News of Descartes Systems Group’s (TSX:DSG) acquisition of MacroPoint LLC hit me right in the middle of a research effort vetting several of the more notable players that dominate the exact same solution space.  I walked into the project wondering why there hadn’t been more M&A activity; more specifically, why the market’s Transportation Management System (TMS) vendors seemed to have conceded all-things-track-and-trace-related to this booming group of upstart “supply chain visibility” solution providers.  And while I had half-settled for an answer that says, “TMS software companies needed a third party to do this,” it’s now clear that I should have trusted my gut.
For background, MacroPoint provides technology that visually plots the progress of shipments on a map. It does so in near real time. It also combines lots of additional risk data like weather, traffic, temperature, altitude, etc. and applies analytics aimed at providing shipper companies a way to predict and optimize their logistics supply chains.
Why are truck icons moving on a map important?  Because the underlying data enables all kinds of goodness –everything from the kind of shipment milestone tracking information we consumers have come to expect from carriers like FedEx and UPS, to the kind of where-is-my-package-now information that ecommerce customers have come to expect, to new levels of capacity management aimed at helping shippers and carriers operate far more efficiently, for example, allowing shippers to optimize their docking operations and carriers to load match more timely so they can keep moving –full.
“Consumers expect to see the location and progress of shipments from the point of order to delivery,” said Ken Wood, EVP of Product Management at Descartes. “With leading e-commerce retailers and other shippers demanding that their transportation providers provide real-time location-based information, the business-to-business market now has the same expectation of full visibility into transportation moves. To meet this expectation, MacroPoint has established what we believe is the preeminent network of connected vehicles and location-based content in North America.”
Here’s a market where size surely matters. MacroPoint is one of the largest, managing a network of over 2 million trucking assets and drivers. They’re connected to trucks through via a variety of techniques, including integrations to on-board electronic logging devices (ELDs), GPS-enabled smart phone applications and location-based mobile phone triangulation.
“MacroPoint is the market leader for truckload shipment visibility,” said Bennett Adelson, CEO of MacroPoint. “We believe that the combination of Descartes’ Global Logistics Network with our cloud-based, real-time load visibility platform creates a truly differentiated offering that helps customers research, plan, execute and monitor multi-modal shipments around the world.”
“Descartes has a successful history of electronically connecting transportation providers to transportation brokers, logistics intermediaries and shippers to share data, automate processes, and run more efficiently,” said Edward J. Ryan, Descartes’ CEO. “With this experience, we appreciate the unique value of a network-based business focused on the transportation industry with a track record of high revenue growth, high recurring revenues and profitability. We’re excited to have MacroPoint join the Global Logistics Network so that we can jointly deliver even more value to the logistics and supply chain community.”
Descartes acquired MacroPoint for approximately $US 107 million ($US 87 million in cash and $US 20 million in shares). “We view Descartes as a natural fit for the MacroPoint network and business,” said Amir Goldman of Susquehanna Growth Equity, LLC, a MacroPoint shareholder. “We believe there are tremendous opportunities for the combined business, which is why we’ve become Descartes shareholders as part of this transaction.”
TMS (Transportation Management Systems) didn’t address real time shipment tracking. The lack of capability was conspicuous, having created the market opportunity for those that do. To help open up the market, these same Supply Chain Visibility (SCV) solution providers worked together in meaningful ways, more than willing to concede a niche or application sale (e.g. a transport mode) to a competitor that already had it covered. Together, they had not only stitched together a cross modal, track and trace capability, but they were sharing data and integrating in ways that provide shippers, 3PLs, brokers and even the independent owner/operator truckers, a way to automate and comply with every-evolving and challenging service standards.
To be brief, they were well on their way to establishing a more open kind of plug and play logistics platform (logistics as-a-service) designed to serve the needs of all shippers –not just the giants of the industry. For example, as mentioned in a piece posted in SpendMatters, Tom Finn, the author, points out how Amazon’s vertical integration may be “playing an unwitting, yet facilitating role” in the creation of such a platform –one that will not only satisfy its own requirements, but inevitably, those of competitors whose demand for similar capabilities will result in raising the service bar across industry.  While the acquisition of MicroPoint by Descartes raises several more questions, it will be interesting to learn if their combination will hasten such progress or slow it down –forcing otherwise meaningful collaborators to become less cooperative and more insular.