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25 September 2019 - Tim Ole Jöhnk

Letters from Silicon Valley: September edition

Letters from ...
Letter Silicon Valley september title

Digitalisation is causing supply chains to evolve rapidly. And there is no better place than Silicon Valley to find out just how quickly things are changing. In this edition, we are telling the stories of start-ups that made it their quest to turn the world of logistics on its head.

We are also giving you the chance to join a delegation from the Northern German Innovation Office (NGIO), a partner of Bremeninvest. You will find further details at the end.

Once upon a time in Silicon Valley: how an MBA student got on the wrong side of Apple

The story goes that Steve Jobs almost exploded with rage on 22 May 2008. And why? Tech giant Apple, which has always been obsessive about secrecy, was caught out by a small start-up called ImportGenius. This was great news for Ryan Petersen, who had founded the firm just a year earlier and was on the verge of completing his MBA at Columbia Business School. It meant that ImportGenius had achieved its breakthrough.

What happened? ImportGenius is a search engine for customs declarations and freight lists. Sifting through vast quantities of data, Ryan and his team spotted 188 mysterious shipping containers. They had been rented by Apple and contained ‘electric computers’, a product description never used by Apple before. A closer look at the data revealed that one load contained 544 crates with a total weight of around seven tonnes. At that time, Apple was not importing any goods labelled ‘desktop computers’, stocks of the iPhone 3 had been virtually exhausted across the US, and mobile phone provider AT&T had banned employees from taking holiday in June and July due to an ‘exciting summer promotional launch’.

The team at ImportGenius quickly put two and two together, realising that the mystery freight had to be the new iPhone 3G. They were right: Jobs announced the device at the Moscone Center on 9 June 2008 (by the way, most of the Apple engineers in attendance were allegedly drunk, but that is a different story). The discovery brought ImportGenius many new customers, fresh capital and recognition.

In fact, ImportGenius was only Petersen’s first successful start-up. He is also CEO and co-founder of Flexport, the ‘unsexiest trillion-dollar start-up’.

Logistics supply chains are going digital and thus becoming more efficient
Logistics supply chains are going digital and thus becoming more efficient

The importance of transparent supply chains in the modern world

Why are we telling you these stories? “Transparency begets data, which begets efficiency”. In the years since ImportGenius incurred the wrath of Apple, transparency in the supply chain has become vastly more important. But today, transparency is much more than just an operational advantage for freight forwarders and freight brokers. It is now a crucial element in the competitiveness of entire sectors.

In the logistics industry, the supply chain is currently going through a digital revolution. Companies are facing new challenges right along the value chain due to the move away from bricks-and-mortar retail and the accompanying growth of e-commerce.

The predicted global economic slowdown and the increasing prevalence of trade barriers require supply chains to become leaner and more efficient, without losing any of their resilience. We are also seeing a shift in consumer behaviour among millennials, who now form almost the biggest generation. Made-to-order and last-minute customisation strategies are gaining importance both in B2B and B2C business.

Survival in this new environment requires collaboration between the different players along the length of the supply chain. New solutions for the sharing of data and the more flexible deployment of staff and production capacity are needed. Automation, robotics and greener options for transporting people and goods have a major role to play.

Whether coffee, fish or meat, consumers are increasingly keen to know the provenance of their food – and that calls for digital solutions
Whether coffee, fish or meat, consumers are increasingly keen to know the provenance of their food – and that calls for digital solutions

Visibility throughout the food industry supply chain

In the food industry, the demand for transparency in the supply chain is higher than in virtually any other sector. According to data, 68 per cent of US households with annual income of more than US$ 20,000.00 are willing to pay more for food when they know its origin. This percentage rises to 73 per cent among millennials. We only have to remember the horsemeat scandal in Germany. Who would not want to know the exact source of the meat on their plate?

Happily, there are start-ups such as Bext360, which is based in Denver, Colorado and has developed a SaaS platform that brings together data from machine learning, AI and blockchain. The start-up is currently focusing on its first projects, in areas such as the production of coffee beans, seafood, timber, minerals, cotton and palm oil. Bext360 deploys robots with automatic image recognition in order to assess the quality of commodities while they are still on the farm. Every individual coffee bean is scanned and rated. This means that Bext360 and the farmers always have an accurate idea of the quality of the products and can therefore negotiate a fair price.

This is stored on the blockchain. Bext360 also pays the farmers via this platform. When buying a cup of coffee, consumers can see exactly where the beans have come from, what price the farmer was paid and how the beans were transported from the country of origin to the coffee shop. For anyone wanting to know more, a fascinating video is available here: https://www.youtube.com/watch?time_continue=82&v=sP14yyQaz3s

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Andreas Gerber

Team Leader Bremeninvest

+49 (0) 421 9600-123


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