Chinese digital logistics platform raises $100m

YQNLink, a digital container logistics platform, has raised $100m from venture capital investors.

The Series D round, referring to the fourth stage in the seed stage financing cycle of a new business, has pushed the Chinese company’s valuation to $1bn.

The fundraising reflects the appetite of capital markets for digital solutions that might deliver revolutionary changes to the logistics sector, especially with the lockdown-led supply chain disruption.

“The coronavirus crisis has brought more attention from the society to the international logistics industry,” said company chief executive Zhou Shihao.

The platform’s shareholders include some major US investment firms such as Coatue, Sequoia Capital and DCM Ventures, alongside Chinese institutions China Merchants Venture and Source Code Capital.

Established in 2015, the platform has expanded its business scope from online slot booking to providing shippers with one-stop services.

In addition to container shipping, its products now also include air and rail freight, cross-border e-commerce transport, as well as trucking, customs clearance and storage service at both departure and arrival ports.

Having served about 20,000 corporate clients, the platform is expected to handle 700,000 teu of shipments this year backed by its offices in China, Japan, the US, Mexico, Brazil, and several key economies in Southeast Asia.

The funds will first equip YQNlink with an adequate cash reserve in preparation for an age where uncertainties are fast growing, Mr Zhou told Lloyd’s List in an interview.

“The extent to which the market will change in future might exceed our expectation. So, cash is king,” he said.

The money will also be used for his company to hire and incentivise the best talent available, and will allow it to establish an “eco-system” at the cost of short-term profits.

YQNlink has announced that it will share its technological and operational capacities, including those on price forecast and cargo tracking, to stakeholders on the logistics chain for free, in exchange for their willingness to share the data and follow the same business standards.

The initiative is similar to the one Maersk has already been developing on its operating platform TradeLens, according to Mr Zhou.

He said traditional freight forwarders “should be afraid” of a market trend, in which carriers are becoming increasingly good at digitalising their services and reaching their shipper customers directly. “You can’t obtain the assets [the ships] they have while it’s relatively easy for them to acquire your ability.”  

But shipping lines running on an asset-heavy mode also have their challenges, as prioritising digital solutions while at the same time maximising the returns of assets often leads to a conflict of interest, he said.

There is no single company, even as big as Maersk, that can reform the whole logistics sector alone.

“An industry leader’s competence must be empowered by an eco-system with the support of other players in order to reach the highest efficiency possible,” he said.