This Week in Logistics News (August 27-31, 2018)

I’m on borrowed time this morning, so let’s go straight to the supply chain and logistics news that caught my attention this week, which was dominated by M&A, new startups, and investments news.

MercuryGate Acquired by Summit Partners

As an industry analyst, I have had the opportunity to see MercuryGate (a Talking Logistics sponsor) grow and evolve over the past 18 years. The company broke into the transportation management systems (TMS) market by focusing on a segment that most of the entrenched players at the time had largely ignored: third-party logistics providers (3PLs), particularly those with brokerage operations. After achieving critical mass in this segment, MercuryGate expanded its focus and solution footprint, going after shippers and adding fleet management and parcel capabilities to its platform. Along the way, there were many suitors for the company, but co-founders Monica Wooden and Steve Blough turned them all away — until now.

(MercuryGate received an investment from Warburg Pincus in 2015, but it wasn’t an acquisition).

“We selected Summit Partners amongst many other suitors because Summit shares our vision and commitment to extend the foundation we have built into a platform for accelerated innovation, global ecosystem enablement, and customer scale,” said Monica Wooden in the press release. “I was looking for an investment partner that had the growth-oriented strategic and operational resources to take us to the next level, and I found that formula in Summit Partners.”

Here are some excerpts from the press release:

MercuryGate began with a mission to solve the most complex, high-volume transportation management challenges at an affordable price. Since those early days, the company has grown immensely. Last year alone, the MercuryGate TMS managed more than $70 billion of annual freight spend and supported over 300,000 daily logins from 80 countries.

As part of this transaction, Monica Wooden will transition into a customer-facing role at the company as Chief Revenue Officer, while Co-founder and President Steve Blough will continue on as Chief Product Officer. Joe Juliano, an Executive-in-Residence (“EIR”) with Summit Partners and software industry leader, will join MercuryGate as President and CEO and will work closely with Monica and Steve to drive growth and scale initiatives.

MercuryGate also announced yesterday that Jeffrey Varon has joined the company as its Chief Strategy Officer. According to the press release, “Varon has more than 20 years of experience in the supply chain and SaaS software industries. In this new role, he will be responsible for customer success, global marketing, channels & partners, corporate business strategy, and mergers and acquisitions.”

You can almost think of MercuryGate as an 18 year-old startup, and like most successful startups, it ultimately reached the point where in order to drive the next phase of growth, it needed an infusion of capital and new leadership. Where will the growth come from? Most likely by expanding its global presence and by acquiring other solution providers, something MercuryGate has not done to date.

As I wrote more than two years ago, the TMS market is becoming barbell-shaped. It is moving in two opposite directions: some solutions are becoming broader, more integrated, and feature-rich (multi-mode, multi-geography, complex optimization), while others are offering more limited capabilities, but with a stronger focus on ease of use, faster deployment, affordable and transparent pricing, and meeting the needs of the small and mid-sized business (SMB) market. This acquisition will ultimately move MercuryGate further toward the broader, more integrated, and feature-rich end of the TMS barbell.

Investors remain very interested in the transportation and logistics space, so we’ll likely see more deals in the weeks and months ahead. There’s never a dull moment in this industry!

(For related commentary, see my takeaways from last year’s MercuryGate user conference.)

UPS Launches Ware2Go

Taking a page from FLEXE and other startups looking to help companies better compete with Amazon’s fulfillment capabilities without having to build their own distribution network, UPS launched Ware2Go this week, “a new technology company and digital platform that matches available warehouse space and fulfillment services with merchants who need to get online orders to customers fast.” Here are some details from the press release:

“Ware2Go uses innovative online technology to match excess warehouse and fulfillment capacity with merchant demand to provide transparent inventory, order fulfillment and final delivery,” said Scott Price, Chief Transformation and Strategy Officer. “We’re solving for two major problems: speed to market and efficient warehousing.”

Ware2Go recruits and certifies warehouses in strategic locations, establishing a network of vetted fulfillment partners. Merchants can then position products closer to their customers without the need for researching or vetting providers, or making long-term volume and time commitments. Ware2Go’s cloud-based platform and solution provides merchants with seamless end-to-end order fulfillment – storage, pick/pack fulfillment and shipping – with guaranteed two-day delivery by UPS. Because Ware2Go manages the relationships with warehouses, merchants get the service levels and pricing they might not receive on their own.

As noted earlier, UPS is not first to market with this idea and service. Is the company a little late to the game or is there plenty of opportunity for more than one player to succeed in this area, especially if you have the sales, technology, and capital resources of UPS? And will FedEx now go and buy FLEXE or a similar startup?

Like I said, there’s never a dull moment in this industry.

And with that, have a happy weekend!

Song of the Week: “Don’t Go Away” by Oasis