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LogTech: Why VCs should pay attention to logistics innovation


In today’s dynamic business environment, embracing innovation is the key to staying relevant. However, the logistics sector in the UK appears to be holding onto traditional practices, often unaware of the hidden consequences.

For industry insiders, including venture capitalists and private equity firms keeping a watchful eye on the logistics technology (LogTech) sector, it’s essential to delve into these unspoken costs.

1. Losing talent

Within the logistics sector, there’s a pool of talented individuals eager to harness modern technology for streamlined operations. Unfortunately, outdated processes can become a source of frustration, driving these capable professionals to seek opportunities elsewhere.

For those in the know, this talent migration presents an opportunity to support companies that can attract and retain these skilled individuals.

2. Clients moving towards convenience

In today’s fast-paced landscape, clients, especially shippers, are relentlessly seeking ease and transparency in their logistics experience. They are increasingly drawn towards logistics providers offering self-service portals, called ‘client zones’, and other convenient solutions.

Logistic companies that lag in providing these modern conveniences may witness clients gradually migrating to competitors who offer seamless, tech-enhanced experiences. This underscores the pressing need for LogTech solutions that not only streamline logistics operations but also elevate the client experience, ensuring retention in an evolving market.

3. Costs creeping up

Traditional processes, while familiar, are often labour-intensive and prone to errors. Inefficiencies within logistics operations lead to hidden costs that slowly erode profit margins. In the background, LogTech startups are diligently working on solutions to address these inefficiencies, effectively reducing operational costs for those who embrace them.

Derek van Dyk Cargo Stream
Derek van Dyk is head of UK at Cargo Stream.

4. Falling behind the competition

Logistics firms that remain resistant to technology often find themselves at a considerable disadvantage. Alongside this, the rise of digital freight forwarders presents a notable challenge. These agile competitors leverage technology advantages to capture market share, reshaping the logistics landscape.

This collaboration between LogTech and these new entrants is poised to redefine the industry.

5. The evolution of freight forwarding

It’s not just the clients who are evolving; freight forwarders themselves are ready for optimisation and efficiency. The logistics sector has shifted from being solely rate-driven, particularly in the wake of market disruptions like the Covid-19 pandemic.

Today, the emphasis is on efficient management, surpassing the era of rate fluctuations. This change in focus has given rise to marketplaces and other tools, acknowledging the need for a broader spectrum of advantages beyond rates, with a heightened focus on overall efficiency.

In summary, the LogTech sector offers a wealth of opportunities for those within the logistics community and industry insiders to subtly enhance awareness of these unspoken challenges.

By recognising the hidden costs of sticking with traditional logistics methods and acknowledging the ongoing transformation, the industry can foster a shift towards modernisation, efficiency, and adaptability, ultimately shaping a more vibrant and competitive logistics landscape in the UK.

In partnership with Cargo Stream