In Western markets, freight forwarders are well into digitizing their operations, but the same doesn’t hold true in Southeast Asia, say the founders of Fr8Labs. The reasons for that include the lack of localized software and a more fragmented logistics industry where SMBs dominate. Fr8Labs wants to digitize Asia’s logistics industry with its SaaS operating system and has plans to turn it into an open ecosystem that multiple players can tap into with APIs.
The Singapore and Indonesia-based startup announced today it has raised $1.5 million in seed funding from East Ventures, FEBE Ventures, Kaya Founders, Mulia Sky Capital, Seedstars, Venturra and angel investors. Fr8Labs currently has more than 50 customers in Singapore, Malaysia, Indonesia, Taiwan and Australia and is expanding into the rest of Asia.
The startup was founded in 2022 by chief executive officer Glenn Lai and chief of product and technology officer Felix Lu. Lai, who has family members in the freight forwarding industry, started his own career in logistics in 2015 at Sinar Gas Golden Agri Resources. Then in 2019, he and Lu joined e-commerce logistics company Bizzy in Indonesia, where they served as COO and VP of product, respectively.
After Bizzy was acquired by Warung Pintar, the two returned to Singapore, where Lai was chief of strategy and growth at software company Gravity Supply Chain. He traveled around the world, working with major international logistics and supply chain companies. In developed markets, he noticed that supply chains were digitally interconnected, in contrast to Asian markets.
Lai says one reason for the technology gap in Asia’s freight forwarding industry is that the market is more fragmented compared to Western countries where enterprise players dominate. Large freight forwarders are able to sway other players to digitize, especially since they have systems that the companies they work with can plug into with APIs. On the other hand, Asia’s freight forwarders are primarily SMBs and don’t have the same kind of centralized power to influence new practices. Lai adds that another reason is that digital logistics systems are created for specific markets, and don’t work in Asia because of different accounting or customs policies.
As a result, many freight forwarders in Asia, especially Southeast Asia, still use on-premise software, or a combination of Microsoft Excel, email, chat and off-the-shelf accounting systems. Lai says this makes it difficult for them to scale and also results in errors that can cost freight forwarders customs or demurrage penalties (fees charged on shipping containers that aren’t picked up on time).
“This contrast inspired me to think about how we could improve the freight forwarding industry in Asia,” Lai tells TechCrunch. “I brought Felix and some past colleagues together to brainstorm solutions. We realized that leveraging the strong networks, expertise and relationships of Asian freight forwarders, rather than disrupting them, was key.”
Fr8Labs is developing products that will enhance those networks, including giving freight forwarders the ability to offer cargo insurance, FX trade and financing facilities to their end customers (similar to how online travel agencies offer travel insurance to passengers). The startup’s core offering is its Operating System that supports a freight forwarder’s entire workflow: quotation, booking confirmations, shipment confirmation, job accounting and an accounting backend. The platform helps departments like sales and operations collaborate more efficiently and links platforms like email and chat.
One use case is that instead of doing multiple manual data entries, a freight forwarder can upload a PDF of a shipping order and have shipment booking and other documents created automatically, including forms that need to be submitted to customs. Another example of how Fr8Labs can be used is its Warehouse Management System module, which lets freight forwarders interface directly with their client’s backend ERP, so they can manage international shipments to and from the same warehouse.
Part of Fr8Labs’ funding will be used to expand its platform, with plans to add FX trade, financing, cargo insurance, rates management and a marketplace. The startup’s goal is to turn its platform into an open ecosystem that can integrate with and manage different logistics tech software.
“Think of Android or Apple, and how well integrated each of their devices are in the ecosystem,” says Lai. “We want to provide the freight forwarder a seamless experience for them to operate on, and then build more value-adding services on top of it.”
In a statement, East Ventures managing partner Roderick Purwana said, “The application of technology is crucial in logistics because it can help to increase cost efficiency and productivity, yet players in the industries are not immune to challenges in enhancing digital logistics. Fr8Labs’ innovative tech solution is here to address the challenges freight forwarders face in Southeast Asia. With the team’s expertise, we are confident that Fr8Labs can transform the logistics industry, adding value across the value chain.”