Logistics startup Zencargo raises $20M to take on the antiquated business of freight forwarding

Move over, Flexport. There is another player looking to make waves in the huge and messy business of freight logistics. Zencargo — a London startup that has built a platform that uses machine learning and other new technology to rethink how large shipping companies and their customers manage and move cargo, or freight forwarding as it’s known in the industry — has closed a Series A round of funding of about $19 million.

Zencargo’s co-founder and head of growth Richard Fattal said in an interview that the new funds will be used to continue building its software, specifically to develop more tools for the manufacturers and others who use its platform to predict and manage how cargo is moved around the world.

The Series A brings the total raised by Zencargo to $20 million. This latest round was led by HV Holtzbrinck Ventures . Tom Stafford, managing partner at DST Global; Pentland Ventures; and previous investors Samos, LocalGlobe and Picus Capital also participated in the round.

Zencargo is not disclosing its valuation, nor its current revenues, but Fattal said that in the last 12 months it has seen its growth grow six times over. The company (for now) also does not explicitly name clients, but Fattal notes that they include large e-commerce companies, retailers and manufacturers, including several of the largest businesses in Europe. (One of them at least appears to be Amazon: Zencargo provides integrated services to ship goods to Amazon fulfillment centers.)

Shipping — be it by land, air or sea — is one of the cornerstones of the global economy. While we are increasingly hearing a mantra to “buy local,” the reality of how the mass-market world of trade works is that components for things are not often made in the same place where the ultimate item is assembled, and our on-demand digital culture has created an expectation and competitive market for more than what we can source in our backyards.

For companies like Zencargo, that creates a two-fold opportunity: to ship finished goods — be it clothes, food or anything — to meet those consumer demands wherever they are; and to ship components for those goods — be it electronics, textiles or flour — to produce those goods elsewhere, wherever that business happens to be.

Ironically, while we have seen a lot of technology applied to other aspects of the economics equation — we can browse an app anytime and anywhere to buy something, for example — the logistics of getting the basics to the right place are now only just catching up.

Alex Hersham, another of Zencargo’s co-founders who is also the CEO (the third co-founder is Jan Riethmayer, the CTO), estimates that there is some $1.1 trillion “left on the table” from all of the inefficiencies in the supply chain related to things not being in stock when needed, or overstocked, and other inventory mistakes.

Fattal notes that Zencargo is not only trying to replace things like physical paperwork, faxes and silos of information variously held by shipping companies and the businesses that use them — but the whole understanding and efficiency (or lack thereof) that underlies how everything moves, and in turn the kinds of businesses that can be built as a result.

“Global trade is an enormous market, one of the last to be disrupted by technology,” Fattal said. “We want not just to be a better freight forwarder but we want people to think differently about commerce. Given a choice, where is it best to situate a supplier? Or how much stock do I order? How do I move this cargo from one place to another? When you have a lot of variability in the supply chain, these are difficult tasks to manage, but by unlocking the data in the supply chain you can really change the whole decision making process.”

Zencargo is just getting started on that. Flexport, one of its biggest startup competitors, in February raised $1 billion at a $3.2 billion valuation led by SoftBank to double down on its own freight forwarding business, platform and operations. But as Christian Saller, a partner at HV Holtzbrinck Ventures describes it, there is still a lot of opportunity out there and room for more than one disruptor.

“It’s such a big market that is so broken,” he said. “Right now it’s not about winner-take-all.”