Freight forwarder Zencargo’s co-founder explains how the company uses technology and digitalisation to plug the supply chain efficiency gap
UK freight forwarder Zencargo was launched at the start of 2017 after its founders saw how “complicated” logistics was and decided to solve this by ironing out inefficiencies through technology.
The company is headed up by childhood friends and co-founders Alex Hersham (former associate at Goldman Sachs) and Richard Fattal (previously at Morgan Stanley and Google).
In an interview with Container Shipping & Trade, Mr Fattal explained that family connections to the logistics business first sparked his interest in this sector. “Three generations of my family were involved in international trade,” he explained. He singled out his grandfather. “My grandfather was involved in freight forwarding in the UK and was doing business in Europe and Africa, so in my childhood I heard stories about freight and shipping.”
Mr Fattal also had a spell working in trade in Africa, where he was involved with a company shipping cocoa. “The logistics was very difficult, and I saw first hand how complicated it was to organise logistics, and that very little had changed since my grandfather’s days,” he explained.
“We came together to solve a problem that we have seen first-hand – inefficiencies and the time wasted in organising purchasing and logistics around the world”
He pointed out Mr Hersham’s previous career also alerted him to challenges within the supply and logistics chain: he worked for a large US hedge fund buying container ships and selling them to shipping lines.
Mr Fattal summed up “We came together to solve a problem that we have seen first hand – inefficiencies and the time wasted in organising purchasing and logistics around the world.”
Key to Zencargo’s business is its digital platform that allows beneficiary cargo owners (BCOs) to book, manage and keep track of their international freight and use analytics to optimise routes. This was built inhouse by a team of Zencargo engineers and is funded by venture capital finance.
Mr Fattal explained “It is very much based around communications and access to data. Most people are dealing with silo bits of information and there is no way of unifying it. Whether it is a retailer customer with 100 people responsible for chasing up suppliers in different parts of world or logistics people who can’t find out where their cargo is on the water, they want to see a view of all their shipments on the water.”
He also singled out the email inbox “nightmare”, whereby there are so many communications and streams of information on different shipments that they are not organised and can “get lost”.
In order to solve these problems, Zencargo built a platform that gives all parties all the information they need at the right time, and only shows them important information and actions they need to carry out to progress their shipment as quickly as possible.
Mr Fettel called the real-time platform an “interactive workflow”, covering the entire supply chain, from purchase order to end delivery. “They can see where their shipments are, and all shipment documentation and communications are in one place.
A crucial factor is that the platform is, said Mr Fattal, “constantly evolving” and it is “not just a question of it is built and finished”.
Mr Fettel said the company had calculated that its platform saved an average business dealing with 10 shipments a month one working week in time.
Furthermore, by having such a transparent view of the supply chain, it provides insights, so can save BCOs money over time.
Mr Fattal said “They can see what they are spending, where, and which of their suppliers are the most efficient, allowing them to make decisions and improve working capital by seeing which suppliers work best for them.”
The platform also reveals container line efficiencies – how long the supplier takes from the purchase order to the order being ready and how long it takes on the tradeline, from the start of the purchase order to arriving at the end warehouse.
Mr Fattal said Zencargo did not release figures on how many customers it has, but he said “We have grown incredibly fast”, with FTSE companies, small to medium businesses and lager companies spanning UK and Europe. The company covers all shipping lines, from the major international ones to niche carriers.
Carriers were increasingly focusing on digitalisation he said, singling out Maersk as being especially focused on this.
Commenting on shipping line needs, he said “They lean more to companies that are digital because then they save money in terms of how they interact with freight forwarders.” He added that the cost of interaction between them and freight forwarders is “very expensive” and might be as much as US$100 per transaction with all the paperwork involved. Therefore, a “streamlined relationship” between the shipping line and freight forwarder “really does help”.
He added “We work to streamline interaction with them – it is a work in progress. They realise the customer service that comes from a digital platform adds value to the end customer and helps them too.”
He commented that while many freight forwarders are embracing digitalisation, he believes Zencargo has a “fresh approach”. “We have been involved in consumer-facing businesses, so we understand the consumerisation trend, whereby there is a big trend among business-to-business executives to expect the same user-ability interface and apps they use in personal life. We put that at the centre of our business.”
The digital trend within the maritime and logistics supply chain has also been fuelled by younger people taking on decisionmaking roles in logistics businesses that have taken supply management and logistics degrees. “They are open to change and excited about the technology, and we use that to our advantage.”
He said there are three types of customers embracing what Zencargo are doing:
- Large businesses leaning to digitalisation and going through digital change processes. Mr Fettel said by using Zencargo, “we give a free way of digitalising their supply chain overnight with no investment”.
- Fast growth business and fast growth scale-up firms that are already digital. “They are excited about our platform as they can show data to customers and are already very data-driven in their whole approach.”
- Large commodity traders who need visibility about what shipments they are moving.
Mr Fattal summed up “We are attacking those three types and finding success and that is what is informing us on how we build our product going forward.”
The company is planning to open an office in China by the end of the year to give visibility to clients with suppliers in China. “We are acting on their behalf to reach out and have a close link with suppliers in this area, overcoming the language barrier and helping to build software to fit their needs. China is a key market for our customers. We want to create easy user interfaces for Chinese suppliers to give the data our customers need and cover any issues with the supplier chain.”
Supply chain inefficiencies according to Zencargo
Zencargo carried out analysis of over 100 shipments from a cross section of UK industries and its conclusions are:
£1.5Bn (US$1.9Bn) per annum
The amount inefficient supply chains are costing UK business
Processing shipments ties up these jobs’ unnecessary procurement and freight
Brexit could make trading with non-EU countries 17% less efficient
Technology adoption can deliver 5% of the annual UK digitisation productivity target