2 system experts go after the $200B Indian shipping industryVishal Krishna
Ocean freight is something that confuses the one million SMBs that export their products in this country. There are 49 million more that do not have the ability to go global because they have not understood the processes required. The confusion starts because there are too many agents and multi-level freight forwarding companies that make no sense to individual entrepreneurs.
Striving to change all that, Shahid Israr, Co-founder, Shipwaves, says, “The frustration of endlessly waiting for quotes for shipments, lack of transparency in rates quoted, and the inability to compare rates for the same shipment led us to create a shared technology platform for shippers.” This startup, founded in March 2015, strives to empower shippers by bringing freight forwarders closer to assured business and continued customer relationships. “Today, there is a need for overall accountability for final delivery through the same common platform. This is the first step towards easing the process of ocean trade for the vast SME sector in India,” says Israr.
With Shipwaves, two Mangalore-based friends are targeting India’s $200-billion shipping industry. The business case is to offer dynamic pricing to shippers and work with the best shipping lines.
The platform was built by his co-founder Athahar Mohammed, who has worked as an engineer with Apple and PayPal. He is also a graduate of the University of California where he finished his MBA. Shahid is a Queensland University of Technology, Australia graduate who has worked in the logistics industry for a decade. Being friends from childhood, both of them met in Dubai for a get-together when Israr asked Athahar if he could help him build a solution for the business case in India. Both quickly did the math and realised that a technology platform that could include all freight forwarders, shipping lines, and SMBs on to the same platform, digitally, was going to be very popular. They quickly discussed this with a couple of large manufacturing companies in Mangalore, who decided to pilot with them.
The business model
The company works on a pay-as-you-go basis and takes money from the SMB when it blocks freight to ship goods.
“We have inducted senior members in our team who bring a wealth of experience from this industry and we have already handled 1,000 container shipments last year. We plan to double this target this year. We have had early successes with shippers from diverse verticals like seafood, cement, and machinery,” says Athahar.
There are two types of services in the logistics industry:
- Movement of cargo over land, ocean, and There are automated trucks and robots to move cargo within the port and load in the ship being tested out in western countries, but the full-fledged implementation will take time.
- Skilled manpower to negotiate the complexities of the trade like optimising the cost of supply chain, logistics, and customs paperwork, some of which are moving online.
“Trust and services is a major factor in this business and we are helping the shippers in the transformation of the conventional practices,” says Athahar.
The two friends are not just providing software — they are creating a platform.
With their internal software and big data analysis, they have data patterns to suggest and advise users over the entire supply chain, starting from the storage of cargo, land transport routes, and port congestions to customs rules and shipping lines to choose from.“We counsel our customers on their logistical needs with our industry expertise and transparency with multiple options provided to them, to bring about efficiency in costs and overall supply chain management,” says Israr.
Their competition is Shipping Exchange, which has also made inroads in the industry with a similar business model. “Most of the containers that go out are only 60-percent full, so we tell the freight forwarders that an SME’s products can fit into the container and the freight forwarder gets extra revenues in the process,” says Ashutosh Shrivastava, CEO, Shipping Exchange.
Then there is ODex, which offers digital documentation to shippers.
Although shipping is a vast industry to be explored, it does not interest techies because of the lack of transparency. Moreover, it requires people who can understand the business. However, ShipWaves and Shipping Exchange have viable business models and are scaling up. Both the companies are close to the $1-million revenue mark. Shipwaves has invested less than Rs 1 crore to scale the product.
Athahar and Israr have the right combination, which is the ability to build technology and win business, to succeed. Now it is only a matter of time before they take their product global.