cscmp 2014: follow the money
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Follow the Money
Where are investors placing their
supply chain bets for the next 5 years?
Why Are We Here?
Venture capital, private equity, strategic investors help shape
the future of supply chain, by funding the innovation that
creates new business models and capabilities.
Agenda
• Introductions
• Defining the investor market
• Macro trends shaping investor thinking
• Where are the supply chain bets being placed?
• Q&A
Introductions: Dave Anderson
• Managing Director, Supply Chain Ventures (14 years)
– Angel/early stage investing
– Supply chain technology
• Notable investments: Kiva Systems, LeanLogistics
• Current investments: Llamasoft, Steelwedge, Resilinc
• Supply Chain Experience (35 years)
– Managing Partner, Supply Chain Consulting, Accenture
– Vice President, Logistics Consulting, Temple, Barker & Sloane
Introductions: David Beatson
• CEO & Founder, Ascent Advisors, LLC – Private equity consulting and investing
– Logistics and supply chain industry
– Public Company Boards: • Descartes Systems
• PFSweb
– Private Company Boards: • Jones and Frank
• Progistics
• Supply chain experience – CEO Globalware Solutions
– CEO Panalpina, North America
– Chairman & CEO Circle International Group
– President & CEO Emery Worldwide
Investors: Different Stage, Different Focus
• Venture Capital
– Angel/Early & Mid Stage companies looking for growth capital
– Focus: Acquisition & IPO
– Investing Horizon: 1 – 10 years
– Notable names: Bain Capital, CRV, Khosla, Battery Ventures
• Private Equity
– Mid-stage and mature companies that need a broader platform or
recalibration
– Focus: Market rollup (critical mass or footprint extension)
– Investing Horizon: 3 – 7 years
– Notable names: Vista Equity, Francisco Partners, Warburg Pincus,
Accel KKR, ABS Capital
Investors: Different Stage, Different Focus
• Strategic – technology “platform” companies
– Mid-stage & mature companies that need a broader platform or have
distribution & channel synergy opportunities
– Focus: Market rollup (critical mass or footprint extension)
– Investing Horizon: 5-? years
– Notable names: SAP, Oracle, Descartes, Highjump, Accenture
Supply Chain Macro Trends
• Omni-channel retailing/home delivery
• Internet of things
• Risk management/Security
• Sustainability
• Social supply chain
• Globalization
• Outsourcing
• Consolidation (shippers and LSPs/carriers)
2017 UK
economy online 15%
5 year online growth in
Western Europe
83% 5 year online growth
in the US
60%
5 year margin impact
from Omni-channel
retailing
-11%
2013 Holiday
Delivery Capacity
Problems
Sources: Forrester Research & LCP Consulting
Online Retailing Will Drive Logistics Market Changes
150 Daily Smartphone Touches
2013 Mobile devices outnumber global population
1.9B Smartphones & tables sold in 2017
2B High speed broad band users in 2019
26B IoT devices in 2020
$1.9T 2020 global economic IoT value add
Sources: IDC, Super Monitoring , Mary Meeker & ABI Research
The Highly Connected World Will …
Source: Overdrive Online
2.00
1.75
1.50
239,000 Potential shortfall
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Mill
ion
s
Impact of Aging Population on Transportation
Industry
Growth
36%
Retirements
37%
Non-voluntary
Departures
16%
Voluntary
Non-retirement
Departures
11%
USA Truckload Trends
25,000
productivity decrease
3.1 %
Resulting from
Hours of Service
(HOS) changes
Intermodal
growth increase
through 2017
5.1 %
New drivers needed by 2022*
* Each item represents 10K drivers
Unfilled driver positions at the end of 2013
Schneider estimate
ATA ATA
Stephens, CHAIN estimate
Decrease in newer
tractors 2006-2013 19 %
ACT research
projected
increase
in 2014 rates
ATA
2017 Time
229,000
2-3 %
Global Ocean Container Trends
Proposed general rate increase
per FEU* through April 2014
Operating Margin of
most profitable ocean carrier in 2013
TSA
5.8
Alphaliner
$600
%
Alphaliner
in total carrier
capacity in 2014 7.6 %
increase
Projected increase
in container shipping
volume in 2014
4.6% 70%
of the current market share
is covered by the three
global shipping alliances
Alphaliner
77 %
Carrier on-time
reliability in Q4 2013
Seaintel Drewry
* One forty-foot equivalent unit (FEU) equals 25 metric tons or 72 cubic meters.
Global Air Freight Trends
annual growth
rate for the
5 years covered
by 2013-2017
Total Freight-Ton-Kilometer
(FTK)
Available
Freight-Ton-Kilometer
(AFTK) Asia-Pacific Market
share of airfreight
industry
Source: IATA
3.2%
Estimated air
freight revenues in
2014 10 %
down since 2011
$60Billion
1.4% 2.6%
40%
Number of regions with
tonnage growth
above 3% 1
2013 Growth
MIDDLE EAST
Supply Chain Technology Investment Trends
• 5 years of platform making and consolidation
• Private equity
– New Mountain Capital - Red Prairie & JDA
– Francisco Partners – Kewill & Four Soft
– Vista Equity – Omnitracs, Roadnet Technologies & XRS
• Strategic
– SAP acquires Ariba
– Descartes acquires 26 companies in 6 years
– GT Nexus acquires TradeCard
– Trimble acquires TMW Systems & ALK Technologies
– Brambles acquires LeanLogistics
– Accenture acquires Procurian
Where Will Supply Chain Investment Go for the Next 5+ years?
Venture Capital
• Last Mile/Omni-Channel Delivery
• Supply Chain Resiliency / Sustainability
• Visibility/Traceability
• Real-time Execution Optimization
• Buyer Sentiment / S&OP
Private Equity
• Platform development—Supply Chain Planning, Execution
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