Dynamo Dispatch. 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 💭
We continue to see the impact of the silicon shortage across mobility supply chains - it may not feel like news till there are some signs of reversal. This is similar to the ongoing pressures in maritime that are driven by the trifecta of port congestion, container misplacement, and Suez Canal aftershocks.
In terms of Dynamo, we have our applications for our July 2021 Venture Fellowship open - apply or send brilliant people our way. Note, this is a full-time commitment.
Shout out to Matt and Seth for the referrals!
We Are Dynamo,
Santosh, Jon, Barry, Ted, Katie, Emily, and Rachel
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Supply Chain 📦
Containers are Plenty, Just Not in the Right Places. The global containers crisis is unlikely to relent before the end of the year despite 2021 likely being a record-breaker in terms of new containers delivered. Industry analysts believe that 1.4M TEU of new containers were delivered last quarter which is about 10% more than Q4 2020 and 21% more than in Q1 2020. Based on this activity, 2021 production could be more than 4.7M TEU. This could be a record for container production beating out 4.42M TEU in 2018. In spite of this record-breaking production, there is still likely to be a container shortage due to disruptions from COVID-19. On top of this, demand for new equipment is soaring. Around 45% of all orders this year were for replacement units and that number is expected to rise to 60% next year and until 2025. Related to the humble container, Shipping Containers Fall Overboard at Fastest Rate in Seven Years.
Earnings Roundup: UPS Posts Higher Quarterly Revenue, to Boost Weekend Deliveries, CH Robinson Posts Big Gains, Amazon’s Profit Run Continues, Bolstered by Sustained Demand, and Maersk Posts Strong Quarter, Market Conditions to Remain into Q4. In a quarter where Texas froze, ports were historically clogged, and there were other business disruptions, logistics and parcel delivery services beat expectations. The trends that caused this positive quarter were the continued surge in eCommerce and growth and a continued increase in volume. Even though all of these companies had impressive quarters, some thought these numbers were a tad underwhelming given the historic volume seen in the past three months. UPS announced that it will invest this quarter’s profits into weekend delivery so that 90% of the US will have access to it by October. Also, Amazon is Spending Big to Take on UPS and FedEx and USPS Invests in More Parcel Sorters, Overflow Facilities to Prepare for Peak.
A COVID-19 Vaccine’s 1,500-Mile Journey Through India. In India, a half-millimeter dose of the AstraZeneca COVID-19 vaccine starts its journey in a bioreactor in Pune and then must travel 1,500 miles over 120 days to reach its final destination in a remote village in the northeast part of the country. After the dose is manufactured, it goes into a 40-degree warehouse where it is stored until January 2, the day that India approved the use of the AstraZeneca vaccine. The vile is then packed in an ice-pack-lined plastic foam box and loaded onto an insulated truck. The truck drives 30 minutes to the Pune airport where it is loaded on a passenger flight to Kolkata, where it will then be loaded onto a passenger flight operated by the government. The vaccine will then go to a warehouse in Kolkata and then loaded onto a delivery truck where it will be delivered to various locations in the state of West Bengal. In order to reach the most remote parts of the state before the rainy season starts, the viles are then loaded into large coolers that go into government vehicles that can drive on unpaved roads and reach the vaccination center. This logistically complex vaccine campaign is how India aims to vaccinate 300M people by the fall while it battles the worst outbreak of COVID-19. In other vaccine distribution news, US COVID-19 Vaccine Supply Set to Outpace Demand.
How the Pandemic Changed Retail Supply Chains. The pandemic has upended retail supply chains. eCommerce has shifted supply chain strategies and brick and mortar stores became shipment hubs. Omnichannel strategies became essential. Many consumers preferred not to shop inside and wanted options such as curbside pickup or pickup lockers separate from the main store. Another change was toward on-demand warehousing. Some on-demand warehouse providers saw more than 100% y/y growth. All of these changes have been expensive, but none more so than an increase in returns. The National Retail Federation estimates that customers returned an estimated $428B in merchandise in 2020 which makes many retail executives wonder if there needs to be a C-suite level position for returns. On the horizon, Amazon to Pass Walmart in US Retail Sales in 2025.
Life on the Road with Pets. Many truck drivers own pets and they are beginning to bring their pets on the road with them. Long haul trucking companies encourage this because it can keep drivers happy and retain them at a time of a nationwide driver shortage. Truck driving can be an isolating job and pets, ranging from parakeets to hedgehogs, can serve as a companion that lifts truckers’ spirits during journeys that can exceed 3K miles per week. More flexible policies towards pets accompanying truckers can also help them adopt more pets from shelters since shelters will be more convinced that the pet will be able to spend more time with their owners. Allowing pets in trucks is seen as a trend toward trucking companies becoming more driver-centric which is something truckers and their four-legged friends welcome. On the open round, Have Carriers Learned Not to Overextend Fleet? and Outrider CEO on the Yard of the Future.
Shipper/Carrier Relations at All-time Low. A short-sighted, “it's all about the money” approach to shipping lines is driving the degeneration of shipper/carrier relationships. Another reason for this strain is that carriers may not be honoring the MQCs, thereby forcing shippers onto spot markets to find space. Many industry experts believe that in this market carriers are newly empowered to set limits on what they will carry and implement peak season surcharges on spot businesses and NVOCC businesses. In order to repair these damaged relationships carriers are urged to have open communication with shippers and share more about their long-term growth plans. This could spur better relationships in the industry. Also worthwhile read: Suez Effects to Stretch Into June, Container Shortage to Worsen, Historic Cargo Surge in LA, Long Beach Ports Spur 24-hour Supply Chain Discussions, and MSC to Accept eBoL via Blockchain.
German Manufacturers’ Optimism Hit by Supply Chain Disruption. While German manufacturers reported the highest level of capacity utilization for almost two years, almost half of German manufacturers reported disruptions to their levels in supplies of parts or materials in the past month which is the highest level in the past 30 years. Almost three-quarters of companies in the rubber and plastic sector, 60% of those in the electronics and automotive sector, and 42% in the chemical industry reported supply chain problems. Shortages in everything from polymer resin to semiconductors have also forced manufacturers to cut production, leaving them unable to meet rising demand. The usual suspects of rising consumer demand, restrictions to curb the spread of COVID-19, and container shipping delays are to blame for these disruptions and lack of optimism. Related, The EU's Microchip Dilemma: Too Little or Too Late and Australia, Japan and India Form Supply Chain Initiative to Counter China.
Mobility 🚗
📊The Self-Driving Software Race. Since the AV industry is years away from Level 5 autonomy and is yet to figure out if robotaxis, autonomous pizza delivery, or package delivery will be the most profitable, there is a shift going on in how these companies are evaluated. According to the Guidehouse Insights annual study, the best AV companies are no longer defined by their plans to get cars on the road, but those who develop the best systems for anything from dense urban taxis to long-haul trucking. Companies such as NVIDIA or Aurora are on the rise in the industry since they develop systems, not cars. Waymo still took the top spot in spite of a change in leadership followed by NVIDIA, Agro, and Baidu. Also, AVs to be Allowed on UK Roads This Year and Baidu Apollo to Launch Fully Driverless Ride-Hailing Services in Beijing.
Ford, VW Face More Work Stoppages Due to Chip Shortage. Ford is expected to lose about 50% of its planned Q3roduction and about $2.5B in earnings due to the chip shortage. Volkswagen also announced that they will stop the production of their Jett and Tiguan models in Mexico for nearly two weeks due to the chip shortage. These shortages and subsequent stoppages in production are beginning to have an impact on trucking rates and supply chains across Mexico such as disruptions to schedules, production, and transportation costs. This has led carriers such as Knight-Swift to raise rates for the rest of 2021 and no one expects the chip shortage to be resolved any time soon. In other chip shortage news, Global Chip Shortage Spreads to Toasters and Washing Machines and Tesla faces 'Insane' Supply Chain Headwinds, From Semiconductor Shortages to Port Congestion.
EV Charging Business Is Doing Everything But Making Money. The push to wean US drivers off of fossil fuels won’t be possible without charging infrastructure, but EV charging infrastructure companies have yet to find a profitable business model. The main reasons for the lack of profitability are that most EV drivers want to charge their vehicles at home, the lack of infrastructure makes non-EV drivers weary of the switch, and the problems that can arise when parking spaces double as charging spots. Another issue is that Tesla represents the lion's share of the EVs on the road and their charging infrastructure can’t be used by other cars which could create issues when other automakers such as GM and VW have more EVs on the road. Investors are still bullish on this industry due to a global push to reduce carbon emissions, but realize that this still has a long way to go. Related, GM has a Solution for Our Charging Infrastructure.
Ford Plans to Manufacture Its Own Batteries for EVs. This week Ford announced plans to manufacture its own lithium-ion batteries for EVs. The automaker will invest $185M in a battery-development plant in southeast Michigan and many other locations next year. Batteries for Ford’s earliest plug-in models will come from outside suppliers such as SK Innovation Co in South Korea. This move comes as other major automakers such as GM and VW made similar announcements. Until recently established automakers have been wary of making their own batteries due to the expense of this endeavor. Tougher global emissions regulations, the rise in demand for EVs, and the emergence of Tesla are seen as the leading causes for this change of heart. Also worth reading, Electric Cars: What Will Happen to All the Dead Batteries and On Top of Zero-Emission Vehicles, GM Looks to Clean Up Its Own Operations.
📊Ride Sharing Intensifies Urban Road Congestion. A new study shows that ride-sharing increased road congestion in the US by almost 1% and increased the duration of the congestion by 4.5%. The study also found that ride-sharing can decrease the number of public transit rides by 8.9% and decrease private vehicle ownership by 1%. One reason for this increase in congestion is that many ride-sharing trips are ones that would have otherwise taken place via a greener solution such as public transit, riding or cycling. Another reason for this increase in congestion could be the number of miles that a driver spends without a ride-hailing passenger in the car, which accounts for 40% of a driver's miles. In other micromobility news, eBikes Are Getting More People Out of Their Cars, Google Pay Update Adds Grocery Offers, Transit Expansions and Spending Insights, and Edmonton Preps to Launch On-Demand Transit Option
Volvo Forecasts Rapid Growth for eTruck Adoption. Volvo believes that heavy-duty eTrucks could represent more than half its sales within a decade. Late last year the automaker launched the production of eTrucks in the US and plans to assemble three new models for Europe later this year. Analysts and industry experts believe that this shift will be powered by an increasing number of transport companies realizing that they need to start their electrification journey right now. California and Europe could help accelerate this journey due to subsidies and regulation that is more favorable to EVs rather than diesel-powered vehicles. Additionally, Renault plans to gear up EV sales to 65% by 2025 and Yonkers Police Roll Out First Fully Electric Vehicle.
Thailand to only allow BEV sales from 2035. This week the Thai government announced that only EVs will be sold from 2035 onward. To achieve this goal, the government wants EVs to make up 50% of the vehicles registered by the end of this decade up from a previous goal of 30%. Thailand hopes that its clear stance will attract investment in its automotive sector. The automotive industry represents about 10% of the Thai economy and the cars produced there go to other countries in Southeast Asia. Thailand hopes to become a hub for EVs because the country already has the existing supply chains. Also in Asia, China’s Transition to EVs by 2040 and Huawei Deepens Dive Into EVs.
Cobalt Price Jump Underscores Reliance on Metal for EV Batteries. The price of element cobalt has jumped by 40% this year due to its importance in EV batteries. More than 60% of the world’s cobalt comes from the Democratic Republic of the Congo where the production of this metal is dominated by child labor. This has led Tesla, Volkswagen, and other automakers to pledge to reduce their reliance on cobalt due to potential human rights violations. While cobalt is the most prevalent element in EVs, advances in lithium-ion phosphate (LFP) chemistry have gained popularity in recent years which could reduce dependence on cobalt and could decrease its notoriously volatile prices. Many industry experts believe cobalt will be an important part of EV batteries going forward, but it likely won't be as dominant as it is today. In the realm of EVs, California's 'White Gold' Rush: Lithium In Demand Amid Surge In Electric Vehicles and How EV Batteries Are Improving: Materials, Energy Density and Price.
Fundraises and M&A 💸
💥Manna Raises $25M Led by Draper Esprit. Manna is an Irish drone delivery startup that delivers orders 3 KG or less to suburban areas. The company, which is the most commercially progressed in the drone delivery space, aims to replace road delivery with drones that are a safer, faster, and greener alternative. The capital infusion will be used to expand operations and offer their services to even more customers. Congrats to the entire Manna team on this milestone!
💥Plus One Robotics Raises $33M Led by McRock Capital and TransLink Ventures. Plus One Robotics is primarily focused on computer vision software for robotics in logistics and warehouse settings. Specifically, the system is designed to adapt to a wide range of robotic arms and grippers, which tend to fill different needs for different use cases. The fresh funds will be used to expand operations internationally. Congrats to the entire Plus One Robotics team on this milestone!
KickFurther Raises $5.9M Led by Grand Oaks Capital. KickFurhter is a Boulder-based platform that offers inventory and eCommerce financing for retailers. The startup lets retailers have up-front access to cash through a co-op model. The seed round will be used for marketing and improving backend technology.
FlavorCloud Raises $6.3M Led by Mucker Capital. FlavorCloud is a startup that provides global shipping and logistics services for local eCommerce brands. The startup’s platform allows customers to easily pay customs and duties upfront, as well as streamlines the process of moving goods through global shipping networks. The new funds will be used to further expand the team and the business.
Gridtential Energy Raises $12M Led by 1955 Capital. Gridtential Energy is a startup that produces lead batteries made from its patented, solar-inspired Silicon Joule technology. The Silicon Joule technology replaces metal grids in conventional lead batteries with silicon wafers which enables these batteries to reduce weight, increase power performance and extend cycle life. The funds will be used to further expand the business.
Logixboard Raises $13M Led by Redpoint Ventures. Logixboard is a white-label platform for freight forwarders. The startup’s platform lets freight forwarders create a customized digital experience for their customers, creating a transparent environment that resembles Amazon. The capital infusion will be used to invest in new products to meet their customers’ needs.
Super Raises $28M Led by Softbank Ventures Asia. Super is an Indonesian startup that uses social commerce and streamlined supply chains and logistics to lower the price of everyday essentials. The startup aims to build a Walmart group of Indonesia without having a retail store. The fresh funds will be used to double its presence and launch in other Indonesian provinces later this year.
IRP Systems Raises $31M Led by Clal Insurance and Altshuler Shaham. IRP Systems is an Israeli maker of powertrains for EVs. The startup supplies a whole host of EV manufacturers including Renault with its technology. The Series C capital will be used to scale the development of its systems for EVs, expand R&D and operations, and make a push on global sales and marketing.
EasyMile Raises $66M Led by Starlight Capital Partners.EasyMile is a french startup that builds autonomous shuttles to transport people and goods. The startup claims to be the world leader in autonomous shuttles with 60% of the global market using its vehicles. The funds will be used to scale its business.
Merama Raises $160M Led by Valor Capital and TriplePoint Capital. Merama is a platform that partners with eCommerce sellers in Latin America by purchasing a stake in them and offering services that help them grow their services exponentially. The startup expects to sell $100M--twice as much as last year--focusing on Brazil, Mexico, Chile, and Argentina. The fresh capital will be used to partner with more brands and expand its technology offerings.
Arrive Logistics Raises $300M Led by ATL Partners. Arrive Logistics is a freight brokerage company that connects carriers with shippers. The company’s technology connects 5K shippers to more than 70K carriers. The capital infusion will be used to invest in technology improvements and expand its service offerings.
Trendyol Raises $350M From Alibaba. Trendyol is the largest eCommerce provider in Turkey and the largest ISP in the country. The company recently added food delivery and grocery sales to its platform which sells, on average, 1M products per day. This capital infusion gives Alibaba an 86.5% stake in the company and will be used to further scale the business.
Toyota Acquires Lyft’s AV Unit for $550M. Toyota’s Woven Plant subsidiary has acquired Lyft’s AV unit. For Lyft, this sale comes after pouring millions of dollars into its AV unit and after taking $500M in investment from GM. Toyota’s Woven Plant subsidiary where the company is building a prototype of the city of the future. Lyft will get $200M upfront and the remaining $350M over a five-year period.
DSV Panalpina Buys Agility Logistics Unit for $4B. DSV, a Danish transport and logistics company, will buy the logistics unit of Agility Public Warehousing, a warehousing and logistics company based in Kuwait. This deal will create the third largest freight forwarder in the world and will close in Q3.
SPAC Radar 📡
Plus with Hennessy Capital Investment Corp. V. Self-driving startup Plus is in talks to merge with Hennessy Capital Investment Corp. V. The startup is set to have a valuation of $3B and is expected to raise $500M-$600M in the deal. Blackrock is also discussing putting more money into the deal through the PIPE.
Company Building 🛠️
Github CTO Jason Warner on Developer UX. We’ve increasingly seen the importance of developer-first products in supply chain technology as evidenced by our investments in Tangram and Nextmv. Warner shares his thoughts on creating a best-in-class experience for this user base. Especially important in the early days is the core, cult group that can serve as the foundation for a group that scales to thousands of hundreds-of-thousands big.
How To Build An Awesome Developer Community. A basic primer on building an awesome developer-first community. Can you tell this has been on our minds this week?
Virtual Retreats. Our portfolio company, Nextmv is a fully distributed team and hosted their first virtual retreat recently. Some really great learnings for others looking to round up the troops to team build, problem solve, and brainstorm the future of the business.
Who's Hiring? 👩💻
Account Executive at Backbone AI in New York, NY.
Senior Software Engineer at Token Transit in San Francisco, CA (remote ok).
Deployment Manager at SVT Robotics in Norfolk, VA.
Check out other jobs at Dynamo portfolio companies.
💥 Have you seen any interesting startups recently? Introduce us.
❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.