In Western markets, freight forwarders are starting to digitize their operations, but the same is not true in Southeast Asia, its founders say Fr8Labs. Reasons for this include a lack of local software and a more fragmented logistics industry dominated by SMEs. Fr8Labs wants to digitize Asia’s logistics industry with its SaaS operating system and plans to turn it into an open ecosystem that many API players can tap into.
The Singapore-Indonesia-based startup announced today that it has raised $1.5 million in seed funding from East Ventures, FEBE Ventures, Kaya Founders, Mulia Sky Capital, Seedstars, Venturra and angel investors. Fr8Labs currently has more than 50 customers in Singapore, Malaysia, Indonesia, Taiwan and Australia and is expanding to the rest of Asia.
The startup was founded in 2022 by CEO Glenn Lai and Chief Product and Technology Officer Felix Lu. Lai, who has family members in the freight industry, started his own career in logistics in 2015 at Sinar Gas Golden Agri Resources. Then in 2019, he and Lu joined e-commerce logistics company Bizzy in Indonesia, where they served as COO and VP of Product, respectively.
After Bizzy was acquired by Warung Pintar, the two returned to Singapore, where Lai was head of strategy and development at software company Gravity Supply Chain. He traveled the world, working with major international logistics and supply chain companies. In developed markets, he observed, supply chains were digitally interconnected, unlike in Asian markets.
Lai says one reason for the technology gap in Asia’s freight industry is that the market is more fragmented compared to Western countries where enterprise players dominate. Large transportation companies can entice other players to digitize, especially because they have systems in place that the companies they work with can connect with APIs. On the other hand, Asia’s freight forwarders are mostly SMEs and do not have the same central authority to influence new practices. Lai adds that another reason is that digital logistics systems are built for specific markets and don’t work in Asia because of different accounting or customs policies.
As a result, many freight forwarders in Asia, particularly Southeast Asia, still use in-house software or a combination of Microsoft Excel, email, chat and off-the-shelf accounting systems. Lai says this makes it difficult for them to scale and also results in errors that can cost carriers customs or reparation penalties (fees charged on shipping containers that are not picked up on time).
“This contrast inspired me to think about how we could improve the freight industry in Asia,” Lai tells TechCrunch. “I brought Felix and some previous colleagues together to come up with solutions. We realized that leveraging the strong networks, expertise and relationships of Asian freight forwarders, rather than disrupting them, was key.”
Fr8Labs co-founders Felix Lu and Glenn Lai
Fr8Labs is developing products that will strengthen these networks, including enabling freight forwarders to offer cargo insurance, foreign exchange transactions and financing facilities to their end customers (similar to how online travel agencies offer travel insurance to passengers). The startup’s core offering is its Operating System that supports the entire workflow of a freight forwarder: quotations, booking confirmations, shipment confirmation, accounting work and accounting backend. The platform helps departments like sales and operations work together more effectively and connects platforms like email and chat.
One use case is that instead of doing a lot of manual data entry, a carrier can upload a PDF of a shipping order and automatically generate the shipping reservation and other documents, including the forms that need to be submitted to customs. Another example of how Fr8Labs is used is the Warehouse Management System module, which allows carriers to interface directly with their customer’s ERP backend so they can manage international shipments to and from the same warehouse.
Part of Fr8Labs’ funding will be used to expand its platform, with plans to add forex trading, financing, cargo insurance, price management and marketplace. The startup’s goal is to turn its platform into an open ecosystem that can integrate and manage different logistics technology software.
“Think of Android or Apple and how well each of their devices is integrated into the ecosystem,” says Lai. “We want to give carriers a seamless experience to operate and then build more value-added services on top of that.”
In a statement, East Ventures managing director Roderick Purwana said: “The application of technology is vital in logistics because it can help increase cost efficiency and productivity, yet players in industries are not immune to challenges to enhance digital logistics. Fr8Labs’ innovative technology solution is here to address the challenges faced by freight forwarders in Southeast Asia. With the team’s expertise, we are confident that Fr8Labs can transform the logistics industry, adding value across the value chain.”
