Dynamo Dispatch (2023/10/30)

Issue 256 | Wareclouds, Blubirch, Inlyte Energy

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 💭

Last week we grappled with the somber news coming out as a result of the continued freight recession. We’ll continue to follow the latest developments there and extend our support to anyone we might be able to help.

Momentum on the mobility front has been equally stymied recently. Cruise has halted all of its robotaxi operations nationwide in the midst of increased scrutiny from an investigation into a recent accident. There’s also increasing signs that the EV revolution, spurred by automaker and IRA investments, is hitting a wall as consumers demand lags. More on both in the Mobility section below.

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Madelyn, Derrek, and the rest of the Dynamo team

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Supply Chain 📦

⭐ Amazon Confronts a New Rival: TikTok. TikTok’s success as a platform and its early success of TikTok Shop - launched last month and already selling approximately $7M of products - is advancing the convergence of eComm and social media, known as “social shopping”. Amazon is now making efforts to encourage shoppers to spend time on its app the same way they do social media platforms, adding social elements and building up a network of influences to promote items. TikTok on the other hand is taking a page out of Amazon’s playbook and building a logistics operation. It’s also hiring ex-Amazon employees and offering better economics to third-party sellers to lure them away from Amazon’s platform. While TikTok beats Amazon in user engagement, it still has long ways to go in building logistics infrastructure that can compete with the eComm giant. Also in Amazon news, Amazon Outlines Push to ‘Eliminate Packaging Altogether’.

Is Convoy’s Closure the Beginning of Brokerage Meltdown? The ongoing freight recession with the recent closure of major digital freight network Convoy has raised questions as to whether the industry will see further exits from other players. While many brokerages can survive on low margins and high volume, in the current environment with both low margins and low volumes these firms are in a precarious position. Already 1.5K freight brokers have shuttered their doors this year, and 3PLs that emphasize spot-market versus contractual shipper business are seeing the largest declines in business. Recent developments demonstrate that advanced technology such as Convoy’s is not enough to provide immunity from depressed rates and volumes. On that front, Flexport Reportedly Working on Deal to Acquire Convoy’s Trucking Tech.

Gloomy Outlook for Container Shipping – and Not Just for 2024. The container shipping industry is predicted to experience a $15B loss next year, a massive drop from this year’s $20B EBIT profit. Drewry’s senior manager container research, Simon Heaney, has painted a bleak picture ahead: a 60% reduction this year in both spot and contracted freight rates, and a subsequent drop of 33% next year. These rates reflect the deepening disconnect between supply and demand, with supply forecasted to grow 6.4% and demand only 2% in the coming year. As noted last week, the declines in demand and parallel declines in rates are hammering players across the supply chain - from ocean liners to truckers.

Companies Doing More to Reinforce Supply Chains With Reshoring, Tech. Accenture’s recent survey of 1,230 operations across 11 industries and 14 countries reveals key trends reshaping supply chains. These include the growth in multi-sourcing strategies, a shift to regional sourcing, and growing investments in relocating, automating, and digitizing supply chains. Corporates are spending an average of $1B on these initiatives, approximately half of which is for reshoring initiatives. This survey puts illustrative data points on some of the most heavily discussed topics within supply chain in recent years as global disruptions and geopolitical tensions push governments and corporates to shift their approaches to trade. Completely unrelated, Oregon State Gives ‘All Clear’ After Receiving Threat of a Bomb in Campus Food Delivery Robots.

Airbus Opts for Wind Power as it Replaces its Transatlantic Ships. In order to reach its 2030 decarbonization goals, Airbus will replace its existing shipping fleet with emissionless crafts. The company has now commissioned three new vessels that will travel via wind propulsion and are expected to cut the firm’s annual transatlantic emissions by more than half. These Luis Dreyfus Armateurs built, owned, and operated liners will transport aircraft inputs between production facilities in the US and Europe beginning in 2026. Airbus’ moves demonstrate the substantial investments and innovative technology being pursued in the long road ahead for decarbonizing these intensive sectors. Related, Inditex Partners with Maersk to Reduce its Maritime Transport Emissions.

Mobility 🚗

⭐ California DMV Suspends Cruise’s Robotaxi Permit. The California DMV has suspended Cruise's deployment and driverless testing permits, halting its robotaxi operations in San Francisco. The suspension was prompted by Cruise's alleged withholding of video footage from an ongoing investigation into an incident involving a pedestrian who was hit by a human-driven car and then got stuck under a Cruise robotaxi that attempted to pullover while the pedestrian was underneath. This development is a setback for Cruise and the AV industry, raising questions about the safety of such technology on public roads. As a result, Cruise Halts All US Robotaxi Service Nationwide and in parallel, Justice Department Expanding Tesla Investigations and Issuing Subpeonas Related to Autopilot and Full Self-Driving Features.

Auto Execs Are Coming Clean: EVs Aren’t Working. Auto industry executives are expressing concerns about the growth of the EV market due to signs of growing inventory and slowing sales. Even GM’s CEO Mary Barra, who has been bullish on EVs, admitted that the company is abandoning its targets to build 100K EVs in the second half of this year and another 400K by the first half of 2024. Mercedes is also discounting its EVs to boost sales, and almost all EVs are selling below sticker price with some offering incentives of nearly 10%. This shift in perspective reflects the challenges of EV adoption, including cost, infrastructure, and lifestyle barriers, which are impacting the industry's ambitious electrification plans. Also, Ford Postpones $12B in Planned EV Investments.

The Battery Test Race To Work Out What Used EVs Are Really Worth. The race to certify battery health and performance in used EVs is intensifying, with startups offering solutions to determine the real value of secondhand EVs. Traditional factors like mileage and age don't apply to EVs; instead, the battery's condition and capacity are critical determinants of value. Startups are developing battery state-of-health tests, aiming to provide accurate data points as previous charging habits can significantly impact battery performance. An increasing number of used EVs will enter the market in the coming years, making a reliable and informed used-car market essential. In other automaker news, Toyota Supplier Denso to Invest $3.3B in Chip Business and BP Orders $100M of Superchargers From Tesla.

UAW Reaches Deal with Ford, a Breakthrough Towards Ending Strikes Against Detroit Big 3. The UAW union has reached a tentative contract agreement with Ford last Wednesday after nearly six weeks of strikes. The deal, still subject to approval by 57K union members, is seen as a potential template for agreements with GM and Stellantis. The agreement includes a 25% general wage increase, with cost of living raises pushing it over 30% for top-scale assembly plant workers. If ratified, this will be the first step in ending the strikes that have impacted the auto industry and its partners for weeks. A couple of days later, UAW Announces Tentative Agreement with Stellantis and All Eyes on GM After UAW Strikes Deal with Other Carmakers, but Detroit and Korea’s $28B Battery Bets Risk Going Sideways Amid UAW Talks.

Want to Buy A Commercial Aircraft? A Clunker May Be the Safer Bet. The value of 10-year-old planes has risen recently due to issues affecting newer aircraft models. Specifically, the Airbus A320-200's value has increased by 10% since August. This is attributed to problems with the newer A320neo, powered by Pratt & Whitney's Geared Turbofan (GTF) engines. Contaminants found in the engines have led to concerns and potential repairs, grounding numerous planes. This situation has caused a resurgence in demand for older, more reliable aircraft models, highlighting the challenges of manufacturing problems in the aerospace industry. Relatedly, Airline Industry’s Silent Struggle: Pilots and Mental Health.

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The Future of Supply Chain 🎙️

Check out our podcast series that’s been running since 2018. On each episode of the Future of Supply Chain, we sit down with a different entrepreneur, investor, or industry veteran to discuss innovation, technology, and the most exciting opportunities in supply chain as we build the future of the industry together.

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Fundraises and M&A 💸

Wareclouds Raises $2M in Seed Funding. Wareclouds is a Chilean collaborative logistics startup connecting households with storage space to eComm businesses. The capital will be used to expand to at least 10 cities next year, including breaking into the Mexico market. 2048 Ventures led the round, with participation from Chile Global Ventures.

Lunr Raises $6M in Funding. Lunr provides inventory financing for emerging retail brands. The funding will be used to continue the development on its integrated retail analytics dashboard. The round was led by Mairs & Power Venture Capital.

Blubirch Raises $6.4M in Series A Funding. Blubirch is an AI-based SaaS platform for reverse supply chain management. The capital will be used to accelerate its growth and expand into diverse retailer marketplaces and OEM ecosystems. The funding round was led by Cornerstone Ventures and Capital2B.

Laka Raises €7.6M in Funding. Laka is a peer-to-peer mobility insurance platform covering bicycles and equipment. The latest capital will be used to amplify efforts to enable more customers to transition to more environmentally friendly modes of transport. The round was led by Shift4Good alongside existing investors Autotech Ventures, Porsche Ventures, Ponooc, ABN AMRO Ventures, Creandum, 1818 Ventures, and Elkstone Partners.

Inlyte Energy Raises $8M in Seed Funding. Inlyte Energy is developing iron and salt-based battery technology leveraging the design of the previously commercialised sodium metal halide battery. The company has raised a seed round to continue to the development of its technology. At One Ventures led the round with participation from First Spark Ventures, Valo Ventures, TechEnergy Ventures, Climate Capital, and Anglo American.

Circu Li-ion Raises €8.5M in Seed Funding. Circu Li-ion is a Luxembourg-based battery recycling startup. The funding will be used to expand its AI-driven battery upcycling solution, optimize battery recycling processes, and develop a battery recycling data repository. BonVenture led the round, and includes €4M in grants.

AgentSync Raises $50M in Series B+ Funding. AgentSync is a modern insurance infrastructure provider, focusing on federating information via APIs between different parties. Prior investors led the round, with Craft and Valor returning as lead investors.

Pony.ai Raises $100M in Funding. Pony.ai is a Chinese AV technology startup. The funding comes from Saudi Arabia’s futuristic city and development project Neom as part of a joint venture to develop, manufacture, and deploy AVs and smart infrastructure in Neom.

Ola Electric Raises $384M in Funding. Ola Electric is a Bengaluru-based EV manufacturing startup. The new capital, of which $240M is debt funding, will be used to expand the EV business and set up India’s first lithium-ion cell manufacturing facility. Temasek and the State Bank of India led the round.

UPS Acquires Happy Returns. Global shipping leader UPS is acquiring Happy Returns, a software and reverse logistics company. Happy Logistics’ technology enables “frictionless, no-box, no label returns”. The acquisition will enable the merge of Happy Returns’ digital platform and existing drop-off points with UPS’ small package network and footprint for accessible, seamless reverse logistics.

Who's Hiring? 👩‍💻

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

Key Senior Account Manager at Skydropx in Mexico.

Full Stack Developer at Milk Moovement in US or Canada (remote).

Traveling Superintendent at PaintJet in US (remote).