Why the demand for supply?
Today’s edition explores how Atlanta companies are driving the future of supply chain and logistics.
That topic might sound a little dry until you consider how important robust supply chains are to modern life and how disruptions over the past year and a half have contributed to shortages in everything from medical supplies and PPE to toilet paper (we all remember The Great Toilet Paper Run of 2020, don’t we?) and food. The global shortage of semiconductors — used in everything from home appliances to smartphones, game consoles, and cars — is expected to cost the auto industry alone $210B in revenues this year because nearly 8 million vehicles simply won’t be built.
The Prime Directive
The rapid rise of ecommerce is one of the other forces putting supply chains in the spotlight. Online shopping’s share of US retail sales jumped an incredible 32.4% between 2019 and 2020. Globally, retail ecommerce sales rose 28% last year to nearly $4.3B, with sales expected to top $5B next year.
Much of this acceleration can be attributed to consumers avoiding physical stores due to COVID, Americans spending government stimulus checks, and sellers’ increased usage of ecommerce platforms. Shifting consumer behavior — namely customers growing accustomed to frictionless online shopping and free, two- or same-day delivery through programs like Amazon Prime (which counts nearly 60% of America’s adult population as members) — has clearly played a role as well. 68% of surveyed customers say fast shipping would lead them to place an online order, while 41% abandon their shopping carts due to long delivery times. Many now equate “fast” delivery with “same-day.”
Investing Logistically
The rise in online spending, increased pressure from consumer expectations, and COVID-related disruptions have sent companies scrambling to make their supply chains more flexible, transparent, and resilient.
As a result, total investment in supply chain tech jumped to $52B last year. Of that, over $15B came from 641 supply chain tech VC deals. This year’s supply chain tech VC deal value has already passed that amount.
Hublanta
Atlanta has long been a logistics leader, dating back to the city’s emergence as a railroad hub during the first half of the 19th century. Today, the city’s supply chain prowess stems from extensive infrastructure, strong educational institutions, and a slew of logistics-focused companies.
Georgia still boasts the largest rail network in the Southeast, and a number of interstate highways criss-cross the state. Atlanta’s Hartsfield-Jackson International remains one of the busiest airports in the world, and Savannah, a few hours across the state, is the fastest-growing container port in North America.
Georgia Tech’s Supply Chain and Logistics Institute and Clayton State University’s Center for Supply Chain Management drive research, educate students, and collaborate with local businesses. And ATDC has incubated multiple supply chain-related startups.
When it comes to the business community, Atlanta-based corporations with supply chain needs like UPS, the Home Depot, and Delta have channeled resources into logistics, as have the nearly 150 supply chain companies located here.
The New Supply
This environment has proven fertile ground for the growth of a new batch of supply chain tech players. The city’s supply chain and logistics tech startups fall into four main buckets:
Warehousing / Distribution Centers
Emerging companies in this bucket offer warehousing and DC services like storage, picking, packing, and fulfillment; connections with warehouse networks; and warehouse robotics and automation.
There are some significant up-and-comers working in this area. Saltbox, a “co-warehousing” provider that offers small businesses shared warehouse and office space as well as fulfillment services, raised a $10.6M Series A in April. Porter Logistics, a flexible warehousing and third-party logistics (3PL) provider, recently expanded operations from Atlanta to a new location in Tampa Bay, Florida.
Also in this bucket is GreyOrange, a developer of AI-enabled software and robotics for fulfillment automation, which moved its global headquarters to Roswell earlier this year. The company has raised over $170M, including from banner investors like Tiger Global Management and Mithril Capital Management. Japanese industrial robotics company Mujin and French logistics automation startup Exotec have also both recently chosen Atlanta for their US headquarters.
Enterprise Supply Chain Management
Enterprise Supply Chain Management startups provide cross-supply chain ERP, procurement, inventory management, order financing, and asset tracking software solutions.
Notable ATL startups in this category include Verusen, which offers an AI-driven platform to help customers improve materials management, inventory optimization, and supplier alignment; LocatorX, a platform provider that leverages IoT for asset tracking; and Reibus, a marketplace matching buyers and suppliers of industrial metals that offers financing and shipping logistics for purchases.
Shipping / Freight
Atlanta’s shipping startups provide freight booking services, fleet monitoring solutions, and electronic payments for logistics.
SemiCab aims to increase coordination between shippers and carriers by using AI/ML to predict network-wide shipping supply and demand to increase the number of fully-loaded truck shipments. ThingTech’s IoT-driven platform allows fleet owners to monitor their vehicles in real time, identify maintenance needs, and address safety issues. And RoadSync and Relay Payments offer electronic payment solutions for logistics and trucking. Both companies have been on a fundraising tear as of late. RoadSync raised a $30M Series B led by Tiger Global in June. Relay, whose founders Ryan Droege and Spencer Barkoff also co-founded RoadSync, is raising $60M according to a July SEC filing, building upon $43M raised last year.
Last-Mile Delivery
The last-mile bucket includes providers of third-party delivery and package placement technologies.
Roadie, perhaps the most prominent Atlanta startup in this category, uses a gig economy model to match large retailers, small businesses, and individuals seeking same-day delivery of their shipments with drivers who have extra space in their vehicles and are going in the right direction. UPS just recently concluded their acquisition of the company, which boasts over 200,000 drivers nationwide and has raised over $60M. Other players include Kanga, which also connects driver partners with business customers for order pickup and same-day delivery, and HelloPackage, which provides a secure package management solution for deliveries to apartment complexes.
Cross-Category Players
A few local startups span multiple categories. Recently-minted unicorn Stord offers cloud-based supply chain management software and warehousing, fulfillment, and delivery services via a logistics network of over 500 warehouses and 20,000 carriers. The company aims to help businesses compete with Amazon Prime’s delivery speed, estimating that its network of partner and in-house solutions covers two-day shipping for nearly 99% of the US. Sandy Springs-based Project Verte — no slouch itself when it comes to fundraising — and UPS-owned Ware2Go also offer SMBs supply chain management platforms as well as fulfillment services via nationwide networks of warehouse partners. Finally, California-based Blume Global, which recently reached a $500M valuation and is rapidly expanding its presence in Atlanta, markets supply chain management software for asset management but also freight booking, payment, and auditing.
Certain Atlanta VC firms are specifically dedicating themselves to supply chain investments. Take Silicon Road Ventures, which raised a $31M fund this past spring. The firm aims to fund 40 startups over four years and is particularly interested in companies focused on retail and consumer products-related in-store and multi-channel tech, supply chain and logistics, and fintech.
Fulfilling the Future
As we move deeper into the 2020s, Atlanta’s supply chain and logistics startups will navigate and shape a variety of trends, including:
S(C)aaS
Like ubiquitous Software-as-a-Service (SaaS) companies, Supply Chain-as-a-Service (SCaaS) providers enable enterprise and small business customers to outsource key business functions. In the case of SCaaS, third-party logistics (3PL) providers take on customers’ procurement, warehousing, fulfillment, and distribution activities. SCaaS companies like Stord that provide end-to-end supply chain solutions will only continue to expand their offerings and customer bases as businesses seek to move away from arrays of incompatible, legacy systems and patched-together logistics operations to comprehensive, cloud-based solutions.
Shipping from and to everywhere...fast
Customer expectations for frictionless ecommerce and rapid delivery will only continue to rise. One area of particular acceleration will be B2B ecommerce, which DHL predicts will increase by more than 70% to $20.9T by 2027. This expected increase can be attributed to greater digitization and reduced in-person activity tied to the pandemic, as well as technology-oriented Millennials and Gen Zers making a growing share of B2B purchasing decisions (and bringing their personal expectations from B2C experiences to their B2B interactions).
Higher customer expectations mean that decentralized fulfillment — rather than centralized warehouses — will become the norm. Businesses will use a variety of solutions for fulfillment, ranging from 3PL providers to smaller, distributed DCs, retail locations, and “dark” stores (stores dedicated exclusively to fulfilling online orders rather than in-store shopping) located closer to customers. They will also focus on nailing — and lowering the price of — last-mile delivery (LMD). LMD accounts for over half of logistics costs today due to inefficiencies associated with delivery drivers needing to make multiple stops, each with generally small drop sizes. As a result, companies are likely to double down on existing solutions like gig economy drivers and product pickup lockers, as well as invest in emerging ones like delivery drones.
More data, more automation
As with the broader economy, supply chain and logistics will only become more reliant on data and automation. Companies will increasingly seek greater supply chain transparency, insights, and control via platforms like those offered by the Atlanta Enterprise Supply Chain Management players mentioned above. Use of IoT in the field paired with advanced analytics will allow greater visibility into the real-time workings of companies’ supply chains. AI will help with predictive demand forecasting and freight and delivery route planning.
Robotics and automation will further streamline warehouse logistics tasks and shipping. Project Verte, for instance, already uses robot-equipped warehouses in their distribution network to boost efficiency. In August, Stord opened a new 386,000 square foot distribution center in southwest Atlanta that leverages the latest in autonomous mobile robots (AMRs) from Massachusetts-based Locus Robotics. And while widespread shipping via autonomous semi-trucks remains very much a work in progress, companies focused on the technology range from established players like Daimler and Volvo to tech giants like Tesla and Alphabet’s Waymo to upstarts like Aurora and Einride.
Going green
Finally, as consumers, investors, and regulators demand greater commitments to ESG, companies will be compelled to ensure they are ethically sourcing materials and reducing the environmental impact of their supply chains. Atlanta’s supply chain tech players are already leaning into this new reality. Verusen points to how the greater transparency and data provided by its materials management solution helps customers design more sustainable supply chains. Project Verte is partnering with sustainable fulfillment company Manifest Commerce, which offers green warehousing, carbon-neutral fulfillment, and recyclable packing materials. And Stord participates in the EPA’s SmartWay program for tracking, benchmarking, and improving freight transportation efficiency.
Although these changes mean upheaval, Atlanta’s supply chain and logistics tech players appear well-positioned to take on the sector’s rapidly-changing landscape. The city’s reputation for supply chain leadership, private sector dynamism, and regular reinvention bode well for the era ahead.
