“We track the causes of every minute’s delay”
Fully digital freight forwarder FreightHub aims to offer global customers the best possible forwarding service – whether by road, sea or air. Customers can use a central platform to obtain quotes, book shipments, manage documents, track freight and analyze supply chain data. Erik Muttersbach, co-founder and CTO, talks about the vision and future goals of the fast-growing start-up, which recently secured Series B financing of $30 million.
What makes FreightHub fundamentally different from other players in the industry?
We are one of the first digital international freight forwarders, and we are certainly the best-known. What sets us apart from Flexport in the US, for example, is our strong focus on technology, which allows us to design and digitize processes differently right from the start. Compared to a traditional freight forwarder, we are a very modern, customer-focused organization that aims for simplicity.
FreightHub secured Series B financing in sprint 2019. How do you convince investors?
The key was that in the past, we were able to demonstrate our ability to achieve a very high level of customer satisfaction with our platform, service and technology, our operatives, and the support we provide to our customers. We have a client fluctuation rate of only around two percent per quarter, which is very low – for some forwarders it is 50 percent. We are therefore showing that digitalization is attractive to customers. Secondly, we can work internally and extremely efficiently and need far fewer operatives than a traditional freight forwarder. For an investor, these two factors combined mean that FreightHub could become the most profitable freight forwarder on the market over the next five years, with a significantly higher EBIT as a result. In recent years, we have been able to multiply our revenues considerably, which is an important indicator. And last but not least, we are a very complementary team that is well positioned in all areas – Operations, Technology and Sales.
What are your goals in the air freight sector?
We are currently working on improving the visibility of freight on our platform. This enables customers, for example, to plan when employees need to be available to unpack incoming goods on arrival. In the long term, giving our customers automated improvement suggestions based on the data we collect is one of our main objectives. We record, for example, the reasons for each delay and any additional financial expense. For every minute’s delay and every Euro cent deviation, we track exactly how it occurred and how it affected the final delivery time and invoice. This gives us a very accurate picture of what is happening in the customer’s supply chain and, after we have been working with them for some time, we can offer suggestions for improvement. Ideally, this reduces costs or raises performance.
FreightHub is a digital freight forwarder, but you and your co-founders don’t have a background in the industry. How well does that work?
The perspective we had as non-industry professionals entering this relatively complex B2B industry, and the way we interpreted customer needs, helped us to be very innovative. But it definitely created some problems that we had to solve by learning more about the industry too. However, all this means that we now have a thorough understanding of both the new and traditional worlds of freight forwarding.
What attracts you to logistics as a team?
As a computer scientist, I get a real kick out of bringing added value to the world with digital things. I think we can say that we make global trade easier. For example, we also help many small vendors to run e-commerce, for example, people who discovered yoga mats while on holiday in Brazil and import them with us. You could say this leads to a kind of democratization of global trade and benefits the economy as a whole.
More trade also means more CO2 emissions. What role does sustainability play for FreightHub?
The issue is very close to our hearts. We are all young, the last four years have been the hottest in history, so ‘The Time is Now’. Our entire company works in a CO2-neutral way. For example, we have water dispensers in the office, we all travel by train if possible, and when we order food, it is always vegetarian. We also help our customers to optimize the utilization of their containers. This has twice the benefit for them, as they save on shipping costs too. In the future, we will also display CO2 emissions and other key data for sustainable shipping on our platform, but unfortunately this is not something customers are requesting widely yet.
What was your vision when you founded the company – and how has it changed since then?
Despite taking many detours, our vision is still the same almost three years down the line: We want to make this industry much simpler. Logistics is a strong driver of economic success in Germany, but it is still inexplicably analog and non-transparent. Every year, 130 million containers are transported and 30 to 50 emails are written for each of them; there is an extra sheet of paper for each container that flies from Shanghai to Hamburg. With us, no customer has to write emails, they don’t even have to call – everything runs automatically and much more transparently. Customers always know where their goods are, can plan their supply chain much better and improve it by working with it daily, and make better decisions with the help of concrete data.
All this means lots of advantages for customers, but are they ready to change too?
I believe that in Europe, our basic market-democracy orientation is great, there is a lot of money in the market, lots of smart people and good companies. However, we are not open enough to innovation and digitization. We have to change that, in the logistics world too. Our biggest challenge as a start-up is the mindset of our partners. Many market participants are unaware of the opportunities we have with digitization and transparency, both customers and partners – for example airlines, freight handlers at ports and air freight terminals. As a digital freight forwarder, we meet truckers who say, ‘It’s too complicated for me to work with you,’ and shipping companies who want to keep their ‘people’s business’. Air freight is definitely ahead in terms of digitization. Today, we are at a point where around 30 percent of all air freight business processes are already digitally mapped. This saves a lot of time: I don’t have to worry about time zones, the machine works automatically, and all the processes are a bit simpler and faster – this enables higher quality at lower costs. The remaining 70 percent are still to get on board.
Which customers did you reach first?
Our initial partners were the classic early adopters – the kind of people who might be wearing an Apple Watch. It was clear to them that paper slips and faxes could not continue in the long run. These included, for example, entrepreneurs who already thought very digitally as Amazon Marketplace sellers. Over time, we have worked our way up to more traditional customers who place their trust in you when you can show that you have been successfully moving containers for three years and have significantly multiplied the volume every year. Today, for example, we work for well-known brands such as Home24 and Miele.
What arguments do you use to convince skeptics?
All our customers tell us they want to improve. They want to deliver their goods more reliably, more punctually and achieve more predictability. But as long as you have an analog process, you can only measure the height of the stack of paper you are printing. And you can only improve processes if you digitally map them properly and extract data – then you can see the problems and solve them.
How do you as a company find the right employees – who need to have this mindset too, after all?
In job interviews, we take great care to ensure that people are open to new ideas. They don’t necessarily have to be computer scientists – we’re also excited about getting people from forwarding companies who have a background in logistics. This balance of people from different backgrounds is exactly what makes a good team. You could say that we bring together Berlin digital expertise and Hamburg logistics excellence – combined with a corporate culture in which everyone can ask questions and everything can be challenged.
Many established players are afraid of questioning everything. Are you afraid sometimes too?
It is true that even we are increasingly confronted with the fact that, on the one hand, we have well-functioning sources of revenue and good customer relationships, but on the other hand, we must not stand still. For instance, we have to ask ourselves if we can’t make the products we sell today five times more transparent. However, putting that into practice could initially mean taking a hit, while our investors are expecting growth. If we deviate from our course even a little and maybe take a detour, that is a risk. On a small scale, this is the same problem as a large company for whom a change means, for example, that a business unit will initially lose sales or that employees will be unable to cope and will leave. Nevertheless, we must always continue to develop further.
So it’s a case of: ‘Don’t hesitate, just do it’?
Exactly. In my opinion, it is fine to make a wrong decision now and again, but you should make it quickly and find out soon if it works. Then you just have to think about it regularly and check whether you are still on the right track. Ideally, all this should be done without getting too political.
How long do you hope to continue as Team FreightHub?
We are often asked that. I think if we were looking to sell FreightHub as soon as possible and make a lot of money quickly, we probably would have sold shoes online. That might have been easier. We don’t want that. The company is our passion and we are building it to be a long-term success. We want FreightHub to go public at some point, and I am sure we have what it takes to be one of the top five logistics companies listed on the stock exchange in the future. We are very clear that this is our goal.
Text by Juliane Gringer
Photos: FreightHub, StockSnap via Pixabay
Photos: FreightHub, StockSnap via Pixabay