What a year. We’ve swung from one extreme — a global supply chain industry battling to keep up with unprecedented, pandemic-driven demand — to another, as we end the year with dramatically weaker demand and an oversupply of inventory, ships and containers. Ocean freight rates for cargo from China bound to the U.S. West Coast were recently reported to have plummeted over 90% YOY. As for the U.S. trucking industry, I fear it’s in for an unusually long stretch of reduced capacity, margin pressures, intense competition, and inevitably, consolidation.
Going into 2023, I think we have to expect more volatility. CPI inflation data looked a little better than had been anticipated in November — prices were up 0.1% for the month and 7.1% over 12 months — but the Fed is expected to keep raising interest rates as concerns over a possible recession continue to loom large in the minds of consumers and businesses. It’s hard to imagine a “return to normal” for our supply chains when the macroeconomic environment is so abnormal and geopolitical instability continues.
And yet, through it all, the team at FourKites continues to achieve so much by remaining relentlessly focused on the needs of our customers; in 2022 we saw 46% growth in total shipments spanning 200 countries and territories, with tracking that covers 95% of the world’s ports and supports a global network of more than 460,000 carriers. We drove 80% year-over-year growth in ocean customers, bringing on companies like Cardinal Health, McCain Foods and Yamaha Motors. Dynamic Yard and Appointment Manager saw 150% growth in facilities managed. This list goes on.
But what I’m most proud of can’t be quantified — it’s the heart and tenacity that FourKiters show up with each day, regardless of any internal or external challenges. And despite personal and professional distractions. The character of my team is remarkable. Which brings me to my first reflection….
Trust is earned. There’s an old adage that it can take months or even years to be earned; but, trust can be wiped away in just a fleeting moment. This adage was top-of-mind for me during our annual Visibility Conference.
Our customers have come to trust that we have their best interests at heart and are always striving to do what’s right. They know that while we may stumble at times, we don’t give up and we do all that we can to pivot and deliver value.
From day one, our customers have been part of our journey. We turn to them for their ideas and their input. When we win, they win. Our customers know that we are innovative leaders and when we share exciting news about a new feature or partner, they get just as excited as we do. Their energy and support are evident in our conversations, our close collaboration, and in our joint advocacy for the platform we’ve built with their indispensable guidance.
FourKites is fundamentally interested in and passionate about understanding each company, what makes them tick and how can they improve — they have that passion around logistics. And the other thing is they have perseverance. They will work on your problem until they get it right. That’s the big differentiator in this space, for me.
I think trust is also earned when people see the company you keep and buy into the vision you have for the future — which reminds me of another formative moment in 2022…
In October, I was fortunate to participate in one of our investor’s, Qualcomm Ventures, CEO Summit. If you’re unfamiliar, Qualcomm is a semiconductor, software and services company focused on wireless technologies. They are largely credited as the inventors of CDMA and 5G — virtually every wireless phone on the market contains a Qualcomm component.
And did you know that Qualcomm invented ELDs? They built the first ELD in partnership with Schneider National in the 1980s, later selling off the ELD business to focus on chipsets for all ELDs and not a specific ELD. In the early days, our company was able to get off the ground because of ELD mandates, thanks to Qualcomm.
As I was flying home, I thought about how we might apply some of Qualcomm’s approach to ours. A couple things were very apparent to me.
IoT is going to drive the world and we need to build FourKites around the ability to consume the data generated by IoT devices. In the not-so-distant future, every device and every asset will have some sort of signal that is powered by IoT devices. Building frameworks to consume IoT data and building applications that transform our customers’ business will be integral to FourKites’ future success.
But it’s not enough to just realize and believe that IoT is the future. We must also be willing to make a big bet on that future. The supply chain ecosystem is constantly and rapidly evolving; and we need to make our big bet and do all that we can to ensure that the bet pays off.
Providing our customers with actionable insights from every mode, node and signal is integral to our big bet of enabling end-to-end supply chain visibility and intelligence. That’s why in 2023 and beyond, we will create a future where we can consume any IoT data on any asset, at any time, anywhere in the world, whether it’s in transit or not. And we will only succeed if we are all fully committed to it.
I believe that we are already making tangible strides toward implementing our big bet. NIC-place, for example, has built a framework that can ingest IoT signals even when an asset is not yet tied to a shipment. Consider that in the context of a producer of high-value, temperature-sensitive products. It really does not matter if they successfully ship on time if the goods were spoiled before they were even loaded on the truck. With NIC-place, they can monitor the temperature of their goods pre-shipment.
And, we cannot pursue our big bet alone. Like Qualcomm, we will need to build an ecosystem that helps to drive the success of our bet. That’s why our partnerships with the likes of FedEx, Microsoft, American Eagle’s Quiet Platforms and others will be so critical. Momentum is created when a critical mass of respected and seasoned companies and people push in the same direction.
To sustain this momentum, we must stay laser-focused on our bet — which means that, along the way, hard choices will need to be made and there will be plenty of times where we will need to say “no” to other opportunities. I’ll admit, it’s easy to fall into the “do more” trap — to equate the number of products delivered and productivity with winning. But, in reality, more isn’t always better. 2022 reminded us of this lesson as we watched the market cap of high-growth companies evaporate. These businesses were bought into the idea of “moving fast and breaking things” — a euphemism for the belief that the more ground you cover, the more you’ll grow.
To be clear, I see value in the playbooks of these tech companies and I believe growth and productivity have their place in the list of aspirations. However, growth as the ultimate goal can quickly create distractions by pushing teams to pursue too many things at once.
As I’ve underscored before, I advise organizations to identify one or two areas where digitization can make a meaningful impact — what we call the “crawl, walk, run, fly” approach. By targeting the greatest return on investment, companies have a greater ability to ensure buy-in and successful implementation. Once the people, processes and technology are in place, companies are able to build on the momentum and more easily scale to tackle additional problems.
As a new spirit of industry collaboration spreads and innovative technologies proliferate, the supply chain industry is empowered as never before to tackle previously intractable issues. Together, we can create a smoother ride for everyone — no matter what the coming year brings.