You know product shortages are bad when you start running out of the shipping containers that carry them.
Most industries have returned to a semblance of normality post-COVID. Not so for freight. It truly has been one thing after another - energy shortages, labour shortages, and now international conflict.
In Explorate founder Conor Hagan’s words: “the information flow required to ship goods around the world is becoming increasingly complex.” And even that’s an understatement.
Experts predict the sector might be able to right its sails by some time in 2023. But in an industry where customers need things now, that seems like a long time away.
Disruption is needed.
Global VC investment in FreightTech increased from USD $1.3 billion to $2.9 billion in 2018. The wider industry could be worth $20 billion by 2025, and 80% of them will use AI and data science “in some way”.
This is not freight as we know it. This new breed of shifters and shippers is characterised by intelligence, automation, and integration. The space is ripe for data-driven decision making. AI is reducing physical labour. And platform models are increasing transparency and communication.
New FreightTech startups have “digital DNA”. they’re not adopting the IoT, apps, or cloud software – they’re built on them. Their structures are lean, their working style agile.
Explorate uses its SaaS platform to remove modern-day icebergs in sea freight, like customs clearance and tariff classifications. Unlike incumbent freight solutions of old, it provides instant quotes and booking, real time track-and-trace, digital dashboards, and faultless workflow management within a user-friendly, centralised platform.
Meet the founders
Alex Ewart and Conor Hagan met in a freight forwarding warehouse in 2014. After 4 years of sharing the frustrations of old-system freight, they moved from colleagues to cofounders.
2 years into developing the business, they were struggling to grow, their monthly revenue was nominal, and the team was getting frustrated with the lack of progress. They had raised money from friends and family and invested a considerable amount of their own money (and time).
Devising a better way of doing things was a no-brainer, especially given the increasingly complex industry climate. The market, as one of their future investors would come to describe it, was “irrelevantly large”. But changing decades-old habits was proving to be easier said than done.
And so Alex and Conor came to Skalata.
Explorate is now a 70-strong, 4-office team with over 1500 clients, shipping $200 million worth of goods through the platform a year. In January 2022, they secured $7.5 million in a Series A round led by EVP. And they have big plans for global expansion into South East Asia.
Meet the problem
Upon coming to Skalata, Explorate was paired with Venture Partner Ying Wang who identified two key barriers to growth:
- Customers didn't want to engage with the product (the way Explorate were selling it)
- The pricing model didn’t reflect the value they provided.
The first iteration of Explorate was essentially an “Expedia for freight”. Customers paid a monthly fee to enter requirements, browse options, and book the best one themselves.
But customers were used to a disconnected legacy system where they handed everything over to a freight forwarder and the forwarder organised the freight. Explorate was trying to give the customer the options and prices the forwarder kept hidden from them. But many were blissfully unaware of this, wanting familiar old convenience while the forwarder essentially picked their price.
In offering a way around this opacity, Explorate were trying to engender immediate behavioural change in a century-old sector.
Resistant to change, customers didn’t like the idea of booking their freight requirements themselves. Explorate pivoted their business to put customer ease first. They transitioned from an Expedia-style middleman to a bona fide freight forwarder - but a digital new breed.
The revised booking process more closely emulated the “old system” experience, where customers could provide the same information they would to their old forwarder. The difference (and value add) was that Explorate sorted options by price and departure/arrival dates, allowing customers to pick what was most important to them.
In the previous business model, Explorate charged a flat fee of $69 per month for unlimited bookings. This left them with no way to capitalise on high volume bookings.
After changing the pricing model, Explorate made more revenue from existing customers, and removed a barrier to obtaining new ones. Revenue began to increase, meaning more resources could be deployed to improve the product and expand the team.
Expanding Explorate’s network was also key. They met with the Skalata Ventures board which is chaired by Paul Little, the CEO who turned Toll Group from a small business into a $6.5 billion sale to Japan Post.
Skalata also introduced Explorate to new clients Brosa, Tommy Swiss, Port of Melbourne, and Port of Brisbane.
Explorate’s monthly recurring revenue grew 21x from May 2019 to January 2020. In 2020, Explorate raised an additional AUD $1 million to fund growth.
The founder experience
Alex on kicking off with Skalata:
“For the first month or two it was a deep dive into our business. You can get that founder ideology of ‘we did it, we have a business and we’re solving a problem’, but working with seasoned people in VC, you’re able to detect flaws that you never would have seen on your own. That has been incredible for us.”
In Conor’s words:
“Skalata helped us become the expanded team that we are today. They brought a new level of diversity and culture into our business that we couldn’t have got by ourselves. Because of that we’re now the employer of choice which is especially important in a difficult hiring market.”
The next 12 months will be all about customer adoption for Explorate. A dual focus on new customer acquisition and increased share of wallet from existing shippers will galvanise revenue growth and fund further product development.
As well as existing Brisbane, Adelaide, Sydney and Melbourne offices, Explorate is planning to open a further HQ in Perth.
Explorate is fuelling its internal growth engine by implementing a new Supply Chain Team to manage customer onboarding, internal sales efforts with existing customers, and project management of supply chain integrations. That’s some sleek operation.
It has also secured a partnership with Cloverly, allowing customers to purchase accredited carbon offsets for the calculated emissions of each shipment. It’s a major step forward for Explorate and the industry, and in Conor’s words will help “make supply chains greener and more sustainable”.
In September 2022, Conor and Alex won Digital Disruptor at Brisbane Young Entrepreneur Awards.
Explorate was also recently named one of Australia's fastest-growing companies by Deloitte’s Technology Fast 50 List.
Founder’s last words
“Compared to how far other industries have come, technology’s real impact on supply chains is only in its embryonic stage. We want to show what Australian - and more broadly, global - supply chains can be capable of if you foster the right mix of people, technology, and innovation.”
“We’ve spent five years getting that mix right and are now ready to push for scale. We couldn’t be more confident in the team, our software, and cohort of investors to give Explorate the global presence it deserves.”