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FourKites will use the new funding to develop its product offering and to expand globally
Transportation has the reputation for being a space that hasn't embraced technology to make itself more efficient, but that's quickly changing, thanks, in part, to the government, which has recently begun to mandate some advancements in the way the space operates. That includes the electronic logging device (ELD) mandate. Passed in 2012 by the U.S. Congress, and having gone into effect in December, it forces all trucks to be outfitted with devices that track, manage, and share records of drivers’ on-duty hours. What this essentially does is bring trucking online for the first time.
FourKites, a predictive supply chain platform, is taking all of that data and turning it into something actionable for the shipper.
On Wednesday, the announced that is raised $35 million in Series B funding. The round was led by August Capital led the round, with additional investment from existing investors Bain Capital Ventures and Hyde Park Venture Partners. It was also revealed that Eric Carlborg, general partner at August Capital, will join the board of directors at FourKites.
With this latest funding, the company has raised $51 million in total.
Launched in 2014, the Chicago-based FourKites takes data available from shippers, fleet management systems and GPS trackers, and uses it to help shippers be more efficient by allowing to track their fleet in real-time.
"Due to all of the mandates, there’s an explosion of data that is being generated by all of these devices that are attached to the tractor or the trailer. Because the trucking industry is so fragmented, though, it's sitting in silos. Shippers don’t have a good way to access this data in a real time fashion," Mathew Elenjickal, founder and CEO of FourKites, told me in an interview.
"We collect the data, that is step one. That’s not easy to do, but anyone can do it if they put time and resources into it. What really differentiates us is making it actionable, the predictive nature of the output, that’s what differentiate us, and that’s why we’re getting a lot of traction among the shipper community."
FourKites also provides collaboration tools on top of that which allow shippers to reduce missed appointment fines and detention fees by rescheduling deliveries in real time by allowing them notify customers in advance when shipments will arrive late or early. It also helps to eliminate check calls and enable tracking team to focus on managing exceptions, as well as to allow the reroute of shipments in real-time based on weather, traffic and even shifts in demand.
One of FourKite's customers is Kraft Heinz, which Elenjickal said uses a combination of 100 different carriers to move their freight.
"Before FourKites, if Kraft were to find out what is happening in their supply network, they'd have to look at 100 different websites to figure out what is happening. Or they have to call carriers one by one, or set up an EDI, which is an outdated technology format from the 1950s, to understand what is happening in their network. None of these are real time, and it adds pain to their daily operations. That’s what FourKites is solving," he said.
FourKites has grown revenue by 400 percent over the last 12 months, and is signing large shipper customers at a rate of one per week. Other FourKites customers include Best Buy, Conagra Brands, Nestlé, Perdue Foods, Smithfield Foods and US Foods.
From an ROI standpoint, what FourKites provides can save companies both time and money. If a truck doesn't show up on time at a Walmart, for example, they lose shelf space, and it can affects sales. There can also be detention charges at the location if the truck shows up late, and that can be eliminated by either showing up early or by having proactive communication with the receiving location.
FourKites also has several manufacturing clients who get raw materials from the vendors. If they don’t have the raw materials on time, they have to build some buffer inventory at their production facilities, which costs a lot or can lead to a production disruption.
"People might think that knowing where the truck is a nice to have, but once you apply this to all of these real life use cases, it is a must have. Companies have been grappling with this issue for a long time. Now they have a solution because of the ELD mandate and companies like FourKites," said Elenjickal.
Part of what sets FourKites apart from others in the space is its focus on shippers, and on ELDs. More importantly, unlike other players, it remains independent from a larger transportation management system or ELD company.
"There are few players out in the space, companies like MacroPoint, which sold their company to a TMS player, Descartes. There's another company called 10-4, they sold their company to Trimble, the ELD company. So what ended up happening is the competition is part of another, bigger company, that is providing a TMS or an ELD, so that is really restricting their ability to build a network that includes everyone," Elenjickal explained.
"If I'm not neutral, if I have a TMS product, then other TMS players might not be that open to integrating with me. If I have a GPS product, then other GPS players will not integrate with me because there's a competitive angle there. Any player that wants to play in this space has to be neutral. We are the only neutral player right now in the market; everyone else is part either a TMS or a GPS company."
FourKites plans to use the new funding to continue developing its product, with new features that allow for better tracking and analytics
"The way we think about tracking, that is just a starting point. That’s a significant addressable market in the billions of dollars but, from a product standpoint, we are working on a few different interesting ideas," said Elenjickal.
One of those is predictive capacity management, where the company will be able to predict when trucks are going to be empty, so they can try to match within the shippers network.
"Because of the ELD mandate, there’s a lot of capacity crunch happening in this industry, a lot of drivers exited, the industry, so shippers are trying to find trucks where they can put products to ship. With this predictive capacity management, we can predict when trucks are going to be empty, and we can take a lot of inefficiency out of the market. It’s in beta so that will be production ready soon," he said.
FourKites will also being creating benchmarks for shippers.
"We already have a lot of analytics in place, the data that we collect we create reporting for customers in terms of on time performance, all those things. We are taking it one step further, and we are creating benchmarks, which shippers can use to better plan their supply chain," Elenjickal said.
"For example, if I have a location in Chicago where multiple shippers are shipping to, I can predict how long a truck is going to wait at that location, and I can also predict that is the best time of day when a shipper should set up an appointment, based on all the historical facts that I have on the platform. That can be used for better planning purposes by the shipper community. Benchmarking is very important on lane level, at a stop level, on a regional level. So we’re creating all those benchmarks and value for our customers."
In addition to product development, the funding will also go toward geographic expansion. The company recently signed international deals with Unilever for supply chain tracking across Europe, and with AB InBev in South Africa, and it will be adding 18 language packs for its customer base all over the world.
Finally, the company, which covers all modes of transportation, including truck and rail, plans to go deeper into covering both ocean and air by adding more features. Right now, all FourKites does in those modes is tracking, and it plans to enhance them with more reporting and benchmarking layers.
Ultimately, Elenjickal sees FourKites being the lynchpin for a lot of the technological advancements that are coming in the next few years for transportation, including autonomous trucking.
"Let's assume that I'm a self driving truck. If I'm going to ship to a location, I should know when I should show up and exactly how long I'll be there waiting. All of that intelligence has to be built into the self driving technology, and I think FourKites will play an integral part in that evolution because we have that intelligence, related to the shippers. Only we have it because we have the shipper data, and we've been collecting it for 10 or 15 years. Any self driving technology player out there, they have to partner with FourKites to build that end to end autonomous solution. Otherwise it will be restricted to certain part of the drive. Our focus is on shippers, so self driving technology companies will partner with FourKites to complete the equation by including the shipper's perspective into that journey," he said.
More broadly, he believes that FourKites will be the one company that is able to offer a global, end to end solution for the supply chain.
"If you look at the global supply chain, the most complex parts are the over the road piece, in North America, Europe and Asia. The trucking is the complex piece, which is what we have mastered. When you talk about ocean, it's not that fragmented; 30 steamship lines in the world control 95 percent of the market. Our approach is to start with the most complex and then add all the other modes on top of it and build this end to end supply chain," he said.
"If you are Best Buy and if you're getting products from the Far East to a distribution center in Minnesota, we should be able to tell exactly when the products are going to get to Minnesota as soon as leaves the plant in China. That's the kind of power that we want to provide our customers, and that end to end visibility piece. We will be able provide that."
(Image source: wp.fourkites.com)
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FourKites is reinventing the complex communication systems in the logistics industry by providing a cloud-based SaaS platform that allows for seamless communication and real-time collaboration across the various entities in the logistics landscape. The company enables shippers, freight brokers and third party logistics providers to monitor the exact location of trucks and the freight status based on data from Electronic Logging Devices (ELD/GPS) already installed in commercial trucks. FourKites is partnered with a network of more than 25 Electronic Logging Device (ELD/GPS) manufacturers in North America and is constantly expanding its ecosystem based on customer demands.