update bookings on our platform but at the moment they need to go to the airlines to do that.
“If there is a problem with the airline they will still need to get in touch with the airline because that is an operational issue and we may not have that information available from the airline.
“What we do, and do quite successfully, is we are the first point of contact for the freight forwarder. We have live chat service that allows freight forwarders to talk in real time to us and we will help to figure out problems.”
The launch of cargo.one is unlikely to be the last digital booking platform that is developed over the coming years, but where it differs from some of its rivals is that it is not trying to replace the freight forwarder, instead acting as a tool they can use to connect to as many airlines as possible.
Like any digital business the key to its success will be whether it can make the users’ life easier while saving them time and effort, not an easy task to complete in the complex world of air cargo.