Logistics solutions startup OpenPort closes Series A, to push into Indonesia

Visual of OpenPort homepage. May 2016

Mobile logistics solutions provider OpenPort, which previously operated under the trade name of Kinabalu, has raised an undisclosed Series A round from Hong Kong-based SIG Susquehanna and Caldera Pacific Ventures.

Previously, OpenPort secured seed funding worth $600,000, with a bridge round that saw it raise $500,000. It has also received a grant from the Brunei Economic Development Board, in order to drive development of a business services centre in Bandar Seri Begawan. One of its seed investors is Gabriel Fong of venture builder Jaarvis Labs, who has also invested in logistics startup GoGoVan.

With the Series A, the aggregate funding in the firm would have exceeded $2 million. The services of the firm are especially in demand in Asia, whose emerging market often have sub-par transport infrastructure, driving up logistics costs.

The investment comes as OpenPort- co-founded by CEO Max Ward and CIO Robert Haney – added a COO to its executive teamSingapore-based Morten Damgaard Andersen. Andersen was previously the CEO (Southeast Asia) of integrated logistics provider Agility Logistics.

The aim of the startup is to resolve the pain point of supply chain inefficiencies, which can severely impact countries like Indonesia and China, driving costs up due to a lack of visibility – the ability to track and control shipments – across different geographies and routes.

OpenPort is positioning itself as a platform that creates a direct, transparent relationship between shippers and carriers and allowing clients to track delivery of goods on a single platform. This allows a seamless integration of the logistics network, with significant cost savings compared to conventional delivery services.

Current competitors in the same space include OTMS in China and Blackbuck in India, with Ward claiming OpenPort’s competitive advantage is its two-sided marketplace linking shippers and transporters simultaneously.

In a LinkedIn post, Ward highlighted that in emerging markets like Indonesia, smaller business took sub-contracts from larger logistics providers and received around 20 per cent of the overall deal value – a traditional and outdated model – but a business model prevalent in Indonesia.

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Indonesian logistics

Indonesia is a market where OpenPort is particularly keen to expand, given its potential. Currently, many consumer product goods corporations, which ship large quantities in bulk, often engage a third-party logistics provider (3PL) to aid in the shipment, with Indonesian services provided by companies like Linfox, Kamajaya, or DHL.

A recent World Bank report titled “Private Investment Is Essential” attributed Indonesia’s high logistic costs on under-utilised logistics assets. This is worsened by long and fragmented supply chains, low port efficiency and road congestion.

However, many Indonesian 3PLs lack the capacity to handle deliveries, resulting in outsourcing of deliveries to subcontractors (i.e. shippers & carriers) to transport the goods to their destination, driving up costs. Ward estimates that between 3000 to 4000 such firms exist, with small fleets of 10 to 20 trucks.

Ward noted that a 2013 report from Frost and Sullivan valued the logistics supply chain industry in Indonesia at US$25.41 billion in 2012, yet was ranked 53rd by the World Bank in their 2014 Logistics Performance Index (LPI). Currently, logistics costs account for 26 per cent of Indonesia’s $861 billion economy, according to consultancy firm Roland Berger.

This was significantly lower than neighbouring countries like Thailand, Vietnam, Singapore, and Malaysia. Singapore’s and Malaysia, Indnesia’s two closest neighbours, see ratios of 8 per cent and 14 per cent respectively. Meanwhile, Asian collosi India and China have ratios of 14 per cent and 18 per cent.

With Indonesia’s economy projected to grow between 5.3 to 5.7 per cent in 2017, growing consumer demand is outstripping the capacity of current supply chain infrastructure in Indonesia. However, Indonesia’s government is engaged in plans to significantly improve overall infrastructure and improve connectivity across the country.

A report by strategy consulting firm Roland Berger which assessed Indonesian logistics suggests that Indonesia is will be able to reduce logistics costs to 19 per cent of its gross domestic products (GDP) by 2020, due to efforts by Jakarta to modernise ports and open up the logistics sector to foreign investment. By 2035, logistics costs could decline to 9 per cent of GDP with reform in port operating models and the development of better port infrastructure.

But for this to happen requires consolidation of Indonesias fragmented forwarding industry and resolving unbalanced cargo flows between its various islands, which OpenPort is leveraging upon.

According to Ward, adoption has been good, with many trucking firms and shipper receptive to its use and eager to be autonomous of the 3PLs. The firm claims to record 40,000 shipments a month across all its markets, with the platform being used in Indonesia, Pakistan, eastern China, India, Vietnam, and Australia.

Commenting on the investment, Hany shared: “Max staked out an amazing multi-market strategy for us. We want to be in all high-growth markets within two years.”

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.