Technology fact that logistics does not have enough structured data and hence [ broad generative AI tools ] are the only way forward has not been broadly understood. But once this changes, we’ ll see a real breakthrough.”

Indeed, it feels as if the concept of digital forwarding, long decried by industry veterans as a shiny wrapper on nothing new, has come of age in the era of AI.

That makes the struggles of Forto, which saw CEO Michael Wax depart earlier in February, more intriguing. At a time when forwarders writ large are figuring out what tools to use to make them more operationally efficient and the customer experience less cumbersome, Forto would seem to have missed its time.

The company raised nearly $ 600 million in venture capital since its founding in 2016. That, and a $ 2 billion-plus valuation in 2022, weighed on the business as it struggled with a rough market for forwarders in 2023 and early 2024.

Flexport, by comparison, has raised $ 2.7 billion, an amount that has been both a blessing and a curse. The funding has enabled it to navigate downturns in the international freight market, manage in-house turmoil during the six-month period where Dave Clark served as CEO, and invest in technology to differentiate itself in a largely commoditized market. But that funding has also constrained the number of paths Flexport can take, whether by acquisition or going public.

Upending global logistics

Digital forwarders that didn’ t raise huge amounts of venture capital in the last decade have seen rosier outcomes. iContainers, one of the original companies to emerge in the digital forwarding era, has found its niche after merging with Agility’ s former in-house digital forwarder Shipa Freight. In 2021, Bollore acquired Ovrsea, a French digital forwarder, which now serves as Bollore’ s in-house digital channel. ExFreight, likely the first digital forwarder, has carved a quiet but successful niche in marrying international and domestic legs through customers lured by its electronic quoting tool.

Digital forwarders in other regions, such as Shipwaves in India and Nowports in Latin America, have seen various degrees of success. But the latter is struggling against the same forces as Forto and Flexport— a large valuation built on multiple rounds of venture funding.

“ AI doesn’ t blot out the sun. You still have databases and workflows.”

Now, venture capital groups seem likely to take another run at upending global logistics through investment into dozens of AI-focused startups tackling discrete forwarding functions.

These startups, working on things as mundane as product classification or contract data extraction from emails, are able to build products faster than their predecessors. This creates an awkward environment in which companies emerging as recently 2020 appear to be a bit behind the times since the advent of generative AI, with products such as ChatGPT and Microsoft Copilot heralding a lightning-fast era of coding and product development.

“ I used to say we were the first forwarder built after the web browser, but now there are probably companies that can say they’ re first since ChatGPT,” Petersen said.

email: eric. johnson @ spglobal. com

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