Freightos fairytale earnings call. Are you sitting comfortably, children?
Zvi Schreiber’s first earnings call as CEO of a listed company was reminiscent of the ...
A war of words has broken out between two airfreight booking platforms over funding and business strategies.
Last week, Cargo.one, a venture capital (VC)-backed platform, was forced to make 16 staff redundant, as co-CEO Moritz Clausen followed Flexport’s lead and announced the cuts – “the hardest decision for any founder”.
Mr Clausen noted the platform’s “incredible growth”, with more airlines onboard in 2022 than the previous four years combined. But he didn’t specify the reasons for the job losses, simply noting: “Like many companies, we are proactively managing our organisation to fit the global economic developments. More than ever, our clear goal is to remain self-reliant and independent of volatile financial markets for many years to come.”
He did acknowledge that the environment was tougher, but added that “the outlook for digital sales is very strong, and we will continue to focus on our long-term approach to partnerships and on our mission”.
However, rival cargoAi was quick to point to what it claimed was the source of the trouble. In a Q&A from before the cuts were made public, CEO Matt Petot said VC-backed companies, facing requirements to achieve certain KPIs, were forced to make short-term or bad decisions.
“As funding is currently becoming more difficult to secure, we can anticipate VC-funded logtech companies will run into significant fundraising challenges this year and will have to drastically change the way they operate. This is not an issue for us as we don’t rely on a similar funding cycle.”
CargoAi, which has strategic investment from CargoTech, added that different funding types meant the playing field wasn’t level.
“Competing with venture-backed startups can be challenging, as they often have access to significant funding at the outset that allows them to make aggressive moves in the market, such as heavily subsidising their services or acquiring competitors,” added Mr Petot.
“Additionally, venture capital firms typically have a “winner-takes-all” mentality and focus on achieving rapid growth at all costs, which can lead to instability for the company and its employees.”
Newly listed Freightos, the 10-year-old market leader, has admitted to years of losses, with a $20m net deficit expected this year, thanks to more investment. But it is also forecasting a gross profit. But it shows how difficult it is to make a profit in the booking business, and how slim the margins are.
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