The StartmeupHK Week in Hong Kong has only just finished a few days ago on Friday, November 14. Though there were still some events ongoing over the weekend, we already wanted to get some thoughts from one of this year’s champions. Freightos was chosen, along with Perseus Telecom and Scoutbots, from 12 and then six finalists. The competition saw 550 entries from 47 economies. HK$5 million (US$645,000) of rewards will be split among the top six.
Founded in January 2012 by British-Israeli serial entrepreneur Zvi Schreiber, Freightos is a startup based out of Hong Kong. In Schreiber’s words, it’s the equivalent of Expedia, Orbitz or Kayak for the shipment of goods rather than people. It aims to address the world of freight — as the name implies — especially on the international shipping side, which spends about US$1 trillion per year on importing and exporting US$19 trillion worth of goods.
“This is the backbone of the world economy, but it’s actually very outdated,” Zvi Schreiber, Founder and CEO, Freightos told e27. “The freight industry has not yet at all adopted the online revolution, whereas if you want to fly a passenger from A to B, you can find prices online in seconds. If you want to ship goods from A to B, you can’t find the price online at all, in almost all cases. This seems to be something that got forgotten in the 20th century, and it’s time it was brought into the 21st century with automatic online pricing.”
While Freightos has already had recognition within the freight industry, Schreiber says winning StartmeupHK gives it broader recognition. It will also bring rewards including free office space in Hong Kong, legal and accounting services, and some other perks to be confirmed by the organisers.
The startup has already secured two rounds of impressive funding — a partly-crowdsourced US$1.7 million seed round in November 2012 and a US$7.6 million Series A round in September 2013 (extended in September 2014) from a venture capital.
Schreiber describes himself, half tongue-in-cheek, as an ‘unemployable’ serial entrepreneur. He has a PhD in computer science, originally working as a software engineer in London, but for much of his life has lived in Jerusalem. One of his previous software startups, Unicorn Solutions, was exited in an acquisition by IBM.
After that he became CEO of his father’s manufacturing company Lightech, where he got a lot of exposure to the world of international freight shipping. Lightech manufactured in Shenzhen, China and distributed to global markets like the US and Europe. The company was eventually sold off in an acquisition by GE Lighting, freeing up cash for Schreiber to start Freightos.
“The goal is really to modernise the industry, and that’s going to take years. The dream would be to IPO in three or four years’ time. I’ve had acquisitions before, so I’d really love to keep this (one) for going public eventually and exit that way, but we’re in a rapidly changing world so I can’t really predict what will happen,” he said.
Freightos is the first time Schreiber has registered a company in Hong Kong, which was chosen due to it being a key logistics hub, the world’s number one cargo airport, the number three seaport, and home to more than 100,000 supply-chain companies. At the same time, it has a modern Western corporate law and court system, plus attractive tax regimes. Being a gateway to Mainland China is also key.
“China is still the number one origin of international freight shipments. More freight shipments start in China than in any other country in the world, so it’s very important in that respect. But it’s also one of the harder places to do business for a Western company — language barriers, legal barriers, Internet connectivity issues, etc. So having the base in Hong Kong with proximity to China and language skills is very helpful,” he said.
The biggest obstacle for Freightos, even given its incredible success, has been the conservatism in the logistics industry. Persuading big logistics companies to change hasn’t been easy. While progress is being made, it remains a big issue.
Freightos is currently working with dozens of freight forwarders and 3PLs. It claims to automate ‘many thousands’ of shipping quotes every month, and that’s growing rapidly. In October, it generated six times more quotes on its network than in January. According to Schreiber, the company has customers on every continent, but the US and Europe remain key as the world’s largest import markets.
“We’ve proven the product, so it’s really now about growth for us… It’s about scaling. We need to go from a handful of companies to really trying to capture a big part of the industry. We’re well funded for now, but this is a big industry and at some point we will want more capital. We’re just in a very fortunate position of not being in a hurry for that,” Schreiber concluded.
Look out for Freightos, you’ll be hearing from it again soon. It just depends whether that’s with news about a monstrous Series B round or an IPO. In the meantime, Schreiber and his team will continue to bring into the 21st century that beastly ‘backbone’ of the world economy, one shipment at a time.