cargo.one, the digital booking platform for air cargo, has raised $42 million (£31 million) in Series B funding following a year of remarkable growth. The news comes just six months after an $18 million (£13.3 million) Series A funding round and is fueled by growing demand for digital distribution as cost pressures and a capacity crunch hit the air cargo industry.
Capacity crunches, while demand for air cargo soars
The funding round comes as demand for air cargo capacity continues to soar, with e-commerce sales projected to grow between 25% and 35% this holiday season compared to last year’s 14.7% increase, and with air cargo parcel volumes already doubling over the last decade.
The industry is also mobilising a rapid response to global distribution requirements for COVID-19 vaccines, which are highly temperature-sensitive and necessitate logistics on a scale never witnessed before: providing a single dose of the COVID-19 vaccine to 7.8 billion people worldwide would fill 8,000 Boeing 747 cargo aircraft.
Against this backdrop, national lockdowns and restrictions on international travel have already dramatically reduced the global air cargo capacity from pre-COVID-19 levels by more than 24% [4] compared to 2019, resulting in the biggest global air cargo capacity crunch on record.
cargo.one is especially focused on growth opportunities in North America, where airlines have been responding to surging demand for air cargo (Cargo Tonne Kilometers (CTK) are up 8.6% YoY) and benefiting from a solid performance of Asia – North America trade lanes [5] – a relative “bright spot” for carriers in an otherwise challenging year. Delta, American Airlines and United, for example, have all dramatically increased their cargo-only flights to offset declining passenger demand caused by global travel restrictions. Delta has been operating 124 cargo only flights per week [6], American operated nearly 1,000 cargo only flights in October alone [7], and United reported a 50% increase in the company’s cargo business to $422 million in Q3 2020. [8]
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Surging demand for digital platform drives remarkable growth
In such a volatile market situation, and despite relying more heavily on air cargo to support their bottom line, airlines are struggling to distribute their capacity effectively, resulting in freight forwarders being unable to access vital cargo space. The current long and cumbersome manual process of booking and selling cargo further adds to inefficiencies.
Founded three years ago by Managing Directors Oliver T. Neumann and Moritz Claussen alongside Chief Technology Officer Mike Rötgers, cargo.one is building the global operating system for air cargo. Today, the company’s digital platform processes annualised volumes in Europe of more than 110,000 shipments and 45,000 tonnes with 15 airline partners including Lufthansa Cargo, Finnair Cargo, Etihad Cargo and All Nippon Airways Cargo. The intuitive digital platform makes booking cargo shipments as simple as booking a flight on Kayak or Skyscanner. It also enables airlines to distribute their cargo capacity efficiently and reach a broader audience while streamlining processes and saving substantial costs.
2020 has been a challenging year for the air cargo industry with increased demand for efficiencies and cost savings from all parties. This demand is reflected in cargo.one’s growth. “Between 2019 and 2020, we increased our user base by 300% with 2,000 freight-forwarding offices now using the platform in Europe to book real-time offers in the highly precarious market situation – in that time bookings have grown by more than 700%” commented cargo.one Managing Director Moritz Claussen. “To date, cargo.one has distributed more than 18 million offers to freight forwarders, serving 347 destinations around the world, and has delivered shipments to 122 countries.”
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”We are pleased to see cargo.one’s continued rapid growth and look forward to leveraging their expansion into new markets like North America and Asia,” commented Peter Gerber, Chairman and CEO of Lufthansa Cargo. Bob Goodman, Partner at Bessemer Venture Partners, added: “cargo.one has quickly developed into the leading platform for digital distribution and booking in the air cargo industry. Unlike any other company, cargo.one has relentlessly focused on providing a world-class user experience.”
“The results are outstanding,” adds Michael Droesch, Vice President at Bessemer Venture Partners.“cargo.one provides a fundamentally better way for freight forwarders and airlines to book freight, leading to rapidly growing adoption and bookings across the industry. The company has had a fast and successful start in Europe, and we are excited to support their expansion into North America, which represents a large and attractive market for cargo.one’s differentiated platform.”
Global expansion
The series B funding round of $42 million is led by Bessemer Venture Partners who are joined by existing investors Index Ventures, Creandum, Point Nine, and Next47.
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“When they launched cargo.one, Oliver, Moritz and Mike couldn’t have anticipated how quickly it would become a critical infrastructure partner for airlines and freight forwarders around the world – and a lifeline for airlines during the pandemic. They have methodically and relentlessly continued to build the new software platform for air cargo, and we’re excited to continue supporting them on that mission and their global expansion ambitions,” comments Martin Mignot, Partner at Index Ventures.
“Soon every freight forwarder in the world will be able to access cargo.one and benefit from the advantages of digital booking. We will use the funds raised to build on our success in Europe, onboard more airline partners, grow our user base of freight forwarders globally, and deepen the expansion into North America and Asia,” commented cargo.one Managing Director Oliver T. Neumann.
“And, as global distribution of the vitally important COVID-19 vaccine ramps up, we are expanding our product offerings to make all pharma shipments bookable across our partner airlines as the first multi-airline platform to ever do so.”
Furthermore, the company will continue to develop tools that use data to let airlines offer more dynamic pricing, engage in better route planning and predict demand in volatile markets as well as adding more products for booking through 2021.
— Press release
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