Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

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Weekly Commentary 💭

If you aren’t caught up on our podcast, head over to https://www.dynamo.vc/podcasts to check out Episode #89 with Steve Denton of Ware2Go. Also, stay tuned for some exciting news early this week.

We Are Dynamo,

Santosh, Ted, Barry, Jon, Katie, Rachel, and Emily

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Supply Chain 📦

Pipeline Shutdown Has East Coast Drivers Making a Run on Gas. Colonial Pipeline experienced a weeklong shutdown due to a ransomware attack that US officials have linked to a criminal gang DarkSide. The company is responsible for 45% of the fuel that is consumed on the East Coast and the shutdown hit Georgia, the Carolinas, and Virginia hard. Demand for gas has spiked 20% compared to last week nationwide and is 40% higher in the Southeast than it was last week. The pipeline shutdown has also hit airlines hard. American Airlines changed two-long haul flight routes out of Douglas airport in Charlotte and Southwest Airlines brought additional fuel to Nashville International Airport to supplement local supplies. Governors across the Southeast took steps to increase fuel supplies and the EPA eased requirements for reformulated gasoline for Maryland, Pennsylvania, Virginia, and Washington DC. Colonial Pipeline was able to restart operations on Thursday, but cautioned that fully restoring the flow of fuel was days away. Related, In the Colonial Pipeline Mess, Tanker Trucks Come to the Rescue and Colonial Pipeline Shutdown: Explaining the Fuel Supply Chain.

More Than 700 Barges Stuck in Mississippi River From Bridge Crack. A crack in the I-40 Hernando de Soto bridge in Memphis, TN has stranded more than 700 barges, cutting off the biggest route for US agricultural exports when the waterway is at its busiest. 47% of waterborne agricultural exports, such as bulk grain products, corn, and soybeans moved through this region in 2017 as well as 13% of waterborne frozen poultry exports. The Mississippi River is the main artery for US crop exports due to its proximity to the Gulf of Mexico. A sustained backup of barge traffic could mean that crops would have to be put on trains and sent to ports in the Pacific Northwest which could further agitate crop markets. Industry experts think that barges could work around bridge repairs and that if the backup is short lived there will be limited adverse consequences since soybean exports are at their low point. Elsewhere in commodities, Corn Is the Latest Commodity to Soar, Understanding Capacity Constraints in US Beef Supply Chain, and Poultry Supply Chain Slowing Down as Demand Rises.

Navigating The Retail Storm Through Supply Chain Agility. Retailers need a new operating model to break the cycle of selling more at lower margins and according to McKinsey, American Eagle Outfitters might have a model that works. American Eagle has successfully implemented a strategy of pulling inventory from its stores and reducing in-store fulfillment. This has given the retailer the ability to tap into dynamic demand, increase flexibility and efficiency, and minimize friction so they can meet customers where and how they want to be met. American Eagle’s new strategy has also helped their bottom line. The retailer saw their total markdowns drop 25% compared to 2019 even as eCommerce sales grew by 30% and they also saw inventory productivity increase by 600 basis points all while their customers received their order within two days of it shipping. In other retail supply chain news, Retailers Double Tech Investments to Make Supply Chains Faster and Under Armour Restricts Inventory Despite High Demand.

📊Manufacturing, Competing With Distribution, Struggles to Attract Labor. Hiring has been an issue for manufacturing for many years and hasn’t recovered during the pandemic. From December 2020 to February 2021 manufacturers struggled to fill 46% of open positions due to a skills gap and this represents a 12% increase from 2018. One of the most common positions that can’t be filled are entry level “miscellaneous assemblers and fabricator” positions. A new study from Deloitte suggests that the main culprit is the rise in warehousing jobs. Entry level warehousing and manufacturing jobs require similar skills and pay about the same amount, but potential employees are flocking to warehouse jobs and not manufacturing jobs. Warehouse employment has hit record highs in the past year while manufacturing employment is still below pre-pandemic levels. Some industry experts believe this is due to potential employees thinking manufacturing is dark, dirty, and dangerous and that manufacturers need to work on changing their image.

📊Ryder: Supply Chain Transparency Creates Resilient Operations. Investing in supply chain transparency will generate remarkable returns for organizations. Supply chain transparency, which allows organizations to see every node in a supply chain and share data across supply chains, can improve a company’s reputation and can even increase profits by 2%-10% according to professors at MIT’s Sloan School of Management. On top of increasing profits, supply chain transparency can also make supply chains more resilient by using analytics to make smarter supply chain decisions and optimizing supply chain processes for the maximum benefit. This innovative means of data sharing means that companies now have the ability to plan, prepare, and adapt effectively to potential supply chain disruptions in a proactive, efficient manner rather than a reactive, chaotic manner.

🌟A Discussion on Autonomous Trucking Insurance. TuSimple and Liberty Mutual are teaming up to explore how autonomous trucks would be insured without a driver behind the wheel. Insurance costs have risen 18.3% in the past five years, with a human behind the wheel, and that makes it the number five issue on the ATRI’s Critical Issues list in 2020. The baseline for insuring autonomous trucks include: what the system is, what the performance is, and what the operating domain is. Metrics such as accident free miles will be an interesting question for autonomous trucks. In the near term they will be deployed in places such as Interstate 10 in Arizona and New Mexico where they will operate safely. This is a different type of risk than in more congested areas or in other states and when more miles are driven actuaries will be able to quantify it. In other autonomous trucking news, TuSimple and Navistar to Start Manufacturing Autonomous Trucks in 2024 and Wall Street Watching as TuSimple Focuses on Autonomous Trucking’s Holy Grail.

A Great Year for Air Cargo, Which Now Makes Up One Third of Airline Business. Airlines are more likely than ever to invest in air cargo or any technology that digitizes the industry. Air cargo, which before the pandemic was responsible for between 10%-15% of an airline's revenue, now makes up 30%-35% of their revenue. On transatlantic routes, air cargo makes up 41% of total revenue, on Europe-Middle East routes cargo represents 54% of the revenue, and on Middle East-Asia Routes cargo represents 67% of revenue. Revenue and yields will remain high in this space because demand is high and capacity is scarce despite there being 20% more freighter capacity than before COVID-19 which is still 14% less than there was in 2019. Air freight volumes are now 4%-5% above where they were pre-COVID-19 and air cargo is expected to grow 13% while global and cross-border trade is expected to grow 8%. This growth is in spite of passengers returning to airlines which only highlights the increasing importance of air cargo to the industry. Elsewhere in international logistics, Pacific Parking Lot in the Pacific Persists as Imports Jam US Ports.

Walmart vs Amazon: The Battle to Dominate Grocery. Amazon’s plans to disrupt the $1.3B grocery industry will rely on brick and mortar stores instead of online ordering. Walmart, the quintessential brick and mortar store, has been laser-focused on digital transformation, thinks the digital-first buying habits of the past year will stick around, and its CEO thinks it's in the “early stages of building a new business model” that can compete with Amazon. Walmart has made some early missteps in the world of eCommerce and their share of the eCommerce market is 7% which pales in comparison to Amazon’s 40%. The grocery market is a different beast than what Amazon and Walmart usually deal with. There are tight margins, more inventory, and a need for innovations in last mile delivery that keep food fresh. Walmart believes it can rely on its thousands of stores, where 90% of Americans are no more than 10 miles from, to dominate grocery. While Amazon believes it can set up Prime Now Hubs, smaller fulfillment centers in affluent urban areas for prime members, to dominate grocery. Whatever retailer succeeds in being top of mind will have an advantage for years to come. Also, The Pandemic Got Seniors to Buy Groceries Online. That Might Not Last.

Mobility 🚗

Hyundai, Kia Plan $7.4B US Investment in EVs, Hydrogen and Mobility. Hyundai and Kia said they plan to invest $7.4B in the US by 2025 to produce EVs, enhance production facilities and develop smart mobility technologies. Hyundai also said it is working with public and private partners to expand the US hydrogen ecosystem. Later this year, the South Korean automaker said it "will proceed on a demonstration project in preparation for commercialization of fuel cell eTrucks.” The automaker said it will continue to monitor markets and EV policy in the US as they finalize their plans which include urban air mobility, robotics and autonomous technologies in addition to its EV production. In other EV news, New York Adds $30M to EV Subsidy Fund and Hydrogen Gains a Toehold in Europe as a Cleaner Alternative to Gas and Coal.

Uber, Arrival and the Architecture of Ride Hailing EVs. Ride-hailing companies are beginning to electrify their fleets. Currently only 0.5% of vehicles used for ride-hailing in the US are electric and only 3.4% are in Europe. In China 21% of vehicles used for ride hailing are electric and that is due to policies in 22 major cities that explicitly require all ride-hailing vehicles be electric, hybrid, or fuel cell. The switch in Europe and the US should be easy, but typical ride-hailing vehicles such as a Toyota Camry have yet to be electrified for a mass market. In fact, of the 215 BEVs on the market in the US, only 13 meet the requirements to be a ride-hailing vehicle (four doors, can hold four passengers). This is why ride-hailing companies are teaming up with automakers to make affordable vehicles that are appropriate for ride-hailing. Also, Real Robotaxi Service Gets a Step Closer in San Francisco

Secretary Pete Buttigieg on the Future of Transportation. Transportation Secretary Pete Buttigieg sees President Biden’s infrastructure plan as a way to shift the 100-year-old paradigm on how we move around. This major, major investment in the future of America is not only focused on infrastructure resilience, but on cutting emissions and ensuring that EVs and charging infrastructure are public goods, not luxury goods. Secretary Buttigieg also wants to make transportation more flexible and hopes that transportation becomes more about choosing the most efficient route whether that is via, EVs, micromobility, or public transit. Buttigieg also sees the movement of goods as a part of this “layered networked solution.” He believes that it is equally important to push to decarbonize rail, aviation, and maritime transportation so the cost of the technology can be driven down and society can reap the greatest benefits. In other future of mobility news, NASA to Help Local Governments Plan for Advanced Air Mobility and Hoboken, Jersey City Launch Unified Bikeshare With Lyft.

How The USPS Mail Trucks Could Still Go Fully Electric. Earlier this year USPS unveiled plans for a new fleet, but much to the dismay of Congress, environmental groups, and even President Biden, most of the new fleet would not be EVs. This is due to the lengthy bidding process which started five years ago when the Nissan Leaf and Tesla’s Model S were the only EVs on the road. The winner of the process was Oshkosh, a defense contractor, not an EV darling. The best hope for an electric USPS fleet lies in the US government activating a termination of convenience clause which would get USPS out of the contract while only having to pay for Oshkosh’s design work and scaling up its manufacturing which isn’t a huge bill for the federal government. Another possibility is that Workhorse, an EV startup with a sketchy history with Lordstown Motors and the Trump administration, challenges the contract. Either way it is still early in the life of the contract and many government contractors and members of Congress believe that the USPS fleet could still be EVs. Earlier this week,Lawmakers Back $8B for Electric USPS Vehicles.

Daimler to ‘Pick Up Speed’ in EV Transition. Daimler will phase out its combustion before its original goal of 2039 after other automakers unveiled more ambitious targets. The company also welcomed EU plans to further slash carbon emissions in the transportation sector calling it “an ambition we have to say yes to.” This week their CEO said that “market dynamics”, as well as regulatory pressure and lower battery costs, would make the economic case for a more rapid switch to EVs more compelling. Sales of EVs have increased for Daimler this year. In Q1, Mercedes sold 43K plug-in hybrids worldwide and more than 16K pure EVs, amounting to 10% of global sales, up 7.4% from last year. The automaker plans to release four more EVs in the next 18 months. Related ABB to build 120 DC charging stations in Thailand and Dedicated eTruck Charging Site Coming Up in California.

🌟Android Automotive OS Review: Under the Hood with Google’s Car OS. Google has long sought leadership in the automotive infotainment market (Santosh wrote about this extensively as a public equity analyst in his prior life). Car manufacturers need to include an infotainment system--user-friendly software--in its new cars. This means developing an OS, an UI, and building an SDK and app ecosystem--all things that car manufacturers have not excelled at. Google is positioning itself to be a leader in this area by launching the Android Automotive OS. The fragmented nature of the automotive ecosystem means that each automaker would have to make their own custom OS and that is not a viable solution. Most hardware companies--one could call cars 2,000 lb pieces of hardware--didn’t all produce their own software. Instead, they focused on hardware and used an OS licensed from a software house. Google wants to be this software house for the automotive industry by licensing their automotive OS in-car infotainment systems all over the world. This would be a huge win for Google since they could expand into a gigantic market and it would be a huge win for automakers since they would not have to invest in software that Google would do a better job making in its sleep. Also related to the in-car experience, Ford Ponders In-Car Ads Using Vehicle Cameras in New Patent and Computers that Come With Wheels.

VW AV Profitable at €7/Hour. VW plans to introduce a subscription service for its AV features. The automaker prefers a subscription model to a lump-sum model because it is more customer-centric and it allows those who aren’t as interested in the feature to warm up to it instead of feeling pressured to pay thousands upfront for a feature they may not want. This €7/hour subscription is cheaper than most public transit which means that VW’s level 4 autonomy is the most cost-effective option on the market. Volkswagen sees subscription features as a key part of its future. The automaker said that it plans to make all of its vehicles with all of the bells and whistles then lease them out through its Over-The-Air software updates which can access a vehicle’s OS on demand. Tesla to Roll Out Improved Self-Driving Technology in Coming Weeks while in China, Pony.ai Unveils its Next-Gen Robotaxi With LIDAR From Luminar.

Renault and Nissan Step Up Race with Tesla Over Powering EVs. Renualt and Nissan aim to be the first among car makers to sell 1M EVs using their joint battery system which puts them in the same echelon as Tesla and Volkswagen. As of today Renault and Nissan source batteries separately, but the next generation of batteries could be an alliance between the two automakers. While this news is exciting for EV enthusiasts other automakers think this may be too much too soon. Ford is weary of making too many EVs because that could price potential customers out of the EV market. Another concern is the potential shortage of materials needed to make EV batteries. Regardless of an automaker’s EV strategy, all think the next five years will be critical in determining if there will be enough supply coming in fast enough. Interestingly, Most Toyotas Will Still Use Gasoline in 2030, Company Says and VW to Rely on CO2 Certificates Outside of Europe.

Fundraises and M&A 💸

💥Sennder Acquires Cars and Cargo. Dynamo portfolio company, Sennder has acquired Cars and Cargo, a Dutch forwarder. This acquisition will give Cars and Cargo a significant capacity expansion and sennder said the two businesses had synergies, both connecting shippers to SME carriers. This deal follows sennder’s acquisitions of Uber Freight Europe and Everroad.

Cartwheel Raises $1M Led by TenOneTen Ventures. Cartwheel is an LA-based delivery management platform for restaurants. The company offers solutions for in-house delivery operations, including a driver app, dispatch tools for managers, and customer interaction functionality. The seed capital will be used for product development, partnership integrations, and team expansion.

BluePallet Raises $4M. BluePallet is a Chicago-based marketplace for chemical producers and distributors. The startup hopes that its marketplace can change the way that stakeholders in the chemical industry connect with each other and expand into new regions. The fresh capital will be used to scale their business.

Kitch Raises $4M Led by Atlantic Food Labs. Kitch is a Lisbon-based startup that gives restaurants a one-stop shop to manage every step in the food delivery process. The platform lets restaurants manage all their delivery orders, track couriers and update their menus across all the delivery apps. The new round of capital will be used to scale the business.

CognitOps Raises $11M Led by FirstMark Capital. CognitOps is a startup that builds AI-based warehousing operating applications. The startup’s technology aims to help supply chains adapt to labor shortages, accelerated service levels, and disrupted supply bases. The funds will be used to expand internationally, increase sales capacity, and expand product development.

Optimal Dynamics Raises $18.4M Led by Bessemer Venture Partners. Optimal Dynamics is a startup that builds technology for the decision layer of logistics and supply chain management. The startup’s technology uses AI to automate strategic high level questions and save companies millions of dollars annually. The fresh capital will be used to triple its headcount and invest in R&D.

Contractbook Raises $30M Led by Tiger Global Management. Contractbook is a contract automation platform that gives companies a structured workflow for their contracts. The company provides an all-in-one platform that replaces any number of existing services, from Word to Adobe Acrobat, Box, Excel, and DocuSign. The fresh capital will be invested in scaling the business.

Waybridge Raises $30M Co-Led by Rucker Park Capital and Craft Ventures. Waybridge is a startup that digitizes the supply chain and helps companies deal with supply chain volatility. The startup’s platform helps companies buy and sell raw materials, track shipments, automate manual processes, and offer visibility to their inventory. The new round of capital will be invested in scaling the business.

Zencargo Raises $42M Led by Digital+ Partners. Zencargo is a London-based digital platform for freight forwarding. The company has expanded and faced new challenges in the past year due to Brexit, the Suez Canal backup, and other supply chain bottlenecks. The new round of capital will be used to open offices in the Netherlands, Hong Kong, and the US as well as double its headcount and expand into trade finance.

Innovusion Raises $64M Led by Temasek. Innovusion is a LiDAR startup that is a supplier to the Chinese EV company Nio. For now, China is the largest market for Innovusion. The company plans to ship a few thousand units next year for transportation and industrial use cases. The capital injection will be used to expand its production so it can deliver thousands of units to Nio.

parcelLab Raises $112M Led by Insight Partners. parcelLab is a German final-mile fulfillment service for online retailers. The startup’s services have helped retailers such as Lidl have 85% of their customers come back to their online store. The fresh funds will be used to fuel parcelLabs’s global expansion and new product development.

Gojek Raises $300M Led by Telkomsel. Gojek is an Indonesian ride-hailing and payments platform. The partnership with Telkomsel, the largest telecom provider in Indonesia, will allow both parties to “open up new synergies as the two companies scale up digital services and deliver new, innovative solutions.” The capital infusion will be invested in scaling the business.

WeRide Raises an Undisclosed Series C. Months after raising a $310M Series B, Chinese autonomous driving company WeRide raised an undisclosed Series C that puts the valuation of the company at $3B. The company has been successfully operating robotaxis and has released a driverless mini robobus, which is a new category for the AV industry. The fresh capital will be used to invest in R&D and commercialization.

PayPal Acquires Happy Returns. PayPayl has acquired Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves. The acquisition means that Happy Returns will continue to offer their return experience as a part of PayPal, which has previously invested in Happy Returns. Terms of the deal were not disclosed.

SPAC Radar 📡

EES in a $1.1B Deal with ACON S2 Acquisition Corp. EES is a grid-scale battery maker. The 10-year-old company has little revenue, but sees the SPAC as an opportunity to scale-up and deploy its “flow battery” for long duration storage which can pave the way for a more renewable energy grid. Net proceeds of $465M are expected in the deal and EES said it would use the proceeds to boost its manufacturing capacity from 250 megawatt-hours this year to 16 gigawatt-hours in 2025.

Bird in $2.3B Deal with Switchback II. eScooter giant Bird announced on Wednesday it will go public through an SPAC with Switchback II. The $2.3B valuation is lower than it got in the private markets before the pandemic, but it could go up as cities reopen and riders take to the street. Bird has raised nearly $1B as a private company including a $208M round last month. The deal includes $160M PIPE led by Fidelity and a $40M asset financing facility from Apollo and MidCap Financial Trust.

Company Building 🛠️

Employees Want A Hybrid Model. While we have our opinions about work structures (remote or centralized), a recent survey suggests 42% of remote employees would seek other employment if their employer does not offer long-term remote or hybrid options.

Why Introverts Make Great Leaders. A data-driven appeal in support of the introverted leader. In particular, there are some tips at the end that could help introverts balance themselves as part of their day-to-day service to their teams.

Should Your SaaS Company Embrace Bottoms-Up Efforts?. “Before proceeding further, it’s important to note that bottom-up is not the right starting strategy for every company. A few quick ways to see if bottom-up is the right place to start for you: 1) Product: People can easily try your product; 2) Decision-maker: Your decision-maker is a line-level employee (not C-Suite); 3) Users: Teams and individuals can get value from your product (doesn’t have to be full enterprise roll-out); 4) Data: The data involved isn’t something that compliance would need to review.”

Who's Hiring? 👩‍💻

DevOps Engineer at Milk Moovement in St. John’s, Halifax (remote ok).

Senior Product Manager at Skupos in Denver, CO.

Account Executive at Backbone AI in New York, NY.💥 Have you seen any interesting startups recently? Introduce us.❤️ We would love your support. Please forward to friends and share on social media.🗞️ If you were forwarded this and found it interesting, please sign up.🎙 Check out Dynamo's podcast series, The Future of Supply Chain.