Dynamo Dispatch (08/03/20)

Issue 116 | cargo.one, Byrd, ClimaCell

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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🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Weekly Commentary 💭

If you haven’t already, check out the most recent episodes of the Future of Supply Chain podcast. We’ve had a range of guests discussing topics such as design in supply chain, digitization of supply chain in face of COVID, and most recently, driveaway logistics.

We Are Dynamo,

Santosh, Ted, Barry, and Jon

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Supply Chain 📦

McKinsey Anticipates Bumpy Recovery for the US Freight Market. As the pandemic has ravaged supply chains, McKinsey says the speed and likelihood of recovery will vary by commodity. Despite a 3-4 year anticipated recovery, McKinsey expects LTL and FTL to bounce back quicker than other modes of transport due to a mix of commodity profiles. But other readings suggest that freight markets are back as Intermodal Freight Volumes Point Towards Recovery.

Earnings Roundup: XPO Sees Substantial Decline in Q2 LTL Revenue, UPS Volumes Up, Profit Down, Airfreight Bright Spot for CH Robinson. Q2 results largely exceeded expectations with companies setting an optimistic outlook for Q3. Most interesting was UPS’ comment to focusing on better vs bigger which leads us to believe they might shed non-core business lines under new leadership. Further, it might help them drive investment into the next generation of technologies.

Shipping Charter Markets Heat Up. Resurging demand and increasing rates not seen during previous crises have shifted carriers back into charter markets. In tandem, daily hire rates are inching back up to near $10k a day from lows of $8k in May. In the sky, Airfreight Pricing Tightening as Passenger Capacity Leaves Market.

Amazon Sets Priorities With Peak Season Approaching. By years end, Amazon will double its fulfillment network. Demand shock has boosted sales and in turn, reduced typical delivery speed. As Santosh said, “Peak 2020 will be less about the speed of fulfillment but having a general ability to fulfill.” In the same vein, There’s No Stopping Warehouse Automation.

UPS and FedEx Take Advantage of Pricing Power.  Heightened eCommerce demand has pushed carriers' capacity to the brink and as a result, they've begun charging higher rates. Many common negotiation practices between shippers and carriers are now irrelevant as carriers hold “almost unlimited pricing power.” With peak season approaching and e-commerce demand exploding exponentially, it’s likely the carrier pricing advantage will continue for the foreseeable future. In DC, the USPS $10B Bailout Loan Comes with Strings.

🌟Meet Variant, US Xpress' Digital Asset-based Carrier. The addition of digital fleet Variant, fueled US Xpress to a 500 basis point increase for its operating ratio in their truckload business. Variant is a digitally managed asset-based fleet that allows for “forced dispatch.” For US Xpress, the fleet runs 20% more loaded miles/week and provides 70% lower driver turnover rates. As legacy carriers embrace data, it’s becoming more evident that Data Will Transform Transform Post Pandemic Supply Chains.

GoPuff’s Growth Challenges. By owning and operating its own warehouses in the neighborhoods they serve, GoPuff experienced record sales at the height of the pandemic. In turn, the pandemic has slowed the opening of new GoPuff warehouses and led to several expansion team layoffs. Adding to the problems, many residents in communities where GoPuff operates have complained of reckless drivers trying to meet delivery windows and parking illegally. One resident claimed “It’s concerning that they are expanding so rapidly and so irresponsibly… All they have brought is disruption and headaches'' to the neighborhoods they operate in. Related, Fabric Launches Microfulfillment Facility for FreshDirect while in Food Delivery, QSRs Boost Menu Prices by 15%.

Mobility 🚗

Tesla Demand Remained High During Pandemic. CEO Elon Musk said in a podcast Friday, “We saw strong orders through the whole pandemic, we still had a good order volume.” The company anticipates a hiring spree as it ramps of production of the Model Y at a Shanghai plant. Speaking of high demand, Ford Bronco Reservations Surpass 150k.

Is There a Possible GM EV Spinoff Brand in the Works?.  After the release of GM’s Q2 2020 earnings, CEO Mary Barra hinted at the possibility of spinning off an EV brand. We note the automaker recently announced a $20B commitment to EV and AV programs over the next five years. A spinoff might unlock some of the value in those assets as EV businesses are favored by investors. Related, See Toyota’s EV Battery Which Charges in 15 Minutes and Kandi Launches Affordable EVs in US Market.

Tesla is Open to Sharing Drivetrains and Battery Technology. As German OEMs try to play catch up, Musk tweeted that Tesla would be open to selling their enabling EV technologies to competitors. Couldn’t find a more mission-oriented statement in “We’re just trying to accelerate sustainable energy, not crush competitors!”

COVID Accelerating eBike Sales. It turns out that eBike sales have been accelerating in June after a spring slump. Brands like Accell and Giant are seeing higher growth and margins as a result. Backlogs are starting to build with pricing surging to $1,000 for entry models. In terms of micromobility, Revel Suspends Scooter Service in NYC After Recent Deaths and Techo Electra Launches Electric 60km Range Moped.

Zeelo Launches Zeeride to Power Coachbus Operators. Dynamo portfolio company announced the launch of its Zeeride platform this week. Zeeride is an independent platform that allows operators, large or small, to digitize their fixed route and shuttle services without the hassle or cost of building and maintaining the technology themselves. In light of COVID, Zeeride also ensures capacity is at a safe level in mass transit substitutes. In NYC, Electric Upgrades Are in Store for the Transit System.

🌟Breaking From China Proves Difficult. Rare metals are an essential component of EV production. A US push to break the dependency on China for rare compounds proves onerous as China is responsible for 80% of all the supply. Mountain Pass mine in California accounts for 12% of global production and has aided in weakening China’s dominant position. Experts believe alliances with smaller countries combined with government support can help establish the US as a self-sufficient producer of rare earth compounds. On a lighter and totally unrelated note, Meet the Collectors Who Spend Thousands on Rare Hot Wheels.

Fundraises, M&A, Talent 💸

Tire Agent Raises $5M Led by American Family Ventures. Tire Agent partners with tire brands to give users a platform to browse tires online. The company now has $6M in total funding and didn’t disclose the specific use of funds. 

Byrd Raises $5.8M Series A Led by Rider Global. Byrd is a logistics startup using cloud-based software to connect retailers and fulfillment centers. Funding will be used to advance its global fulfillment platform. 

Buildbots Raises $13M Series A Led by TLV Partners. The London and Tel-Aviv based startup is using computer vision to modernize the construction management industry. The fresh capital will help scale the company and find new applications for its data. 

cargo.one Raises an $18.6M Series A Round Led by Index Ventures. Cargo.one operates a marketplace for booking air freight. The new capital will help expand the business and assist with increasing the number of airlines on its platform. 

Instrumental Raises $20M Series B Led by Canaan Partners. Instrumental is helping detect manufacturing anomalies through AI. With the funding, the company plans to expand its business in their electronics space. 

ClimaCell Raises $23M Series C Round Led by Pitango Growth and Square Peg Capital. ClimaCell is a forecasting and intelligence platform which gathers data. The company will expand its go-to-market efforts and focus on the fundamental R&D which drives its platform. 

AUTO1 Raises $300M Led by Farallon Capital Management and Baupost Group. AUTO1 is a digital used-car trading platform based in Berlin. The new capital will develop its retail brand, Autohero. 

Li Auto raises $1.1B in U.S IPO. The Chinese automaker manufactures extended-range electric SUVs. Li Auto debuted on the Nasdaq Thursday and raised $1.1B in its equity offering. 

DP World Acquires Majority Stake in Unico Logistics Co. Unico Logistics is a South-Korean multimodal transport specialist. The acquisition will help DP World grow as a smart supply chain solutions provider and create synergies between DP’s and Unico’s operations in the Asian Pacific and European regions.

Company Building 🛠️

The Rise of the Data Engineer. If data is changing supply chains, the data engineer is the agent driving that effort. Tomas Tunguz of Redpoint Ventures shares his presentation from a recent conference outlining the trends he sees powering these professionals and their organizations.

Enablers vs Growers. “Enablers are companies whose purpose is to make it possible for other businesses to operate. The most successful enablers, like Stripe, often create the opportunity for entirely new business categories to emerge or cross the chasm. Growers help their customers take the next step. With offerings and business models positioned to increase the value of their end customers, these companies often have the potential to capture the most value.”

🎧The Cost of Toxic Employees. Every startup has to deal with this through their life cycle and oftentimes first-time Founders waffle in managing these situations. It gets more complex when such an employee is productive but harmful to culture. Listen to learn more.

Who's Hiring? 👩‍💻

Senior DevOps Engineer at Gatik in Toronto, ON.

Account Executive at Backbone in New York, NY or Atlanta, GA.

Decision Analyst at nextmv in Philadelphia, PA or New York, NY (remote ok).

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.