News / Exclusive: Another Indian digital forwarder bites the dust

© Paulus Rusyanto

The list of failed Indian logistics tech start-ups appears to be growing, and the next one may well be the highest-valued among that unlucky bunch yet.

A Chennai-based digital forwarder, backed by Tiger Global and Nippon Express Holdings, among others, and thought to be a major industry disruptor in India’s historically fragmented logistics landscape not so long ago, is now struggling to stay afloat, industry updates suggest.

The crisis at Wiz Freight has triggered a mass exodus of executives, voluntarily or otherwise, as it steadily suspended export bookings, sources said.

“We had enough signals about the crisis building in the company,” one former Wiz Freight executive told The Loadstar, speaking from Chennai.

“We were being restricted from accepting bookings.”

The AI-powered model was founded by two aspiring techpreneurs in 2020, Ramkumar Ramachandran and Ramkumar Govindarajan, popularly known in industry circles as the “Two R’s.” While the former has had a longer handle in logistics with other similar interests, the other younger ‘R’ has been the frontline figure for Wiz.

At full flow, the company claimed it had more than 1,000 employees, calling them ‘WIZards,’ across some 47 offices, including in the US, the UAE, Thailand, Singapore and Hong Kong.

Relative to other home-grown tech peers active or inactive, the Wiz founders had managed to raise significant venture capital funding support through early 2024, including from Tiger Global, Nippon Express Holdings and Axilor Technologies Fund, according to available information.  The investors were apparently induced by Wiz’s rapid network consolidation and highly ambitious growth plans following its two strategic acquisitions during 2022 – the Indian operations of Swiss forwarder M+R Spedag Group and Mumbai-based ATZ Shipping, sources believe.

As a result, Wiz’s revenue soared phenomenally – hitting some $142m in the fiscal year 2022-23 from just $2m in the previous year, but it continued to be in the red, losing some $10m against marginal profits of about $900,000 reported in 2021-22, available data shows.

“The tides were not turning for investors to pump in more,” one industry observer said.

“The challenges of fresh funding sources and volatile market conditions have pushed the tech model to the wall.”

Adding to the pain, sources said all container carrier partners have withdrawn their credit lines extended to Wiz Freight.  And airlines are no longer providing airway bill stocks to the cash-strapped start-up, they noted.

One carrier source said Wiz Freight was still trying to fulfil volume commitments under previous service contracts to avoid non-performance penalty implications, even though the targets would not be within reach.

“They seem to be handling only FOB shipments or bookings coming through nominations,” the source said.

According to sources, Wiz is now routing local bookings through another Chennai-based forwarder, TVS Supply Chain Solutions, which has also reportedly absorbed an unspecified number of Wiz staff.

And that informal engagement is fuelling more rumours – Is there going to be some sort of a joint venture or acquisition deal by TVS?  Also headquartered in Chennai, TVS is a leading supply chain group with diverse logistics interests.

Barring the Covid era, Wiz has operated on razor-thin margins or often without any brokerage markup just to build volumes, so sustaining the model for long was going to be difficult, one insider source said.

The demise of Freightwalla in 2023 had already brought those questions to the fore. Sources told The Loadstar at the time that one of its challenges was staying ahead of the market, tech-wise. Both carriers and ‘traditional’ forwarders have invested heavily in technology, including for quotes and visibility, while there are also Saas platforms available.

As one digital forwarding executive admitted at the time: “Our platform is no different or superior to others in the market and, speaking plainly, there are many better and more advanced platforms available.”

And as supply chain strategist Wolfgang Lehmacher noted in trans.info earlier this year, following speculation about the future of German digital forwarder Forto: “Our interviews with multiple players in the sector, both on the buy- and sell-side, hint at a recognition amongst digital-first players that further growth requires a level of balance sheet strength that incumbents have but digital-first actors lack and likely cannot replicate easily.

“Freight forwarding is a working capital-intensive business; the more one grows, the more capital one needs. When capital was cheap, most companies grew by regularly raising equity. Now that that path has closed, they can no longer grow as fast and must partner with balance sheets that can provide the necessary working capital.”

The Indian market is also facing turbulence from the US tariff policy, which has upended its export business.

The Wiz Freight turbulence cements the notion that despite the heavy tech push across the supply chain spectrum, India’s freight industry continues to be deeply rooted in a culture of relationships – a reality that carriers can’t afford to ignore while setting strategies for market share.