From transparent pricing to real-time tracking, here’s how Shiplyst is dealing with the ocean freight industry's challenges
Mumbai-based ocean freight procurement marketplace Shiplyst helps exporters and importers to instantly generate freight quotes. The startup was picked by 500Startups to be part of their winter batch and showcase its technology to global clients.
The freight transport industry today faces a number of bottlenecks. Lack of information and pricing transparency on a real-time basis are the primary concerns.
However, the business of shipping is now getting a shake-up, thanks to a clutch of startups that promise to bring greater efficiencies to ocean carriers, freight forwarders, and their customers.
Mumbai-based startup Shiplyst, started by Méhul Doshi and Manish Singh in August 2017, is an ocean freight procurement marketplace that helps exporters and importers in India to instantly generate freight quotes.
According to the startup, on an average, its customers are able to save up to 10 percent on their freight cost because of transparency and supply chain automation.
Shiplyst was part of the 500Startups winter 2019-2020 batch in San Francisco, and was the only Indian startup selected for its unique business.
The Shiplyst journey
Manish and Mehul graduated from the University of Mumbai, and knew each other since their college days. They also co-founded two startups before starting Shiplyst.
Prior to Shiplyst, the duo was working on technology solutions for freight forwarders through their startup. At the same time, in 2015, Manish'’s brother got an export order and found it extremely cumbersome to figure out the entire export process. After talking to his brother, Manish realised that the ocean freight industry thrives on non-transparency and lack of timely information.
The duo knew many freight companies, and would constantly bounce off ideas of a simple platform for freight booking and shipment management. This received a very positive response from the freight forwarders. So much so that one of the clients decided to close his freight forwarding business to join them full time as a co-founder.
This is how they got their third co-founder, Sharad Kumar, who is now head of growth at Shiplyst. The startup has a 30-member team at present.
“Talking to exporters brought forward the same issues related to non-transparent pricing and complex processes. At this point, we knew there was a need to make things simpler and transparent, and that this could be a big business opportunity,” Manish says.
The B2B platform
Shiplyst is a B2B marketplace, and its customers include exporters or importers who are looking to send freight through the ocean.
Currently, these exporters/importers rely on freight brokers or custom house agents to help them with freight booking, and very often, the price is not disclosed in the process. “Needless to say, this is a highly cumbersome and non-transparent process, which is prone to errors,” Manish says.
Once an exporter registers on the platform, they can compare freight quotes from more than 50 shipping lines. They can also book and manage the entire shipment process on the marketplace, including transmitting shipping instructions and receiving a copy of the bill of lading. The platform is connected in the backend to all major shipping lines, and can communicate shipment status in near real time.
"It took us five months to get the first sale after the launch in April 2018, after seven months of iteration from August 2017. "
Shiplyst’s first customer was an agro commodity exporter from Indore. The startup pitched the concept to the client and gave them a product demo. Looking at the simplicity of the portal and how it made doing business easier, the client made a booking for 20 containers for the first order, and thus began Shiplyst’s journey.
To start up, the founders borrowed some money from their families, and pumped in their savings - a total of less than Rs 1 crore.
It also raised a pre-seed investment from San Francisco-based VC firm and accelerator 500 Startups. Apart from this, Shiplyst raised some money through angels; it has raised close to $200,000 in total.
Challenges and business model
The ocean freight business is operationally very intensive. One has to co-ordinate with multiple companies in different geographies and jurisdictions for each shipment.
Also, connecting many shipping companies on a single platform is challenging as there are no standardised APIs or EDI formats in the industry. Wherever such EDIs exist, access is not easily provided as agents want to protect that information.
The startup faced initial hiccups as customers were sceptical whether ocean freight could be booked on a portal and tracked. They also had concerns about who would be handling their cargo and the reliability of the service.
Shiplyst charges a percentage of freight cost as its commission from vendors. The founders say freight rates are completely transparent, and customers do not have to pay any additional fees.
Apart from domestic shipments, the startup claims to have handled some cross-country shipments from Southeast Asia to Africa as well. The challenge to expand globally lies in understanding local regulations, customer expectations, and cultural issues, both at origin and destination, to successfully execute the shipment.
The company has shipped over 5,000 TEUs (twenty equivalent units) in the past few months, and is projected to cross $5 million in sales by FY20. The startup claims the number of containers shipped through its portal has grown 25 percent month on month for the past 12 months.
Market and future plans
According to MarketWatch, the global ocean freight forwarding market size was close to 100 billion, and expected to reach $164 billion by the end of 2025, with a CAGR of 7.4 percent during 2019-2025.
The opportunity is large as the international freight and logistics segment is scattered, and there is no single platform that can provide all the services to an exporter. FreightCrate and Flexport are some of the other startups competing in the same space.
Talking about its USP, Shiplyst claims it is a single platform that helps exporters with all the services they need for a smooth export transaction – from freight booking to cargo insurance. It is also able to drive down the unit economic cost and pass on the benefit to customers with automation.
Shiplyst now plans to grow transactions on the portal by 10x from the current level in the next 18 months. At present, the company has over 850 registered exporters.
(Edited by Megha Reddy)