Amazon Effect' Sparks Deals for Software-Tracking Firms
A growing number of companies are paying to track in real time everything from truckloads of pork chops to shipping containers full of exercise equipment.
Logistics providers, retailers and suppliers are inking deals with software firms that use location data and weather and traffic information to monitor shipments and alert customers to events that could hold up delivery, such as a loaded truck sitting in a yard for more than an hour.
This month, supply-chain software firm Descartes Systems Group bought MacroPoint LLC, which provides location-based truck tracking, for $107 million. Descartes already tracks ocean, air and parcel delivery for customers such as Home Depot Inc. and CVS Health Corp., as well as some trucking. Other "visibility" startups are broadening their scope, adding services like real-time temperature tracking.
The need for these services is growing as retailers and shoppers demand faster, more-precise delivery. Many Amazon.com Inc. customers have become accustomed to reliable two-day shipping, forcing other retailers to offer similar service. Businesses are making new demands of their suppliers as they trim inventories and reduce supply-chain costs. Wal-Mart Stores Inc. in July said it would penalize companies that made deliveries too late or too early.
"It's the Amazon effect -- customers are putting more pressure on their supplier to know where their product is," said Bart De Muynck, a supply chain analyst with Gartner Inc. Mr. De Muynck said he expects more tracking startups to get snapped up by larger software companies.
Pork producer Smithfield Foods Inc. hires more than 230 trucking companies to ship about 1,000 truckloads of product in the U.S. a day.
"Managing that is an awful lot of phone calls," said Dennis Organ, Smithfield's senior vice president of supply chain.
Smithfield's on-time delivery rate improved to 94%, from 87%, after it began tracking truck freight with software from FourKites Inc. Smithfield plans to test its use for ocean freight, Mr. Organ said, and is incorporating a new temperature-tracking feature introduced in June.
Some businesses are using delivery speed as a way to compete on service. "We have a customer in Australia selling sand for a premium price because they can do time-definite, same-day delivery, with a one- or two-hour window," said Chris Jones, executive vice president of marketing and services for Descartes.
On Tuesday, logistics software company Convey, which specializes in last-mile delivery tracking, said it raised $8.25 million in a Series B funding round led by Techstars Venture Capital Fund. The firm, whose platforms are largely used by retail clients such as Wal-Mart's Jet.com, plans to focus on international supply chains and expand into additional markets, such as medical devices and construction and building materials.
Ingram Micro Inc.'s e-commerce fulfillment unit has been using Convey's software since February to monitor clients' shipments of apparel, electronics and other items from China to consumers' doorsteps.
The company tracks containers from the moment they leave the factory, across the Pacific, through U.S. customs and onto the truck, said Mandy Shellnut, executive director of logistics, transportation and trade compliance for the division.
The software measures carrier performance and merges that information with customer order data to predict whether a shipment will arrive on time.
"If a client has picked next-day delivery, Convey tells us what hubs it needs to hit," Ms. Shellnut said.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
August 29, 2017 08:14 ET (12:14 GMT)
