Nov 23, 2023

Through the lens of Maersk Growth In today’s fast-paced and interconnected world, the complex network of supply chains plays a central role in our daily lives. From the groceries on the shelves to the latest gadgets in your hands, supply chain management serves as the backbone of the modern economy. At the heart of this transformation is a dynamic ecosystem of startups that are revolutionising the supply chain industry, making it more efficient, sustainable, and resilient than ever before. Exploring the Landscape of Supply Chain Tech Venture Trends Venturing into the rapidly evolving startup ecosystem, we have experienced a world marked by innovation, changing investor sentiment, and a renewed focus on sustainability and digitalisation. Let’s navigate this landscape of supply chain tech startups and the exciting trends shaping their journey. Supply Chain Tech Venture Funding Peaks and Valleys Supply Chain Tech startup ecosystem has in total raised USD >200bn since 2016 in venture funding. The funding reached its peak in 2021 but experienced a noticeable dip in 2022 and 2023. A combination of factors, including global inflation, rising interest rates, economic uncertainties, and geopolitical tensions, influenced investor sentiment. In 2022, the number of deals decreased by 26%, and the average deal size witnessed a 43% reduction compared to the previous year. This mirrors a broader trend of slowing down VC investments on a global scale and across industries. Figure 1: Supply Chain Tech Venture Capital Funding since 2016 Source: PitchBook investment data and Maersk Growth analysis. *Latest data update: 20 June 2023 Supply Chain Green Tech Startups Paving the Way for Sustainable Logistics Sustainability is the name of the game for many Supply Chain Tech startups. Investors are increasingly favouring sustainable logistics models, with venture funding for climate-conscious logistics. The sustainable logistics startups within the supply chain tech startup ecosystem raised 14% of total venture funding in 2021, and that share increased to 29% in 2022. Startups that are working on decarbonising supply chains have, in total, raised USD >130bn since 2016, such as reverse logistics platforms, electrification of last mile deliveries, decarbonisation of all modes of transportation, green construction tech and SaaS platforms related to carbon accounting/traceability. In general, climate technologies have a strong interdependence; hence, understanding these and enabling holistic acceleration will be critical for reaching net zero across supply chains. AI-powered Supply Chain Startups are Booming, Signalling an AI Platform Shift in Supply Chains AI-powered startups are leading the charge in optimising supply chains and have attracted 1/3 of Supply Chain Tech funding since 2016. More than 500 startups are leveraging AI to transform logistics, covering everything from autonomous trucks to warehouse automation and supply chain brains. AI is a game-changer in supply chains, enabling accurate demand forecasting, dynamic route planning, predictive scenario simulations, and workflow automation. “Supply chain optimisation is ideal for AI — massive amounts of data, high complexity, and need for swift responsiveness factoring in a vast number of parameters. We will see a lot of investment in this area, with access to data as the limiting factor. The AI technology development will be very positive for global businesses, consumers, and the environment,” expresses Arnt Harsmann, Head of Data Excellence & Corporate Portfolio at Maersk. The Rise of Regional Champions The push for supply chain resilience has triggered a trend called regionalisation. Political subsidies such as the IRA and a focus on supply chain resilience as a result of COVID-19 and geopolitical tenses have spurred the rise of regional winners. North America attracted over 40% of total VC funding, emerging as the most active region. Meanwhile, the Asia-Pacific region secured 33% of VC funding. 5 Mega Trends Impacting Supply Chains As the supply chain industry undergoes a remarkable transformation, five megatrends are emerging, reshaping the way goods move and businesses operate. These trends are not just shaping the industry but are also driving it towards a more efficient, sustainable, and technologically advanced future. Let us explore these trends through the lens of innovation and transformation: Figure 2: Maersk Growth estimates on 5 mega trends potential impact on supply chains Source: PitchBook investment data and Maersk Growth analysis. Latest data update: 20 June 2023 Note: Bubbles indicate Supply Chain Tech Groups, and bubble size is raised VC funding in USDbn since 2016. #1 AI Platform Shift in Supply Chains AI is revolutionising supply chain operations. It enables dynamic and visibility-enabled network models, real-time scenario testing and causing disintermediation, and potentially the commoditisation of asset owners. With the ability to make predictive analytics and forecasting upstream and downstream, AI-powered supply chains are poised to redefine how we manage and optimise global logistics, like building digital twins, aggregating and structuring data to powering visibility and supply chain control. It will be a competition of who can build and orchestrate the most dynamic network model/brain to optimise global supply chains. #2 Digitalisation of Trucking Logistics The rise of autonomy and electrification in logistics is poised to transform transportation networks. Market consolidation, early total cost of ownership advantages, and new business models like Trucking/Capacity-as-a-Service are on the horizon to challenge the traditional way of offering logistics. #3 Managed Logistics Platforms/Ecosystem Born-digital B2B managed logistics and B2C delivery platforms are redefining the customer experience while building holistic trade ecosystems (beyond logistics). Digital freight forwarders streamline processes, increase visibility, and tailor solutions, ultimately leading to improved customer experiences. Cloud providers could as well be impactful players, crossing over with new value architectures and enabling infrastructure such as cloud services and app stores for global trade. #4 Automation & Robotics in Warehousing The warehouse and fulfilment market is changing significantly. The rise of e-commerce and labour cost challenges are driving the need for efficiency. This is leading to larger warehouses to reduce cost per unit shipped and the rise of micro-fulfilment centres closer to city centres. Limited space left in megacities will also lead to multistore facilities. Automation technologies like AI-powered Warehouse Management Systems, digital twin tech and robotics are being deployed to make the most of available floor space and to optimise operations.. “As warehouse automation progresses, data-driven insights are crucial for advancing supply chain innovation — being able to act on real-time, accurate, comprehensive information in the quickest way possible. Embracing technology will revolutionise warehouse operations, enhancing efficiency, visibility and resilience. This approach ensures adaptability to market demands and labour challenges, marking a pivotal shift in how the industry operates — in true real time, all the time”, says Andrei Danescu, CEO & Co-founder at Dexory (Maersk Growth portfolio company). #5 Move to Circular Supply Chain Loops The transition from linear supply chains to circular loops is essential for sustainability. Companies are preparing for future legal requirements and increased consumer demand for sustainable practices. This shift will lead to new partnerships and the orchestration of return flows. “At Arrive Recommerce, we envision a future where circularity in supply chains becomes the cornerstone of sustainable commerce. Embracing a circular economy not only mitigates environmental impact but also unlocks new opportunities for innovation, cost-efficiency, driving profitability and ensuring a more resilient and responsible global marketplace”, says Rachelle Snyder, Co-CEO & Co-founder at Arrive Recommerce (Maersk Growth portfolio company). In this era of supply chain innovation and transformation, one key question emerges: How will traditional supply chain players adapt to these mega trends that are shaping the future of logistics? Will they embrace innovation, adopt new technologies, and pivot toward sustainability? --