Deal focus: Taking truckers to the cloud

The success story in Australia's logistics software-as-a-service (SaaS) space isn't hard to find: WiseTech Global, which provides cloud-based software solutions to freight forwarders, went public earlier this year, raising A$125 million ($95 million). It works with 6,000 customers across 125 countries, and revenue doubled to A$15.1 million during the 2016 financial year. Its current market capitalization is around A$1.5 billion.

In its IPO prospectus, WiseTech cited an estimate by Gartner that global supply chain execution software revenue would rise from $3.5 billion in 2015 to $5.2 billion in 2019. Increasing global trade flows - driven in large part by e-commerce - supply chain and regulatory complexity, and cost pressures are seen as the key contributing factors.

Containerchain targets a small part of the logistics industry in terms of time spent moving a package from factory floor to shop shelf, but it is an area where the fragmentation of service providers and poor communication is most costly. The company specializes in SaaS for landside containers: from when a container is offloaded at a port, transferred to a truck and its goods deposited at a warehouse to when the cleaned and repaired container picks up another consignment and returns to port.

"You would think this part of the supply chain was highly automated, but it's not. The multiple stakeholders service different customers and this results in imperfect co-ordination and communication. There's a real opportunity for technology solutions to drive efficiency gains," says Shane Gong, a director with CHAMP Private Equity, which recently acquired a 50% stake in Containerchain.

The company was established in Melbourne in 2007 by Tony Paldano and started to expand overseas in 2013. When Gong came into contact with Paldano, the founder and CEO was spending more than half his time in Singapore. Gong is based in Singapore but also hails from Melbourne, and the two established a relationship while transiting between the two locations. They concluded that CHAMP's strategy of helping Australian businesses expand in Southeast Asia was a good fit for Containerchain.

While the size of the deal was not disclosed, CHAMP typically invests in businesses with enterprise valuations of A$150-750 million. Containerchain sits toward the lower end of this spectrum.

The company has operations in Australia, New Zealand, Singapore, Malaysia and Thailand. It provides services to more than 100 depots, warehouses, ports and shippers, covering over 2,000 container trucks. While the business model is predicated on technology - facilitating data exchange across the chain to enhance turnaround times and increase efficiencies - Gong notes there is a strong element of organisational change.

"It is not simply about selling software packages to CTOs; in fact many participants in the landside chain don't have a CTO," he says. "It's operational, working hand in hand with line managers to install systems that enhance process flows. There is also significant cultural change involved establishing new commercial relationships between the depot, transport operator, liner and shipper stakeholders."

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• Topics
• Australasia
• Southeast Asia
• Buyouts
• Technology
• Australia
• Singapore
• Logistics
• CHAMP Private Equity