In Western markets, freight forwarders are well into digitizing their operations, but the same doesn’t hold true in Southeast Asia, say the founders of Fr8Labs. The reasons for that include the lack of localized software and a more fragmented logistics industry where SMBs dominate. Fr8Labs wants to digitize Asia’s logistics industry with its SaaS operating system and has plans to turn it into an open ecosystem that multiple players can tap into with APIs.
Fr8Labs Raises $1.5 Million to Digitize Asia’s Logistics Industry
The Singapore and Indonesia-based startup announced today it has raised $1.5 million in seed funding from East Ventures, FEBE Ventures, Kaya Founders, Mulia Sky Capital, Seedstars, Venturra and angel investors. Fr8Labs currently has more than 50 customers in Singapore, Malaysia, Indonesia, Taiwan and Australia and is expanding into the rest of Asia.
Background
The startup was founded in 2022 by chief executive officer Glenn Lai and chief of product and technology officer Felix Lu. Lai, whose family are second-generation freight forwarders, started his own career in logistics in 2015 at Sinar Gas Golden Agri Resources. Then in 2019, he and Lu joined e-commerce logistics company Bizzy in Indonesia, where they served as COO and VP of product, respectively.
Industry Challenges
After Bizzy was acquired by Warung Pintar, the two returned to Singapore, where Lai was chief of strategy and growth at software company Gravity Supply Chain. He traveled around the world, working with major international logistics and supply chain companies. In developed markets, he noticed that supply chains were digitally interconnected, in contrast to Asian markets.
Lai says one reason for the technology gap in Asia’s freight forwarding industry is that the market is more fragmented compared to Western countries where enterprise players dominate. Large freight forwarders are able to sway other players to digitize, especially since they have systems that the companies they work with can plug into with APIs. On the other hand, Asia’s freight forwarders are primarily SMBs and don’t have the same kind of centralized power to influence new practices. Lai adds that another reason is that digital logistics systems are created for specific markets, and don’t work in Asia because of different accounting or customs policies.
Fr8Labs’ Solution
As a result, many freight forwarders in Asia, especially Southeast Asia, still use on-premise software, or a combination of Microsoft Excel, email, chat and off-the-shelf accounting systems. Lai says this makes it difficult for them to scale and also results in errors that can cost freight forwarders customs or demurrage penalties (fees charged on shipping containers that aren’t picked up on time).
Fr8Labs is developing products that will enhance those networks, including giving freight forwarders the ability to offer cargo insurance, FX trade and financing facilities to their end customers (similar to how online travel agencies offer travel insurance to passengers). The startup’s core offering is its Operating System that supports a freight forwarder’s entire workflow: quotation, booking confirmations, shipment confirmation, job accounting and an accounting backend. The platform helps departments like sales and operations collaborate more efficiently and links platforms like email and chat.
Future Plans
Part of Fr8Labs’ funding will be used to expand its platform, with plans to add FX trade, financing, cargo insurance, rates management and a marketplace. The startup’s goal is to turn its platform into an open ecosystem that can integrate with and manage different logistics tech software.
“Think of Android or Apple, and how well integrated each of their devices are in the ecosystem,” says Lai. “We want to provide the freight forwarder a seamless experience for them to operate on, and then build more value-adding services on top of it.”
Conclusion
Fr8Labs is poised to revolutionize the logistics industry in Asia with its SaaS operating system and plans to turn it into an open ecosystem that multiple players can tap into with APIs. With its seed funding, the startup is well-positioned to expand its platform and add new features to enhance its network of freight forwarders.
FAQs
Q: What is Fr8Labs?
A: Fr8Labs is a Singapore and Indonesia-based startup that aims to digitize Asia’s logistics industry with its SaaS operating system.
Q: Why is the logistics industry in Asia less digitized than in Western markets?
A: The lack of localized software and a more fragmented logistics industry where SMBs dominate are the main reasons.
Q: What are Fr8Labs’ plans for its platform?
A: Fr8Labs plans to add FX trade, financing, cargo insurance, rates management and a marketplace to its platform, with the goal of turning it into an open ecosystem that can integrate with and manage different logistics tech software.
