Lacking transparency, rife with middlemen, and consisting of “total information asymmetry between buyers and sellers,” is how Xeneta CEO and co-founder Patrik Berglund understatedly describes the murky sea freight industry. It’s also an industry he says is worth $200 billion worldwide, and, by all indications, certainly one ripe for disruption.
Taking up that call, Xeneta offers a crowdsourced price comparison service for sea freight. It lets companies share the prices they are given and compare these to the market average and ‘best of class’ for various routes and lanes, therefore helping to make for better decisions relating to the shipping component of their business.
Or, in the Oslo, Norway-based startup’s own words, by using ‘big data analytics’, it wants to “re-write the playbook on how logistics decisions are made”.
I’m also told that Xeneta’s typical users are companies doing an average of 20 million dollars per year in container shipping. Therefore, even a small difference in price for a particular route can make a quantifiable difference to the bottom line.
Meanwhile, to help with its mission to bring greater transparency to the freight industry, Xeneta has raised a $5.3 million Series A round of funding. The investment comes from previous backers Creandum, Point Nine Capital, and Alden, alongside new investor Alliance Venture, and brings the total raised by the startup to $8.5 million since it was founded in 2012.
Xeneta says it will use the additional capital to accelerate its “product innovation and growth”. This will include unlocking and capturing more of the value of its data, with additional premium features, now that it feels it’s solved the ‘chicken and egg’ problem inherent in its crowdsourced model.
That is, without enough data being put into the system — specifically, pricing for various port-to-port lanes around the world — the value of using Xeneta diminishes.
However, it appears that a tipping point has been reached, with the startup claiming ‘market intelligence’ for more than 50,000 port-to-port combinations, up from just over 1,000 in less than two years.
As another metric, Xeneta’s crowdsourced database of prices now amounts to over $3 billion in annual freight spend. So, if we take the company at its word, a pretty decent chunk of that $200 billion overall.