Haven is a logistics platform that aggregates data on logistics solutions for the benefit of companies needing to ship goods (shippers). If you own a paintball shop in Boston, how do you move the paint guns from your supplier in China?
Usually you would approach a company called a freight forwarder and ask them how to do it. The freight forwarder would call up lots of logistics providers (container ship companies, rail companies, trucking companies) and find the cheapest route that met your needs.
Haven is different. Once you’ve logged into Haven (and paid the $3,500 subscription), you can see a full list of solutions that would match your needs. After you’ve chosen one, Haven keeps all of the documents and communicate in a simple place.
For logistics providers, they advertise space and availability (a space on a ship crossing the Pacific), and Haven lets them sell it on their platform, hassle free.
Haven’s network has some strengths, specifically for smaller shippers: strong cross-side network effects, low risk of disintermediation and multi-homing. These strengths will drive steady growth of the platform amongst this customer segment and allow for reasonable profitability.
The lack of same-side network effects prevents the platform from achieving Facebook style. Similarly, disintermediation prevents growth into the larger and more profitable customer segments. The potential to bridge into new networks closely related to the current platform presents modest future growth opportunities.
Strength of Network Effects
Haven users do not benefit from same-side network effects – users only gain value from other types of users.
Cross-side network effects are significant however. With more logistics providers comes greater information and optionality for shippers, who in turn provide more customers for the providers.
Other parties include customs officials and financial institutions (banks financing trade or insurance companies insuring cargos) who similarity will benefit from more cross-side users, through greater transparency and accessibility of information, in addition to aggregation of data.
Logistics networks naturally clustered geographically. Networks are different depending on the route required: shipping across the Pacific is very different to shipping across the Atlantic; assets deployed in one trade do not benefit the other trades. We see the impact of this on trade flows where logistics providers specialise in certain trades and do not dominate the industry.
Clustering also occurs with respect to the services required. Shorter lead times (on perishable or time sensitive shipments) require air freight, while longer lead times use container ships and rail. Operating an air freight service from Hong Kong to San Francisco is very different to a maritime freight service for the same route, so firms specialise along types of logistics.
Risk of Disintermediation
The risk of disintermediation in new logistics platforms that do not own or operate assets (like planes or ships) is high. Logistics providers are now offering many of the digital services that new platforms offer, and so the value add is in tendering and selecting a logistics solution. Once the solution is established, the incremental value of the platform is low to zero compared to logistics providers.
This is especially true for larger shippers (like Starbucks) that ship enormous quantities of goods globally and on predictable schedules. Logistics providers add significant value through a direct relationship, that the platform is unlikely to provide.
Smaller shippers however, with much lower freight volumes and logistics sophistication, are likely to value the incremental utility that a platform offers. Who wants to navigate a new logistics firm’s website on the two occasions that you need a container shipped? Haven’s natural users on the shipper side are small and medium sized firms; larger shippers are likely to be catered to by logistics providers.
Vulnerability to Multi-Homing
Haven is more vulnerable to multi-homing from logistics providers – these firms sell their services through multiple channels and have limited barriers to increasing channels. As highlighted above, larger shippers will likely have direct relationships with logistics providers.
Smaller shippers however are unlikely to multi-home with Haven’s new subscription service. This cost is likely a small fraction of the overall logistics costs. But given that maintaining several subscriptions won’t provide much benefit, they will likely stick to one platform.
Haven does have the opportunity to bridge into other networks, however these are likely to be small niches directly related to the core logistics services. Services like financing, insurance and administrative processing (e.g. customs) could become new aspects of the platform. Given their small size and niche however the network bridging opportunity is relatively small for Haven.
Logistics Industry Executives