Will 2023 be the end of the party for the logistics tech sector?

Posted on Dec 26, 2022 10:59 pm by

Brian Gicheru Kinyuwa

At the end of a tumultuous year in the shipping industry, it is important to highlight some of the trends that have defined 2022 and are likely to determine the outcome of 2023.

Without a doubt, the logistics technology (Logtech) space has exploded in the last couple of years. By 2022, growth is accelerating. As shipping becomes digital, freight procurement, forwarding and other logistics services are being done online.

In fact, the Covid-19 pandemic has come as a big boost for Logitech companies. The third-party logistics (3PL) space has seen significant growth over the period. Due to the potential for high returns, venture capitalists and angel investors have poured billions of dollars into the sector.

Flexport represents a successful business model for the Logitech company. In addition to Flexport’s sales of $37 million last year, It reached 3.3 billion dollars from 670 million dollars in 2019.

Sender, a Berlin-based Logitech company, received the award for its surge in ocean freight during the pandemic. Founded seven years ago, Sander recently attracted global attention in logistics circles after details emerged that it was raising a financing round valued at $2.1 billion. This is more than double the value it received for equity in January 2021 as the shipper raised $160 million to advance its digitized freight strategy.

However, there is a catch to these expansion initiatives. As the shipping sector becomes more formalized and trade volume shrinks, are Logitech companies well-suited to the changing business environment?

“The business they are doing now is brutal. We are talking about small margins and the need for large volumes. Their survival depends on acquisitions, winning new markets and huge volumes. 2023 will be a defining year for Logitech. . . . Who will be the first to knock over the dominoes,” said the logistics expert and Supply chain specialist Anthony Miller comments.

In the year With 2023 and the end of “free money” in shipping and logistics, Logitech/FreightTech companies realize the need to lock in value for most of the products and services they offer, and some are now investing more in hiring software engineers.

Over the past several years, the Logitech sector has spent huge budgets on marketing and PR campaigns to bring in customers. The sector may be overly optimistic about the types of problems it can fix; For 2023, the goal of SaaS solutions by Logitech companies is to create more value by solving the real logistics issues that shippers need.