Global supply chain visibility provider project44 has confirmed the company went through an organizational restructuring, eliminating approximately 130 jobs, about 10% of its total global workforce.
Leadership at project44 told FreightWaves Thursday night that the restructuring move comes as the industry and economy face various headwinds, vastly challenging FreightTech startups with venture capital backing to showcase profit over growth.
“In the height of the technology boom, startups could secure millions in funding in mere days. With increased market volatility, we’ve seen a broader shift in the [venture capital] landscape as investors become more cautious,” said project44 founder and CEO Jett McCandless. “Investors have shifted from a growth-at-all-costs mindset to focus on the path to profitability and scalable growth. No startup, not even the rocket ships of logistics technology, will be immune to these trends.”
The leader — and investor in the space — is correct, as the industry has witnessed a number of layoffs already this year as FreightTech providers adjust to unfavorable economic conditions.
After acquiring Shopify in May, digital freight forwarder Flexport eliminated 20% of its workforce following layoffs of 20% of its employees in January. Digital freight platform Convoy announced restructuring and layoffs in February. Autonomous trucking company startup Embark Trucks laid off 70% of its staff and legacy load board provider Truckstop.com cutback its workforce by an undisclosed amount in March.
Economic headwinds
McCandless pointed to market headwinds, including falling truckload costs and decreased global demand for goods, as the reasoning behind this shift in investor sentiment.
As seen in the FreightWaves National Truckload Index, which measures the average dry van spot rate in the U.S., rates have consistently fallen since the beginning of the year. Coupled with slowing global demand for goods and domestic economic uncertainty, the second half of 2023 shows no sign of demand recovery.
These conditions have led businesses to restructure their contracts with logistics service providers and carriers to rightsize their transportation costs.
“Logistics technology startups are reevaluating their approach to growth and reducing their cost structures to be responsible stewards of their businesses, meet the evolving customer needs while achieving scalable growth and efficient capital allocation,” McCandless said.
Project44 is not immune to the market headwinds, despite recently becoming the first vendor to be positioned highest on its “Ability to Execute” and achieving the farthest right position for “Completeness of Vision” in research firm Gartner’s Magic Quadrant for Real-Time Transportation Visibility Platforms.
McCandless believes there will be more FreightTech layoffs to come.
“This trend toward logistics tech companies reassessing their growth strategies is likely to continue throughout 2023 as the market rewards sustainable growth,” he said.
Watch now: The State Of Freight: May 24th, 2023
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