Dynamo Dispatch (27/03/23)

Issue 231 | Gatik, Manna, US Xpress

Dynamo Dispatch. A weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

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Weekly Commentary 💭

🚚Happy last Monday of March!  The major industry event this week is Shoptalk 2023 in Las Vegas.  We won’t be able to attend but look forward to hearing the key takeaways and highlights. Shout out to Nextmv and Factored, among others who will be in attendance from the Dynamo family.

This was widely covered last week, but we wanted to highlight Dynamo portfolio company Gatik’s collaboration with Kroger in Dallas - an exciting development set to kick off in Q2 of this year.  

We’re still accepting applications for our Associate program. Apply here if you’re interested! 

🥰Love reading the Dispatch? Make sure you forward it to anyone looking to stay up to date with all things supply chain and mobility.

We Are Dynamo,

Santosh, Jon, and the rest of the Dynamo team (shout out to Anneli for the editorial support this week)

Note: please add “dynamo@substack.com” to your email client, so you don’t miss future issues due to aggressive spam filters.

Supply Chain 📦 

🌟Manna To Commence US Last-Mile Drone Delivery Trial. Ireland-based drone delivery company and Dynamo portfolio company, Manna, has partnered with real estate development company, Hillwood, to offer drone delivery services to over 10,000 residents in the Dallas-Fort Worth area. Pending approval from the Federal Aviation Administration, the drones will handle deliveries of up to 7 pounds across Hillwood's 27K-acre AllianceTexas community and can travel at 60kph. Manna's drone fleet is accessible via API to food tech providers and online food platforms, offering deliveries for food, coffee, medical supplies, and more. For more on drone delivery, read The Ecosystem: Drone Start-Ups Get Ready For Europe’s New Space Race.

Walmart’s Spark Driver Platform Ramps Up Delivery Coverage. Retail giant Walmart has tripled the number of pickup points for its Spark Driver platform, a move aimed at strengthening its last-mile delivery services. According to the company, the platform now covers 15K pickup points, which include Walmart stores and Walmart GoLocal client retail locations. With this expansion, drivers for the delivery provider can now reach 84% of households in the US, a significant increase from the previous year. For more on Walmart, check out Walmart And Target Battle For Last Mile Supremacy and Walmart Laying Off Hundreds Of Us Workers At 5 E-Commerce Fulfillment Centers. 

Shell Scenario Sees Need For 10K Hydrogen Ships In Service By 2040. Shell's Energy Security Scenarios report outlines two potential energy and climate outcomes, with the first scenario examining current pressures through the end of the century. In order to achieve the Paris Agreement's climate goal of limiting global temperature rise to less than 1.5°C, the report suggests that 10,000 hydrogen carriers should be in operation by 2040. For more on the report, read Shell Reports Good Progress On Journey To Net-Zero Emissions and Shell Rules Out More Ambitious Goal For End-User Emissions. 

Ikea Now Uses 100 Drones For Inventory Operations. Swedish retailer IKEA has expanded its fleet of autonomous drones to 100 across 16 locations in Europe. The drones, developed in partnership with Zurich-based start-up Verity, are deployed during non-operational hours to ensure stock accuracy and offer real-time overviews of stock. According to IKEA, the investment will improve worker well-being and increase affordability and convenience for customers. For more on the subject, check out Verity Raises $32m As Ikea Stores Deploys Its Inventory Drones and Ikea Claims An Industry First As It Says It Is Now Using 100 Drones For Stock Inventory.

The Hard Limits Of Retail Digitalisation In Africa. Africa's retail market, which is worth $1.4 trillion, offers a massive opportunity, particularly for serving consumers earning $4-$8 per day. However, it is challenging for digital platforms to profitably serve this segment, as acquisition and distribution costs make it difficult to sustain B2C marketplace models selling food and necessities. B2B models that aggregate consumers through small businesses may have a more substantial chance of success. For more on e-commerce in Africa, check out African Online Pharmacies Are Leapfrogging An E-Commerce Giant and Nokia (NOK) Solutions to Aid Digitalization Efforts in Africa.

Amazon Launches Program To Reduce Grouped Delivery Issues. As it continues to in-source its last-mile delivery operations, Amazon has launched a program called "Risk Aware Delivery" aimed at reducing errors made by delivery drivers during stops that involve multiple delivery locations. Under the program, delivery drivers can group all packages at a "grouped stop," but if there is a high risk of an issue, such as previous repeat issues at a particular address, the package will not be part of a grouped stop. For more Amazon-related news, read Amazon, Other Retailers Revamp 'Free' Shipping As Costs Soar. 

China Tariffs Lifted Us Production But Hurt Downstream Industries: Report. The report highlights the effects of tariffs on products from China, finding that they reduced imports, raised prices, and increased domestic production in many cases. The study covered tariffs on steel and aluminum, as well as a range of other imports, and found that while the US steel and aluminum industries benefited, downstream manufacturers purchasing the metals as inputs suffered negative effects. Despite this, the Biden administration has kept the tariffs in place and may seek further action in its 2023 trade agenda. For more on manufacturing in Asia, read Manufacturers Move Back to China as Renewal of U.S. Trade Deal Is Delayed. 

Foot Locker Builds Out Inventory Visibility As It Chases Digital-Savvy Peers. Foot Locker is making efforts to improve its inventory tracking system and catch up with its digitally advanced competitors. By 2024, the company plans to have its inventory synced across stores, DCs, and digital channels to provide a near real-time picture of product availability and location. In the next four years, the retailer plans to increase capital spending by 50% as it builds out its inventory capabilities and makes other investments. In other retail inventory news, Nike Sales Jump As It Works Through Inventory Glut and Freight Rebound Hopes Are Fading Under An Inventory Glut.

Mobility 🚗 

🌟US Treasury To Release EV Battery Sourcing Rules Next Week. This comes highly anticipated after the billions of dollars in incentives revealed in the Inflation Reduction Act last year. In the next few months, the Treasury will also release more guidelines on the bonus tax credits being deployed for clean energy projects for fossil fuel-dependent communities. Understand more about the guidelines by reading Treasury Guidance On Electric Vehicle Tax Credit Due Next Week and Biden Reaches Moment Of Truth For Electric Vehicle Tax Credits.

Electric Vehicle Battery Makers Test A Future Without Lithium. Chinese car manufacturer JAC has unveiled a new test vehicle that runs solely on sodium-ion cells. With batteries supplied by HiNa Battery Technologies, JAC’s new vehicle is leading the charge for China’s sodium-ion battery wave. Read more on the latest sodium-ion technology by checking out Sodium-Ion Batteries Just Got More Competitive and Researchers Develop New Method To Enhance Sodium Ion Storage.

We Are Living In A Golden Age Of Electric Cargo Bikes. In January of 2022, cargo bikes only represented 2.77% of used eBikes that were posted on Craiglist. However, this number has taken off as used cargo bikes clock an average mileage of 766.5 miles, nearly double that of any other performance eBike. For more, consider reading Americans Are Finally Getting On Board With eBikes.

Germany Reaches Deal With EU On Future Use Of Combustion Engines. This agreement will allow some combustion engines beyond 2035, which has become a  controversial topic for environmental groups. A resolution is being reached,  with Germany wanting future assurances that new combustion engine automobiles can be sold past 2035 if they run on e-fuels. Get more information by reading Brussels Agrees Deal With Germany In Spat Over Combustion Engines Ban and German Government In Crisis Over EU Ban On Car Combustion Engines.

Foreign Car Makers Take Hard Knocks In China’s Auto-Sector Brawl. China’s car market is slowing down substantially, with auto sales falling nearly 20% y/y in the first two months of 2023. This is largely due to gas cars,  which dropped 30% y/y while plug-in hybrids grew 23% y/y in these first two months of 2023. How China Plans To Crush Elon Musk In Electric Car Market and China’s Slow Auto Sales Spurs Race To Cut EV Prices.

Car Makers Revive India Growth Plans As China Market Sags. Manufacturers including Volkswagen, Renault, Nissan, and Hyundai have announced plans to enter the Indian manufacturing market. India has now reached the same level as Japan in terms of being the #3 in vehicle sales after China and the US. To get more information, consider reading Why Is The Auto Industry Split On Free Trade Deals?

Fundraises and M&A 💸

Knight-Swift Transportation Acquires U.S. Xpress Enterprises For $808M. Knight-Swift Transportation is now the largest full truckload carrier in the US and US Xpress is a smaller, asset-based truckload carrier. US Xpress shareholders will receive a 310% premium over the company's closing stock price on March 20th, 2023, but the US Xpress brand and separate operations will continue.

Revolv Raises $15M in Series A Funding. Revolv, a San Francisco-based provider of electric commercial fleets, has raised $15 million in Series A funding led by Greenbacker Capital Management. Revolv offers a full-service development model that covers electric vehicles, facilities, installation, and maintenance of on-site charging infrastructure. The funds will be used to expand its operations across North America to support the demand for decarbonized commercial fleets with light, medium, and heavy-duty trucks.

Candela Raises $20M In Latest Funding Round. Swedish company Candela is developing an electric-powered hydrofoil, the P-12, which can carry up to 30 passengers and uses 80% less energy than a traditional vessel. Candela estimates that operators can save around 40% compared to traditional, large, diesel setups. The funds will likely be used to finalize the development and put the P-12 hydrofoil shuttle into production.

IntegrityNext Raises $109M In First Funding Round. IntegrityNext is a Munich-based startup known for its software that helps organizations monitor their suppliers and overall supply chain for ESG compliance. With the funds, the company plans to build more capabilities in environmental and ethical labor commitments and expand its operations in the US and Europe.

Canadian Pacific Acquires Kansas City Southern For $31B. The merger of Canadian Pacific and Kansas City Southern, two major railroad companies in North America, is the first major railroad merger in more than two decades and will link the United States, Canada, and Mexico. The new combined company is expected to add over 800 new union jobs in the US, will facilitate the flow of goods between the countries, and shift approximately 64K truckloads annually from North America’s roads to rail. The terms of the deal were not disclosed.

SPAC Radar 📡

Heidmar plots Nasdaq listing and $55m raise with listed SPAC outfit Home Plate. Based in Athens, Greece, Heidmar Inc., an operator of supertankers and provider of maritime services, recently announced its go-public merger with Spac outfit Home Plate.  Upon completion, the combined company will be listed on the NASDAQ as “HMAR” and operate as “Heidmar”. Latham & Watkins is advising the SPAC and anticipates the combined company would have an equity value of around $261.4 million. For more information check out Heidmar Inc. Announces Business Combination Agreement with Home Plate Acquisition Corporation and Three Firms Anchor $261 Million SPAC for Tanker Operator Heidmar.

Business Building 🛠️

The Series B Remains Elusive. While the data shows what we all know, the reasons for the Series B freeze might be more interesting. We’ve seen Series B investors struggle to clearly answer the question “what’s a good company look like?” as they try to parse shifting public market dynamics that often serve as a reference even at this mid-stage of company growth. The antidote? Keep building, selling, and building a durable business - if you haven’t trimmed burn already, do it.

The Real Competition is the Water. “What matters is moving your company towards excellence. What does that mean? Look at your 2023 plan and be honest with yourself about whether your revenue growth justifies your cost base. If it doesn’t, either make the hard decision on costs now or find the big bet on a product that will give you a chance to fundamentally alter your growth trajectory in 2024 and beyond. Most companies are treating 2023 as a mulligan year with hopes that the market improves in 2024 and brings growth back. None of us know whether it’s going to be easier or harder to grow in 2024. All we know is that hoping that it’s easier is not a great strategy. Don’t let a long runway lower the bar for your company. High standards are a gift that you give your team. And remember - the real competition is the water.”

How To Build Your First Sales Team When You Have Zero Experience Building One. A seven-point framework that can help when you’re looking to draw first revenues. It’s never pretty or perfect but that comes with time. The one thing we’d note is that the CEO ultimately is always the best salesperson the company has - lean into it!

Who's Hiring? 👩‍💻

Be sure to check out the Dynamo website for more job opportunities at our portfolio companies!

Construction Project Optimization Consultant at Tendered in Riyadh, Saudi Arabia. 

Head of Finance at Solvento in Mexico City, Mexico (hybrid).

Staff Software Engineer at Nextmv in Philadelphia, PA (remote). 

Random Statistic Of The Week 📈

♿According to a new study by the National Disability Institute, “if reliable, affordable self-driving cars were widely available, around 9.2 million more Americans would join the workforce, the researchers found.”  In 2021, only 21% of Americans with disabilities participated in the labor force, compared to 67% of participants without disabilities. To learn more about the study, commissioned by Cruise, check out this article from Axios.