In its first financial report following its IPO at the beginning of this year following a merger with a special-purpose acquisition company, Freightos Ltd. has slashed its growth predictions as sputtering cargo volumes and faltering freight rates take a toll on the online freight booking platform, as reported by WSJ.
Shaky economic condition
The Israel-based company, one of several supply-chain specialists, said it now anticipates revenue to climb 15% to 21% this year over 2022, down from an earlier prediction of 87% growth. This comes after a period of pandemic-driven logistics chaos and soaring shipping prices.
The founder and CEO of Freightos, Zvi Schreiber, stated on a Monday earnings call that “the sector has certainly altered beyond recognition.” A “significant headwind” has been put in the way of the company’s growth objectives due to shaky global economic conditions, which also include poor trade demand and an abundance of transportation capacity, he claimed.
In contrast to a June 2022 forecast for this year of $39.5 million, the company now expects sales for 2023 to range between $22.3 million and $23.6 million.
Since air and ocean shipments fell from Covid-pandemic highs last year, several freight businesses were having trouble when Freightos went public in January.
Air freight declines globally
One of the largest container shipping companies in the world, A.P. Moller-Maersk A/S, has warned that this year’s earnings could fall by 80%. Due to decreased international demand, digital-focused freight forwarder Flexport Inc. has made layoffs, while U.S. truck freight brokers have stopped their pandemic-era hiring drive because of weaker domestic shipping business.
In the last week of January, ocean container shipping costs from Asia to the U.S. West Coast were down 91% from the same time last year, while rates from Asia to Northern Europe were down 77%, according to Freightos’ report from last month.
Demand for air freight is also declining globally. International Air Transport Association data indicates that global air cargo traffic decreased by 14.9% in January compared to the same month last year.
Revenues below expectation
The Freightos portal functions as the Expedia or Travelocity of the freight industry, enabling businesses with items to transport to compare costs and reserve space on ships and planes. Freightos receives payment either as a flat charge for each booking or as a percentage of the total value of each booking.
Revenues for 2022 were $19.1 million, up over 72% from the previous year but 9.5% below the company’s expectation from June 2022. Despite a decline in the global freight industry, its data showed a doubling of transactions in the fourth quarter.
Officials at Freightos claim that because the platform keeps on adding carriers and enrolling new shipping clients, they are protected from some of the difficulties facing the larger business.
On January 26, Freightos completed its merger with Gesher I Acquisition Corp., raising more than $80 million. British asset management M&G PLC provided the majority of the funding with a $60 million contribution. $10 million was invested by Qatar Airlines Ltd.
When the offering was priced at $10 a share, the company’s shares opened at $22.76 in January. Its shares dropped below $5 in the weeks that followed. At $4.34 on Monday, the cost had decreased by 3.6%.
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