Private Equity Opportunities in Shipping SaaS and Franchise Route Software Markets
At Legacy Capital Fund, we specialize in transportation, shipping, and logistics SaaS acquisitions, growth, and exits. Accredited investors, Registered Investment Advisors (RIAs), multi-strategy funds, and family offices often learn from our experts, so let’s examine the current state and future opportunities within the shipping software and franchise route software markets. Tailored for accredited investors, Registered Investment Advisors (RIAs), multi-strategy funds, and family offices, it offers an in-depth analysis of these rapidly evolving sectors.
MULTI-STRATEGY FUNDSRIA PARTNERSACCREDITED INVESTORSFAMILY OFFICE
At Legacy Capital Fund, we specialize in transportation, shipping, and logistics SaaS acquisitions, growth, and exits. Accredited investors, Registered Investment Advisors (RIAs), multi-strategy funds, and family offices often learn from our experts, so let’s examine the current state and future opportunities within the shipping software and franchise route software markets. Tailored for accredited investors, Registered Investment Advisors (RIAs), multi-strategy funds, and family offices, it offers an in-depth analysis of these rapidly evolving sectors.
Market Size and Growth
The global shipping software market has been experiencing significant growth, driven by the increasing digitization of supply chains and the boom in e-commerce. Valued at $2.91 billion in 2021, the market is projected to reach $6.72 billion by 2030, growing at a compound annual growth rate (CAGR) of 9.8% from 2022 to 2030. This robust growth reflects the increasing demand for efficient, automated shipping solutions across various industries.
The franchise route software market, while smaller in comparison, is showing promising growth as part of the broader logistics software market. This niche is particularly relevant for businesses operating franchise models in the delivery, service, or distribution sectors.
Market Segmentation
The shipping software market can be segmented based on several key factors:
Deployment:
On-premise: Traditional software installations on local hardware, offering greater control but requiring more maintenance.
Cloud-based: Software-as-a-Service (SaaS) solutions, providing scalability, accessibility, and reduced upfront costs. SaaS is where Legacy Capital Fund excels for accredited investors, RIAs, multi-strategy funds, and Family Offices with acquisitions and scaling of American legacy businesses.
End-user:
CEP (Courier, Express, and Parcel): Focused on last-mile delivery and time-sensitive shipments.
Air and Ocean Freight: Specialized software for managing international and long-distance shipping.
Contract Logistics: Solutions for third-party logistics providers (3PLs) managing complex supply chains.
Land Transportation: Software tailored for trucking and rail freight operations.
Company Sizes and Needs:
Small and Medium Enterprises (SMEs): Solutions designed for businesses with limited resources and simpler shipping needs.
Large Enterprises: Comprehensive platforms capable of handling complex, high-volume shipping operations across multiple locations.
Industry Verticals:
Retail and E-commerce: Emphasis on order fulfillment, returns management, and customer experience.
Manufacturing: Focus on inventory management, production planning, and supplier coordination.
Healthcare: Specialized solutions for managing sensitive shipments and compliance with regulations.
Automotive: Software tailored for just-in-time delivery and complex supply chains.
Others: Including sectors such as agriculture, energy, and construction.
Types of Shipping Software
Transportation Management Systems (TMS): Comprehensive platforms for planning, executing, and optimizing the movement of goods.
Warehouse Management Systems (WMS): Software for managing and controlling daily warehouse operations.
Freight Forwarding Software: Specialized solutions for managing international shipments and customs processes.
Shipment Tracking Software: Real-time visibility tools for monitoring shipments throughout the supply chain.
Last-Mile Delivery Software: Focused on optimizing the final stage of delivery to end consumers.
Parcel Shipping Software: Tailored for businesses managing high volumes of small package shipments.
Types of Franchise Route Software
Route Optimization Software: Algorithms for planning the most efficient delivery routes.
Territory Management Software: Tools for defining and managing franchise territories to maximize coverage and minimize conflicts.
Franchise Performance Tracking Software: Platforms for monitoring and analyzing the performance of individual franchises.
Customer Relationship Management (CRM) for Franchises: Specialized CRM systems tailored for franchise operations.
Inventory Management for Route-Based Franchises: Solutions for managing stock levels in mobile or distributed inventory scenarios.
Why Third-Party Logistics Companies Matter To SaaS
Third-party logistics (3PL) companies play a crucial role in the ecosystem of shipping software providers. These 3PL companies serve as both customers and partners, creating a symbiotic relationship that drives innovation and growth in the shipping software market. As customers, 3PLs require sophisticated software solutions to manage complex logistics operations, spurring the development of more advanced features and capabilities. As partners, 3PLs often integrate with or resell shipping software, expanding the reach and adoption of these technologies. A 3PL company is a service provider that helps businesses outsource various aspects of their supply chain and logistics operations. Here are the key points about 3PL companies:
Core services: 3PLs typically offer services such as:
Warehousing and inventory management
Order fulfillment
Transportation management
Freight brokerage
Distribution
Packaging and kitting
Benefits: Using a 3PL can provide advantages like:
Cost savings
Scalability and flexibility
Access to expertise and technology
Improved efficiency
Ability to focus on core business activities
Competitive Landscape
Key Players
SAP SE: A global leader in enterprise software, offering comprehensive supply chain management solutions.
Oracle Corporation: Provides a suite of cloud-based logistics and transportation management systems.
Manhattan Associates: Specializes in supply chain and omnichannel commerce solutions.
BluJay Solutions: Offers a global trade network platform for logistics service providers.
Descartes Systems Group: Focuses on logistics-intensive businesses, offering a suite of modular, cloud-based solutions.
Unishippers: Specializes in providing shipping solutions for small and medium-sized businesses.
GlobalTranz: A technology-driven freight brokerage company offering innovative logistics solutions.
Recent M&A Activity
The shipping software market has seen significant merger and acquisition activity, reflecting the industry's consolidation and the drive for comprehensive, integrated solutions:
In 2021, Worldwide Express and GlobalTranz merged in a deal backed by CVC Capital Partners and Providence Equity Partner. This merger created a logistics powerhouse, combining Worldwide Express's franchise model with GlobalTranz's technology-driven approach.
In 2020, E2open acquired BluJay Solutions for $1.7 billion, expanding its capabilities in transportation management and global trade.
These M&A activities demonstrate the industry's trend towards creating end-to-end supply chain visibility and management platforms.
Case Studies
Worldwide Express
Worldwide Express, founded in 1992, has grown to become one of the largest privately held logistics companies in the United States. The company's success can be attributed to its unique franchise model and technology-driven approach.
Key factors in their growth:
Proprietary technology platform: Worldwide Express developed a custom software solution that integrates with major carriers, providing franchisees with powerful tools for shipping and logistics management.
Strong franchise support system: The company offers comprehensive training, marketing support, and ongoing assistance to its franchisees, ensuring consistent quality across the network.
Strategic partnerships with major carriers: By negotiating favorable rates with carriers like UPS, Worldwide Express can offer competitive pricing to its customers.
In 2017, Worldwide Express merged with Unishippers, creating a combined network of over 150 franchises. This merger expanded the company's reach and capabilities, particularly in serving small and medium-sized businesses.
GlobalTranz
GlobalTranz, founded in 2003, has become a leading technology-driven freight brokerage company. The company's growth has been fueled by its innovative technology solutions and strategic acquisitions.
Key factors in their growth:
Advanced TMS platform: GlobalTranz developed a state-of-the-art Transportation Management System that offers real-time pricing, automated booking, and advanced analytics.
Focus on agent-based model: Similar to a franchise system, GlobalTranz's agent model allows for rapid expansion and local market expertise.
Strategic acquisitions: The company has made numerous acquisitions to expand its service offerings and geographic reach.
Merging GlobalTrans and Worldwide Express
The merger between GlobalTranz and Worldwide Express in 2021 was indeed driven by private equity firms. Scott Hauck, Founder of Legacy Capital Fund, recalls the key points about this merger and the role of private equity:
Merger Announcement: GlobalTranz Enterprises and Worldwide Express announced their merger on June 11, 2021, combining two leading non-asset providers of technology-driven third-party logistics solutions.
Previous Private Equity Activity:
GlobalTranz had changed ownership multiple times in recent years. In 2018, The Jordan Company acquired GlobalTranz for about $400 million.
In 2019, Providence Equity Partners bought GlobalTranz back from The Jordan Company for approximately $930 million.
Strategic Rationale: The merger combined GlobalTranz's strengths in truckload and LTL (less-than-truckload) with Worldwide Express's strong parcel capabilities, creating a more comprehensive logistics platform.
Scale of the Combined Entity: The merger created a company with over $4 billion in annual revenue, making it a significant player in the logistics industry.
This merger exemplifies how private equity firms often drive consolidation and growth in the logistics sector, especially with third-party logistics companies, using their capital and expertise to create larger, more diversified companies with expanded capabilities and market reach.
Growth Drivers and Market Trends
E-commerce boom: The rapid growth of online retail has dramatically increased the demand for efficient shipping solutions. E-commerce sales are projected to reach $6.3 trillion globally in 2024, driving the need for sophisticated shipping software to manage high volumes of parcels and optimize last-mile delivery.
Supply chain digitization: Companies are investing heavily in digital technologies to improve visibility, efficiency, and resilience in their supply chains. This trend has been accelerated by recent global disruptions, pushing businesses to adopt more advanced shipping and logistics software.
Last-mile delivery optimization: With the rise of same-day and next-day delivery expectations, there's an increased focus on optimizing the final stage of delivery. This has led to innovations in route optimization, real-time tracking, and alternative delivery methods.
Sustainability initiatives: There's a growing emphasis on reducing the carbon footprint of logistics operations. Shipping software is increasingly incorporating features to optimize routes for fuel efficiency, consolidate shipments, and provide carbon emission reporting.
Artificial Intelligence and Machine Learning: These technologies are being integrated into shipping software to improve demand forecasting, optimize inventory management, and enhance route planning.
Blockchain in logistics: The use of blockchain technology is growing for improving transparency, traceability, and security in supply chains, particularly for international shipping.
Internet of Things (IoT) integration: IoT devices are being increasingly used for real-time tracking, condition monitoring, and predictive maintenance in logistics operations.
Mobile solutions: The demand for mobile-friendly shipping software is rising, allowing for on-the-go management and real-time decision-making.
Regulatory Environment
The shipping software industry must comply with various regulations, which can vary by region and type of goods being shipped. Key regulations include:
International Maritime Dangerous Goods (IMDG) Code: Governs the safe transportation of dangerous goods by sea.
Customs Trade Partnership Against Terrorism (C-TPAT): A U.S. Customs and Border Protection program that requires certain security measures for international shipments.
General Data Protection Regulation (GDPR): Impacts how shipping software handles personal data, particularly for operations in or with the European Union.
Electronic Logging Device (ELD) mandate: Requires electronic logging of driving hours for commercial motor vehicles in the United States.
International Air Transport Association (IATA) regulations: Governs air freight shipments and dangerous goods transportation by air.
Food Safety Modernization Act (FSMA): Impacts shipping software used in food and beverage logistics, requiring features for traceability and temperature control.
Drug Supply Chain Security Act (DSCSA): Affects shipping software used in pharmaceutical logistics, requiring track-and-trace capabilities.
Shipping software providers must ensure their solutions are compliant with these and other relevant regulations, often building in features to assist users in maintaining compliance.
Private Equity and Venture Capital Trends
The shipping and logistics technology sector has seen significant interest from private equity and venture capital firms, driven by the potential for high growth and digital transformation in the industry.
Private Equity Activity:
In 2021, Thoma Bravo acquired Stamps.com for $6.6 billion, highlighting the value placed on e-commerce shipping solutions.
Francisco Partners acquired RouteSmart Technologies in 2020, demonstrating interest in specialized route optimization software.
Insight Partners led a $200 million funding round for project44, a supply chain visibility platform, in 2021.
Venture Capital Trends:
Venture capital investment in supply chain and logistics startups reached $12.6 billion in 2021, more than double the amount invested in 2020.
Notable areas of investment include:
Last-mile delivery solutions
Warehouse automation technology
Supply chain visibility platforms
Sustainable logistics solutions
Investment Rationale:
Digital transformation: PE and VC firms see opportunities in modernizing traditional logistics operations.
E-commerce growth: The boom in online retail is driving demand for advanced shipping solutions.
Supply chain resilience: Recent global disruptions have highlighted the need for more robust and flexible supply chain technologies.
Consolidation opportunities: The fragmented nature of the logistics software market presents opportunities for value creation through M&A.
Future Growth Projections
The shipping software and franchise route software markets are poised for continued growth.
Market Projections:
The global logistics automation market is projected to reach $107.84 billion by 2028, growing at a CAGR of 12.4% from 2021 to 2028.
The transportation management system (TMS) market is expected to grow from $11.7 billion in 2020 to $28.2 billion by 2025, at a CAGR of 19.3% during the forecast period.
Regional Trends:
North America is expected to maintain its leadership in the shipping software market, driven by technological advancements and the presence of major players.
Asia-Pacific is projected to see the fastest growth, fueled by rapid e-commerce expansion and increasing adoption of digital technologies in logistics.
Wrap Up
The shipping software and franchise route software markets present significant opportunities for investors, driven by technological advancements, e-commerce growth, and increasing demand for efficient logistics solutions. As the industry continues to evolve, companies that can offer innovative, integrated, and scalable solutions are likely to capture a larger market share and deliver substantial returns on investment.
As the logistics industry continues its digital transformation, shipping software and franchise route software will play an increasingly critical role in enabling efficient, transparent, and resilient supply chains. Investors who can identify and support innovative solutions in this space are well-positioned to benefit from the sector's growth and evolution. Connect with Legacy Capital Fund and let’s discuss how we can help you win with shipping, supply chain, and logistics technologies.
Disclaimer
The investments and services offered by us may not be suitable for all investors. If you have any doubts as to the merits of an investment, you should seek advice from an independent financial advisor.
Under no circumstances should any material on this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment fund managed by Legacy Capital. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular fund. Access to information about the funds is limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments.
