Every month we select one company which represents a positive example of innovation in logistics and has the potential to alter the way the industry operates. This month, Transmetrics selected Xeneta, the leading ocean freight price benchmarking and market intelligence platform, as the April “Company of the Month” for its remarkable pursuit of transparency and transformation in the shipping and logistics industry. In order to learn more about the company and what they do, we talked with Patrik Berglund, CEO & Co-founder of Xeneta, and asked him several questions about the business and the industry.
As a co-founder, can you please share with us a story which led you to establish the company?
My co-founder, Thomas Sørbø, and I started our careers in shipping/logistics at freight forwarder, K+N (Kuehne+Nagel). There, we realized that it was not possible for us to do our jobs effectively and really know what it cost to send a container from A to B; what the market average rate was for various routes; how the rates we compiled for our customers stacked up against other shippers. We were not able to answer simple questions such as, “Have we secured the best possible rates from my suppliers in the negotiation period? What are my peers paying?” We believed that there needed to be a better transparency in the procurement of ocean freight to create an equal playing ground for all stakeholders. The market was too volatile to keep up with. Accurate and real-time rate data was missing in the industry. We, therefore, decided to start crowdsourcing ocean freight rates from shippers and developed a web platform to host them. We now have the largest neutral ocean freight rate database for benchmarking and market intelligence.
With what kind of services did Xeneta enter the market? How did you further expand your products? Can you please briefly describe them?
We started with a free product and collected rates from shippers to create the database. Shippers were able to upload their rates and volume, compare them against the market and each other to see how they were performing. A couple of years later, we started to monetize the product with our Xeneta Intelligence and Xeneta Analytics products. In addition, we offer customized reports and services during tenders under our Xeneta Advisor product. Last year, we launched our Xeneta Discover product as a basic entry-level product providing only market average rates.
Our products have been developed based on the needs of the industry and our customers.
In 2016 Xeneta was named “Norway’s startup of the year” which was quickly followed up by your expansion into the US. How did you achieve such remarkable results in such a short time? Are there any secret ingredients to your success?
We entered the market at a time when technology in the shipping industry was still nascent as compared to now. We launched a product/company that solved a real challenge in the industry with no true viable alternative. The solution we provided was well received by the market and we have been aggressive in getting our message out with a value proposition that has struck a chord with all stakeholders. We have had to fine tune our message throughout the years and test various messages against different audiences. We have landed on something that works and have in the end identified our ideal customer profile.
“What really makes a difference in rates when negotiating with suppliers is timing and the type of contract (length); spot or contracted. We can see this correlation in our data and as an insight, we believe all shippers should keep in mind. Therefore, having real-time rate data to get the visibility into the market is paramount to make these informed decisions.”
There is no real secret sauce to our quick success per se. However, we wouldn’t have been able to scale as quickly as we have without the people we have on board. We have been able to attract extremely talented people from all over the world to build our data, engineering and commercial teams. They are the reason we have been able to achieve our current position. You can have a great product, but without the right people to develop, market and sell it, the product becomes meaningless.
Being the world’s largest ocean freight rate database, do you notice any interesting or surprising industry insights which you could share with our readers?
One of the important insights our data is able to show, that it is not necessarily the large volume shippers who get the best rates from suppliers, as thought by many. What really makes a difference in rates when negotiating with suppliers is timing and the type of contract (length); spot or contracted. We can see this correlation in our data and as an insight, we believe all shippers should keep in mind. Therefore, having real-time rate data to get the visibility into the market is paramount to make these informed decisions.
The logistics industry still has a lot of potential for innovation. According to Xeneta, what does the future hold for the logistics industry in the next 3-5 years?
Yes, there is room for even more innovation in the industry. The market is complex. All areas can benefit from innovation to make processes more efficient internally and externally. One of the main challenges is the fragmentation of supply chain processes. A few tech companies have started to try and integrate the various steps and links. There is a big with to create one solution that brings all parts of the supply chain together for better efficiency. However, supply chains are convoluted and it is not as easy as it sounds. Otherwise, some of the legacy big players would have done it already.
What are the next big goals for Xeneta in 2018?
We will launch a platform for air freight in Q2. This is a major milestone for us as we will be providing better transparency for air freight procurement just like we have for the ocean. We will also continue to improve our platform’s user experience with improved visualization, reporting and requested functionality from our customers. We also will introduce new business models and partnerships to further strengthen our position in the market.