Earlier this month, Google announced a new service, Google Express, aimed at delivering groceries and other household items to customers' homes within hours. Now it appears the search giant may have an ace up its sleeve in its competition with the likes of Amazon and Jet.com.
While such on-demand services pose unique infrastructure and logistics challenges on the front end--how do you get all those packages to suburban neighborhoods and city streets the same day they're ordered?---there's an equally challenging and much larger logistics roadblock on the back end. That involves creating the most efficient way to ship the trillions of dollars of consumer items to retailers and their warehouses in the first place.
Hoping to remedy the glitches involved with shipping (especially maritime shipping), San Francisco-based startup ClearMetal has created software that builds predictive models of shipping capacity by crunching--what else--big data. On Wednesday, the seven-employee company, founded by Stanford University engineers and business school graduates, announced it has gotten seed funding from someone who now has a keen interest in such technology: Eric Schmidt, the executive chairman of Alphabet, the parent company of Google.
Schmidt has invested $3 million in ClearMetal through his personal fund, called Innovation Endeavors. Innovation is joined by venture capital firms New Enterprise Associates and Skyview Ventures on the deal.
"[Innovation Endeavors'] vision is to make investments in cutting-edge technology to transform large industries," says Adam Compain, chief executive of ClearMetal, which he co-founded in 2014.
The shipping industry certainly is large. In fact, ships carry the bulk of all goods produced and sold, for a total value of $4 trillion annually, according to the World Shipping Council. The council estimates there were 18 million shipping containers at sea as of 2008, the last year for which it has data, with 10,000 port stops per week.
The need for a clear view of ships' locations and how many available containers they have has spurred more than a few companies to create solutions since the 1990s, says Greg Aimi, research director in charge of supply chain and logistics at Gartner. Among that group are GT Nexus, Amber Road, and a shipping industry consortium called Inttra.
However, ClearMetal's use of big data to build models to predict demand from suppliers and retailers could potentially be a valuable additional service.
"If I were to look at historical [ocean transport] data and the requirements for capacity, and forecast need, in theory I could get capacity, and get it for lower cost," Aimi says.
To date, ClearMetal has three partnerships with large shipping companies, Compain says, but declined to name them. In some instances, the startup's technology has enabled these carriers to predict demand up to eight weeks in advance, more than twice what they can normally do, he says. That could add millions of dollars to a shipper's bottom line and speed deliveries for e-retailers and traditional retailers.
"This will dramatically enhance global trade by enabling the biggest brands and e-commerce companies to ship their goods around the world most efficiently," Dror Berman, a managing partner at Innovation Endeavors who led the investment, said in an email. "In the end, consumers will get what they want, when they need it, more efficiently and sustainably."
Clarification: In an earlier version of this article, it was not clear that Alphabet was not directly involved in ClearMetal's seed funding.