Every time the General Motors assembly line grinds to a halt for half an hour because the screws used in the left dashboard have run out, the company loses about 150,000 euros. The car manufacturer doesn't have time to focus on costs when it needs a new shipment of screws as quickly as possible. Nevertheless, the company can save considerably on premium freight shipments: an opportunity AMSIB alumnus Jan van der Burgt (30) and Wiebe Helder (30) are eager to capitalise on.
'We're dealing with some major players and significant volumes. We hope to greatly expand our operation over the coming months.’© FD.nl - November 2014
Their Cargobase service has now been live for six months, and the two entrepreneurs have already managed to bring in major clients such as Continental Automotive, STmicroelectronics and DB Schenker.
Cargobase is an online platform that allows manufacturers and shipping companies to interact rapidly in urgent situations. 'Manufacturers previously communicated any supply problems to their regular shipping company, which would then submit an offer. However, the major logistics service providers don't always have the necessary people on the ground, and are forced to outsource a large quantity of shipments. As a result, the process can take quite some time. At Cargobase, several competing offers are submitted within minutes, which are then visible to other logistics service providers,' explains Jan. ‘The profit margins for premium freight express shipments and other special shipments that are largely transported by air are currently between 60% and 150%. Those costs can be cut by half or more, and companies willing to focus on this aspect can achieve considerable savings.' Major car manufacturers, all of which currently apply the 'just in time' model based around minimal stocks, procure their goods shipments in advance through tendering procedures. Unforeseen urgent shipments make up some 10% of their overall logistical costs. Other sectors, such as biopharma and the oil and gas industry, use premium freight services on a daily basis. When you're operating an oil platform, you never know exactly what you'll be needing in advance. The transportation of costly biomaterials requires great care in terms of temperature, shock-proof vehicles and avoiding X-rays at airport security checks. 'The entire premium freight market currently totals around $40 billion’, Jan explains.
Car part supplier Continental, semiconductor manufacturer Stmicroelectronics and drilling specialist Air Drilling Associates are already Cargobase customers, with GM, Chrysler and semiconductor manufacturer Infineon currently conducting pilot projects. Cargobase receives a 6% commission on every transaction between business and shipping company. Van der Burgt is reluctant to disclose the company's total turnover. 'That's sensitive information. Some customers prefer to keep their use of premium freight services secret, as these practices could be interpreted as failed purchasing policy.' However, he informs us Cargobase has helped customers achieve cost savings of up to 50%. On the other side of the platform, small local couriers offer their services alongside major logistics companies such as UPS, CEVA, TNT and DB Schenker. As Jan confirms, the major players weren't necessarily enthusiastic at first, having seen their profit margins come under pressure. Although the current customer base may not appear that large. Jan explains: 'We're dealing with some major players and significant volumes. We hope to greatly expand our operation over the coming months, which will require funding.’
So far, Cargobase has attracted investments to the tune of $450,000, of which $100,000 was contributed by Jan and Wiebe. The remainder was provided by Silicon Valley investor 500Startups, the YSS investment company owned by Singapore-based entrepreneur Ivan Yeo, and Bukit Timah, a fund managed by three Dutch investors operating out of Singapore. Jan and Wiebe still hold a joint majority interest in the company.
Jan and Wiebe both studied Trade Management Asia (phased out programme) at the Amsterdam School of International Business (former IBS). Jan took two years of Chinese, while Wiebe studied Bahasa Indonesia. Jan mainly focuses on software development, while Wiebe is responsible for bringing in new customers. Despite being based in Singapore, the two entrepreneurs can frequently be found in Detroit. Cargobase's rapid rise is largely due to its focus on premium freight and lucrative trade routes. In North America, the company has a strong presence in motor city Detroit, and oil industry hub Houston. It is also active in Silicon Valley and Mexico, home to a large number of assembly plants. In Asia, Cargobase has logistics service providers in all major cities. As Jan explains, there are currently no real competitors on the premium freight market. ‘Uship.com is more focused on the consumer market, while Shipstr - which is yet to go live - will target the shipping sector.’