cscmp 2014: follow the money

Follow the Money

Where are investors placing their

supply chain bets for the next 5 years?

Why Are We Here?

Venture capital, private equity, strategic investors help shape

the future of supply chain, by funding the innovation that

creates new business models and capabilities.

Agenda

• Introductions

• Defining the investor market

• Macro trends shaping investor thinking

• Where are the supply chain bets being placed?

• Q&A

Introductions: Dave Anderson

• Managing Director, Supply Chain Ventures (14 years)

– Angel/early stage investing

– Supply chain technology

• Notable investments: Kiva Systems, LeanLogistics

• Current investments: Llamasoft, Steelwedge, Resilinc

• Supply Chain Experience (35 years)

– Managing Partner, Supply Chain Consulting, Accenture

– Vice President, Logistics Consulting, Temple, Barker & Sloane

Introductions: David Beatson

• CEO & Founder, Ascent Advisors, LLC – Private equity consulting and investing

– Logistics and supply chain industry

– Public Company Boards: • Descartes Systems

• PFSweb

– Private Company Boards: • Jones and Frank

• Progistics

• Supply chain experience – CEO Globalware Solutions

– CEO Panalpina, North America

– Chairman & CEO Circle International Group

– President & CEO Emery Worldwide

Investors: Different Stage, Different Focus

• Venture Capital

– Angel/Early & Mid Stage companies looking for growth capital

– Focus: Acquisition & IPO

– Investing Horizon: 1 – 10 years

– Notable names: Bain Capital, CRV, Khosla, Battery Ventures

• Private Equity

– Mid-stage and mature companies that need a broader platform or

recalibration

– Focus: Market rollup (critical mass or footprint extension)

– Investing Horizon: 3 – 7 years

– Notable names: Vista Equity, Francisco Partners, Warburg Pincus,

Accel KKR, ABS Capital

Investors: Different Stage, Different Focus

• Strategic – technology “platform” companies

– Mid-stage & mature companies that need a broader platform or have

distribution & channel synergy opportunities

– Focus: Market rollup (critical mass or footprint extension)

– Investing Horizon: 5-? years

– Notable names: SAP, Oracle, Descartes, Highjump, Accenture

Supply Chain Macro Trends

• Omni-channel retailing/home delivery

• Internet of things

• Risk management/Security

• Sustainability

• Social supply chain

• Globalization

• Outsourcing

• Consolidation (shippers and LSPs/carriers)

2017 UK

economy online 15%

5 year online growth in

Western Europe

83% 5 year online growth

in the US

60%

5 year margin impact

from Omni-channel

retailing

-11%

2013 Holiday

Delivery Capacity

Problems

Sources: Forrester Research & LCP Consulting

Online Retailing Will Drive Logistics Market Changes

150 Daily Smartphone Touches

2013 Mobile devices outnumber global population

1.9B Smartphones & tables sold in 2017

2B High speed broad band users in 2019

26B IoT devices in 2020

$1.9T 2020 global economic IoT value add

Sources: IDC, Super Monitoring , Mary Meeker & ABI Research

The Highly Connected World Will …

Source: Overdrive Online

2.00

1.75

1.50

239,000 Potential shortfall

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Mill

ion

s

Impact of Aging Population on Transportation

Industry

Growth

36%

Retirements

37%

Non-voluntary

Departures

16%

Voluntary

Non-retirement

Departures

11%

USA Truckload Trends

25,000

productivity decrease

3.1 %

Resulting from

Hours of Service

(HOS) changes

Intermodal

growth increase

through 2017

5.1 %

New drivers needed by 2022*

* Each item represents 10K drivers

Unfilled driver positions at the end of 2013

Schneider estimate

ATA ATA

Stephens, CHAIN estimate

Decrease in newer

tractors 2006-2013 19 %

ACT research

projected

increase

in 2014 rates

ATA

2017 Time

229,000

2-3 %

Global Ocean Container Trends

Proposed general rate increase

per FEU* through April 2014

Operating Margin of

most profitable ocean carrier in 2013

TSA

5.8

Alphaliner

$600

%

Alphaliner

in total carrier

capacity in 2014 7.6 %

increase

Projected increase

in container shipping

volume in 2014

4.6% 70%

of the current market share

is covered by the three

global shipping alliances

Alphaliner

77 %

Carrier on-time

reliability in Q4 2013

Seaintel Drewry

* One forty-foot equivalent unit (FEU) equals 25 metric tons or 72 cubic meters.

Global Air Freight Trends

annual growth

rate for the

5 years covered

by 2013-2017

Total Freight-Ton-Kilometer

(FTK)

Available

Freight-Ton-Kilometer

(AFTK) Asia-Pacific Market

share of airfreight

industry

Source: IATA

3.2%

Estimated air

freight revenues in

2014 10 %

down since 2011

$60Billion

1.4% 2.6%

40%

Number of regions with

tonnage growth

above 3% 1

2013 Growth

MIDDLE EAST

Supply Chain Technology Investment Trends

• 5 years of platform making and consolidation

• Private equity

– New Mountain Capital - Red Prairie & JDA

– Francisco Partners – Kewill & Four Soft

– Vista Equity – Omnitracs, Roadnet Technologies & XRS

• Strategic

– SAP acquires Ariba

– Descartes acquires 26 companies in 6 years

– GT Nexus acquires TradeCard

– Trimble acquires TMW Systems & ALK Technologies

– Brambles acquires LeanLogistics

– Accenture acquires Procurian

Where Will Supply Chain Investment Go for the Next 5+ years?

Venture Capital

• Last Mile/Omni-Channel Delivery

• Supply Chain Resiliency / Sustainability

• Visibility/Traceability

• Real-time Execution Optimization

• Buyer Sentiment / S&OP

Private Equity

• Platform development—Supply Chain Planning, Execution