Hi, good morning everybody, and welcome to WiseTech Global's 2024 Investor Day. I'm told we have over 100 fund managers and analysts in the room, excluding the WiseTech team, and many more joining us online via the webcast. For those of you who I haven't met, my name's Richard Dammery, and I'm the Chair of the WiseTech Board. I acknowledge the traditional custodians of the land on which each of us meets today, here in Sydney, the Gadigal people of the Eora Nation, and I pay my respects to their elders, past, present, and extend that respect to all First Nations peoples today in the places that we meet. When I took over as Chair earlier this year and travelled around to meet shareholders, I received strong feedback about how much you wanted to see the depth and quality o f the WiseTech team and hear more about the company.
Our last Investor Day was during COVID, and I promised you that we would have this Investor Day today in person, and here we are, and thank you very much for coming. Today's designed to allow you to deepen your understanding of the company, see our key people in action, and experience some of the unique ways that we think about growth. We're a global team of 3,500 people and growing, a team that has deep knowledge of the intricacies and complexities of the global logistics industry. I want to acknowledge Richard White. He had the vision, the tenacity, and the huge intellectual horsepower to imagine and build this great company, and Richard's commitment to WiseTech remains as strong today as it has ever been. His new role changes nothing. I also want to acknowledge my Board colleagues who are here today: Maree, Charles, Fiona, Lisa, and Michael.
We're a very collaborative Board, and we recognize the unique context that we're governing here at WiseTech. We look to set high governance standards without being slavish followers of fashion, if I can put it that way. What makes this business successful and its place in the Australian capital market is unique, and as a Board, we look to understand deeply and nurture what has made the company successful, as well as keeping one eye on how we evolve WiseTech for a bigger and better future. You know, governance and culture are two sides of the same coin. I've never seen a company with a great culture and poor governance, and I've never seen a company with great governance and a poor culture. There's at least a correlation, if not a causation, happening here.
WiseTech's Credo begins. It's up on the screen here: "Our culture is not by accident, our creativity is by design." Easy to say, but not easy to build. I hope by the end of today you will have a better feel for this. Strategy undoubtedly brings focus and direction, but its culture, supported by ways of working, processes designed to deliver consistent excellence, that fuel passion and dedication, and which lead to consistent execution. At its essence, WiseTech, through the application, is transforming the logistics industry globally and delivering efficiencies, productivity, and profitability across the global supply chain. We do this by replacing manual paper-based processes with more secure, automated, and highly efficient digital solutions. Today you'll be hearing from a range of the WiseTech team members and learning about the WiseTech Way of doing things.
We're intending to provide three opportunities through the course of the day to ask questions. We'll be taking questions from the floor with roaming mics available, and for the attendees joining us via the webcast, you can submit your questions via the portal, and the WiseTech team will make sure these are picked up too. Can I now introduce our two moderators today? Caroline Pham, where are you, Caroline? Caroline's over there. Caroline Pham is WiseTech's Interim CFO. She's been a key part of the WiseTech team for more than eight years and has played an integral role in building out the finance function over this time. Mark Hall, down here, is Head of Acquisitions and Integration and joined WiseTech nine years ago. Mark leads deal execution and oversees the integration process to fully embed acquired businesses within the WiseTech model. I hope you enjoy today.
Thank you again for coming, and a special thank you to those of you who have travelled from overseas. I'll now hand over to Andrew.
Thanks, Richard. I'm extremely pleased to welcome you all to today's Investor Day. Firstly, in my new role as Interim CEO, I've been enjoying working together with the wider WiseTech team. The senior management team and I have been working closely together over this period of transition and exploring opportunities and ways to continue to drive ongoing progress throughout the business. I'm impressed by everyone's passion, constructive attitude, and desire to work together across functions. You'll get to meet and learn today from the team and hear from many of them during the sessions. As Richard said, our last Investor Day was during COVID. That was actually four years ago. As an organization, our vision remains unchanged: to be the operating system for global logistics.
But over those four years, we've grown and progressed significantly, not only in the size of our team, our global footprint, but also in the breadth and capability of our technology and the penetration we've achieved amongst the top 25 global forwarders and the top 200 logistics service providers. We now have more than 50% of the top 25 global freight forwarders rolled out or in the process of rolling out our leading logistics execution platform, CargoWise. Over the course of today's sessions, you'll hear about how we're revolutionizing an industry. We've been doing this in steady, thoughtful, and strategic ways. Slower today, faster forever. One of our mantras lies at the heart of how we approach all the industry challenges and pain points we tackle and solve. For 30 years, WiseTech Global has been learning, refining, and scaling this approach.
Our strong culture, built on innovation and collaboration, has been and will continue to be pivotal to our success. This culture is embodied by our talented and knowledgeable people whose dedication and expertise drive our ongoing growth and continuous improvement. We have the capability and the capacity that no one else in this industry has. Our commitment to adding value for our customers and the industries we serve is unwavering, and we achieve this through consistent execution of our product-led 3P Strategy: Product, Penetration, and Profitability. The momentum we have for the future is substantial. Our strategic investments in technology, our relentless focus on adding value for our customers, and our ability to adapt to the ever-changing logistics landscape positions us well for continued success. We're not just keeping pace with the industry changes. We're leading the way, setting new standards, and driving the evolution of global logistics.
As we look ahead, we're excited about the opportunities that lie before us and are confident that the best is yet to come. Thanks for joining us today.
Thanks, Andrew. Welcome, everyone. As Richard said earlier, my name's Mark Hall. I'm head of acquisitions and integration at WiseTech. Just before we start the fireside chat, there's a few housekeeping points that I want to take you through. The day will conclude at 5:30 P.M. here in Sydney. After that, there'll be a short networking session for those of you actually here and present. Lunch will be a 40-minute break, and we'll have a 20-minute break later on in the afternoon. During these breaks, the webcast will be paused. The agenda is on the back of your lanyards if you've not seen that already. There'll be three sessions for Q&A, a short session after, and then after lunch, there'll be a session that covers the WiseTech Way, and then towards the end of the day, there'll be another Q&A session for the relation to the product sessions.
Webcast guests can submit your questions via the online platform. If you're watching on that platform, you'll see there's a hand icon in the top right-hand corner of the screen. If you click on that, it should open a dialog box in the bottom right-hand of the screen, and then please submit your question in there. When you submit your questions, for those of you in the room, if you could please try and make those relevant to the particular session. That would be really helpful. We'll get through as many questions as we can, and if we don't cover them all off, we'll try and cover those later. Please keep your phones on silent. There's complimentary Wi-Fi for the hotel. I think it's under Bonvoy Marriott or something like that. It doesn't say W Hotel. W Sydney has a two-tone alert system for evacuation.
In case of emergency, a beep alert will be sounded throughout the affected area while they investigate the cause of the alarm. In this event, guests are requested to remain where they are while waiting for further instructions. If we are required to evacuate, the alert tone alarm will change to a whopping noise with a please evacuate instruction. That's actually meant to be a whooping noise, probably, not a whopping noise, but anyway, let's say that. In that event, whether it's whopping or whooping, the team at W Sydney will take control of the proceedings, with staff directing us to the closest evacuation route and escort us to an appropriate assembly area located by the circular fountain near ICC Sydney. A reminder that W Sydney is a no-smoking hotel. The allocated smoking area for guests is located outside the hotel premises. Nothing more specific than that.
I think it's just outside. And lastly, if you do have any questions or need to speak to someone, please don't hesitate to ask one of the WiseTech team. They're the ones wearing the white lanyards as we go around. Now, time for our fireside chat, so please welcome to the stage Richard White, Richard Dammery, Andrew Cartledge.
Where are you sitting?
This end. I'll sit on this end.
Okay. All right.
Thanks. So Richard Dammery, start with you if I can, please. WiseTech is 30 years young this year. We've had great growth. We passed AUD 1 billion of revenue this year. We're highly profitable. We finished with EBITDA margins of around 50%. We've got an enviable customer base, and that's all been built on a huge amount of product investment. At the same time, Richard White has stepped down from his role this year. How do you and the Board see that? Is this an inevitable sort of outcome of a sort of a mature and growing founder? It's sort of an unwanted distraction for the business.
This hasn't been all rehearsed, by the way, just so you know. It's not like I've been practicing my answers to these questions all week. I think it's a natural part of the evolution of the company, as we've talked about. Richard and I have been, since I took over as chair, in fact, before I did, we've been talking about how do we think about making sure that WiseTech can fulfill its full potential, and it's one of, I think, Richard's signature strengths and distinguishing characteristics is that I think you're probably one of the longest-term thinkers that I've met, actually, in business, and so thinking about how we set the company up in five years is not a particularly challenging time horizon for us. I think it's fair to say, wouldn't you? And so we've been having that conversation, and we're now enacting something.
I think here we are. I was saying to somebody beforehand, we were having a few issues back in October. You might agree. We've had an AGM since then, and now here we are for the Investor Day. The company is stable. Andrew's in role and doing what the Board wants him to do. Caroline is in her role, and we're getting on with it. We're very much looking forward in the sense of looking at what we need to do now through to the end of this year and beyond that into the coming years. We've got a very good plan.
What was the rationale for the reporting structure when you were discussing this with Richard?
Quite simply, Richard coming into this role, which is going to be a significant role, Richard's not going anywhere. Richard's going to be focusing, as we've said repeatedly, on the things that he enjoys, and he can talk about that in his own words shortly, but on the things that we think are going to add maximum value to the company. And people said, "Oh, well, isn't having - isn't that going to make the CEO's role impossible? Isn't having dual reporting structure going to be too complicated?" Well, no. I mean, we're a pretty collaborative place. Ultimately, the Board's got a role here to make sure that this evolution of the system works. And to that extent, therefore, we've said both Richard, in terms of his role, and Andrew as CEO, will report to the Board. So far, so good, but it's early days, right?
We'll ask Richard later, but from your perspective, Richard Dammery, how do you think Richard will benefit from not having to focus on some of the things that he was doing as CEO and just being focused on product and growth initiatives?
Hopefully, you're going to enjoy it a lot more. That's the plan. I think from the company's perspective, without embarrassing you with flattery, you are a pretty valuable resource, let's agree. There are only so many hours in the day, and therefore, directing Richard's time to the areas that we've talked about, the future of product and its development and the execution of the things that we want to achieve, into M&A, which feeds into product, which we'll talk about a lot during the day, and supporting sales, they feel like highest and best uses to me. It can only be good.
It's obviously been a busy time over the last few weeks, but how long do you think we should be thinking about sort of this settling in? Because I'm sure there's a little bit of time to bed the role down.
Like most things in business, you just get on with it, don't you? I mean, we're getting on with it. We're an adaptive organization. As kind of things arise, we'll deal with them, but we're getting into this new rhythm. I mean, it's not like we're working out what to do. Andrew's been in the CEO role now for what?
A couple of months.
A couple of months. Coming up a couple of months, R.W. had a break, and then by the way, he's R.W. and I'm RD because it gets confusing when you've got two Richards. So R.W.'s had a bit of a break. He's back, very focused on the things we need to do and want to do around product. So it's happening.
And Andrew, from your perspective, I mean, we've been through challenging times in the past, like kind of short seller attacks and everyone had to go through COVID and that sort of stuff. For this, how have the team reacted when you've been talking to the senior team and other people around the business? What do you think my morale's like?
Yeah. No, honestly, Mark, it's great. I think everybody's clear on what their roles are and their responsibilities. And there's just been a desire to work through what's obviously been going off in the media, and that has had a little bit of a disruption, and we talked about that a couple of weeks ago at the AGM, but the team's just really managed through it very well. And I think as a team of people, we've worked together for a long period of time. I mean, you and I joined the business roughly around the same time, about nine years ago. We've worked with Richard for that period of time and many of the senior leaders within the business. So this is not like a new group of people coming together for the first time.
It's an existing team that works well together and is continuing to work well together.
Yeah, and in practice, are you seeing, I mean, it kind of feels like things are pretty much just normal. Are you seeing any sort of major changes?
No. I mean, obviously, with R.W.'s role here, that is a change, but it's one that the business is taking in its stride. What it is today and what it is in a month's time and what it is in six months' time and what it is in a year's time will continue to evolve as the organization that's growing 20%-30% a year continues to evolve. So it's not an unusual situation to be in. We are an evolving business, and we're growing rapidly, and change happens all the time.
You mentioned the senior management sort of tenure. A number of people have been around for quite some time. What do you think the key strengths of the senior management team are in terms of being able to deal with this change and?
Yeah. I think we have 3,500 people around the world. It's keeping everybody focused on the things that they need to execute, right? And the leadership team is very, very good at that. And we've demonstrated that. The way that we've grown the business, the way that we acquire businesses and that we integrate them, it's a key part of our strategy, as well as keeping the focus on the commercial side of the business. I mean, this year, we signed Nippon Express, which was the top 25 customer that got us over to 50%. And we focus on all aspects of our 3P strategy, whether that's product penetration or profitability.
Yeah, and do you see any changes in those focus areas on the 3Ps in the sort of short term, or?
No. I think that is the core of our strategy, and that is helping us to become the operating system for global logistics, as I mentioned in my opening address there. We'll continue to prosecute that vision, and I think it's been very successful, and we'll continue to be very successful as we continue to grow the business.
This year is a bit different because we've announced the three breakthrough products, which we haven't sort of talked about so much in the past. How do you see that playing out, and how important is that for us for our development?
Yes. I mean, there are three breakthrough products that are all coming through within the same time period, as we talked about last week or the week before at the AGM. ComplianceWise is launched into the market. We've now launched CargoWise Next. That's available with the first group of pilot customers. So that's good to see. And we've delayed, as we communicated at the AGM, the launch of CTO for some very obvious reasons. And that'll launch now in the second half of the year. It's a transformational product, though. It's something that is so important in the marketplace that really addresses what we call the fourth layer of cost efficiency for our customers, which is where we're addressing their direct cost of transportation. And it's the first time that we've really done that.
Landing this product and getting it right in the market is absolutely important and very paramount.
Yeah. There was a question in the AGM last week just about why I think the perception was a relatively small period of disruption had led to this delay. Do you want to add a little bit of color onto that?
Yeah. When you bring in a new product to market, you've got a piece of product development, and you've got a commercial exercise. You've got to bring all those things together. And the disruption that we saw over the past few weeks really just coincided with a very important period in that product life cycle. We also get into sort of the end-of-the-year period where launching a brand new product into a marketplace, as our customers are very busy, isn't the best time to bring something revolutionary to market like that. So hence why we've said we'll launch that now in the second half of the year.
Okay. And there is a lot of focus at the moment on our sort of breakthrough products, but those obviously aren't the only product initiatives that are on the way. We're a product-led company. Do you want to talk about some of the other things, or at least the volume of things that the team are working on?
Yeah. Absolutely. I mean, most people in the room here and probably listening in sort of know this story, but we reinvest a third of our revenue every year in new product development in R&D. Over the past five years, that's delivered 5,600 new products. So it shouldn't be alien to everybody to recognize that there's always a lot of stuff going on in the business. And some things we tell you about as we're bringing those things to market, other things we tell you about after we bring them to market. So clearly, you would anticipate there's an awful lot going on in the business that we haven't shared yet.
And R.W., you are and always will be our Founder and our Founding CEO. How does it feel to be in a slightly different position now and really focused solely on product and growth?
Firstly, my natural resting state is actually focusing on product and the growth of the company through that product and the things that flow from that. This was a decision that I made by myself, and I brought it to the Board. It was a circuit breaker because some of the noise in the media was hurting the company, and I wanted to make sure that the company was protected. But equally, I'd spent the previous day in a series of product meetings, and I came out the end of that thinking how wonderful that felt and how much more meaning it gave to me and much more leverage it gave to me. So that decision itself was driven by my desire to focus on my highest and best use. When you think about a company like WiseTech, we are a high-growth product innovator.
As such, the things that we have to do in the immediate short term, the things we have to do in the medium term and the long term, have to be highly integrated. They have to be very product-focused, and there has to be breakthroughs that are continuing to occur all the time. I mean, we're not stopping with the three breakthrough products we're talking about here. We're talking about internally. We're talking about things that will occur next year and the year after and the year after that. We're talking about how we can extend into adjacent marketplaces like landside logistics but other marketplaces in ways that others probably haven't seen, but we've been planning for some time. And the ultimate industry that we serve is the entirety of the supply chain and logistics.
I mean, it's probably easy now to think about it as a series of pieces: trade, which is the movement of the goods themselves, the goods; transport, the asset-heavy things that are moving goods around the world; and logistics, which is the planning and management, the asset-light but incredibly necessary things. That's what we started out in logistics, and the combination of those things together, it's an incredibly complex problem, and it's hyper-inefficient in many places. It's actually quite broken because it's always dealt with in a local optimized way. We are solving those local optima and building global capabilities that make it much stronger and better, more efficient and effective.
That, by the way, at our scale, we're probably the only people with the reach and capability that can actually build something of that type and implement it in a way that is meaningful from a worldview point of view.
Yeah. What do you think it is that has got us to that point when we've got the scale that no one else has been able to achieve? Because there are other companies out there that are large logistics. They've been buying companies and so on. What is it about?
You and I have looked at some of those companies, in fact, Mark, and thought about whether we want to buy them. And the answer was, "No, that's not something that we want to do." That's a braking effect rather than a positive. Our M&A, by the way, is usually quite targeted and focused on specific things rather than just buying other businesses. WiseTech is a very strong culture, a culture of innovation, a culture of people with great strength, great ability to execute, and an abiding vision to be the operating system for global logistics. And those things remain true. And during this last, let's call it 10 years, a bit more than 10 years, just pre-IPO and forward, we've been operating on a global scale in larger and larger pieces.
The success of the company, its ability to grow, and more particularly, its ability to be profitable and generate cash so that it can continue to grow itself, that's the secret sauce here. Most of our competitors, if you will, are not like that. They're actually stuck in a legacy product. They're stuck in a low-margin business, or they're stuck in an area of the business that doesn't give them scope. We've got the ability to take very careful but very deliberate steps into adjacent areas, and those adjacent areas continuously improve and grow our addressable marketplace, which is an enormous market.
Yeah. You mentioned the mantras. And for those of you around the room, you'll see there's the mantras up on the wall there and the Credo. And I would really encouraRge you to spend some time looking at those and especially reading the Credo during the course of the day. But Richard, those are really important to us as a business. Can you take yourself back a number of years to what made you realize that we needed Credo and mantras like that, and we wanted to have our culture really sort of designed to support our growth?
The Credo, as you said, culture eats strategy for lunch. If you have a strong strategy, but you don't have aligned teams that have a common purpose and mission, you're not going to get the strategy to work. You need to have people connected together by something meaningful and deep that is actually a goal that is more than just the next year's reporting or the next five years. That's what the Credo has done. I mean, it's kind of a blank verse, sort of almost poetic. And by the way, that took probably three months to construct. I took advice from many staff and had many conversations, some of them quite tough conversations, about I wanted it to be deep and thoughtful and meaningful, and other people wanted to be sort of a high-surface message.
I think we've arrived at a set of mantras and the Credo that people, actually, when they read it, they want to join the company. People, when they read it, they feel proud to be in the company. And customers, when they read it, they realize that we're different to other companies because most of the time, when you look at people's vision and mission and their other documents, they don't look like that. They're trying to be like that. When you look at ours, we actually enact them every single day, care about them, and want them to be the fundamentals of how we operate.
As Andrew mentioned, I've been here about nine years, and it took me a number of years to realize that the culture and the mantras was actually real and true rather than just something that we have on the website and something out there. For you, when you sort of started to put this into place, what was the point? How long did it take to see those behaviors really coming through and making a difference? When did you realize it was going to work?
When you're a smaller company, your culture is visible within arm's length of you. You can walk across a small floor and see 50, 100 people, and you can realize you can talk to them, and you can express culture as a set of conversations. The Credo came about because I needed to explain to a much bigger company, and this was talking about very small by today's standards but still global, what is it that we really are and how do we think about it. And so the Credo and the mantras, the mantras, by the way, weren't called mantras until, what were you saying? It was 2018 or 2019 we started calling them mantras. I think we just called them slogans before that. And that was sort of part of my management study about what it means to communicate an ideal in a company.
So the whole idea here was to take the true culture of the company, which was quite meaningful and very passionate, but to turn it into something that people could read and understand as the expressed rather than just implied culture.
Yeah. From an integration perspective, cultural change is obviously really hard. But at WiseTech, I think it's a bit easier because people see the mantras being enacted in their sort of daily interactions with people that have been in the business longer.
People quote them all the time, of course. I think there's a couple of things to think about here. First of all, we are, by our nature, a software company, a development company, an innovator, and for that reason, we have quite similar culture to the companies that we buy. Typically, you'll find that there are differences, but there are more similarities than there are differences, and then we're working in logistics, and so logistics operates a certain way and it has a certain attitude, and that, again, makes it very similar for the businesses that we acquire. When they come into this business, they get a superset of what they've already experienced or think they should experience.
The credos are helpful for that too because it gives you kind of the core recipe for what we do and how we think and what we want to project ourselves into.
Yeah. What role do the tools and processes that we use play in reinforcing the culture? I'm thinking of sort of PAVE and the things that underlie PAVE, the way we work and the way we.
PAVE is an implementation of a thing called Drum-Buffer-Rope, which is, if you've ever read the book called The Goal by Eli Goldratt, it's an implementation of that model. It was actually done. I think we started building PAVE in a deeper way in about 2011. When I read the book The Goal in 2005, I started building some of the datasets that we needed for PAVE. It's a long-term thing that we built. Equally, we have a lot of pieces of this that come from management theory, that come from other constructs. But one of the very powerful ones is thinking processes. We call that course Black Belt in Thinking. It's on the academy. It's all digital these days, thanks to the help of Vimeo. It actually typifies this sort of problem-solving, conflict-resolving, core conflict discovery process. Companies' growth.
A lot of the things that we do here are effectively constraint breakers or conflict breakers that we do. You see this conversation happening around the company. You see people building prerequisite trees, NCNs, necessary condition networks, IO maps, disappearing clouds, core conflict studies, or current and future reality trees. These are all tools that we use. There must be, across the company, probably at least four or five hundred people who have done either one of the physical boot camps or the Black Belt in Thinking itself. So there's a common language across the company. Even people that haven't done those things pick up the language and the model pretty quickly.
Yeah. Now, we had our IPO eight and a half years ago. At the time, you predicted a long and healthy future. Eight and a half years on, what's your sort of outlook for the longer term for WiseTech and.
Well, I want to give you an anecdote because I had a spreadsheet, and I predicted when we'd make the 300 index, when we'd make the 200 index, when we'd make the 100, when we'd make the 50, when we'd make the 25, right? And I showed it to a number of people, many of them very sophisticated, and I got laughs everywhere. It's never going to happen, Richard. That's just complete lunacy. And I can tell you that that spreadsheet was way more conservative than reality. We have made much more of that than I could ever have predicted. And to be fair, the spreadsheet didn't mean anything, really. It was just a little sort of fun sort of mental experiment. This is what I think will happen.
So one of the problems in this business, and this is a problem with technology businesses generally, and this is a very complex technology business, so it's even more of an issue. It's very hard to properly predict the long-term future. I can get you three months and maybe 12 months and maybe at some level of detail, three years, but that's getting very, very fuzzy when you go out 5 to 10 years. So what you have to be is you have to be a learning organization, a very adaptive organization, and you have to be able to constantly renew the ideas and reframe them in different ways. I actually started talking about or thinking about Container Transport Optimization in 2019.
It didn't really happen until 2024 that I had all the pieces together and the things assembled in a way that could actually construct an idea that was going to become that product. So some of these things are very short-term. We've been working with teams on various things compliance-wise. That's relatively quick. I mean, it's probably a year or two. There's some other things we've been working on. I won't tell them what they are until the big surprise, the big reveal, but probably been about six months, maybe less than that, in fact, and some things like CargoWise Next, it's probably a three-year development where we're basically cleaning out architecture and refreshing and renewing and so forth.
So I'm not sure that was the question you asked, but the point is, across this continuum of being a public company, we've actually done a very fundamental thing that is kept to our core product-driven growth strategy. We've added commercial models to that. So the product strategy and the product tactics sit in the core of the business. Then there is the commercial model, the marketing and sales model that comes from that. And then there is the M&A, which is, I think, of M&A largely as sort of feedstock for the engine that is the growth of CargoWise. Now, for those of you that have come from acquisitions, I don't want to make that an insulting thing. I don't want you to think of you personally as feedstock.
But the point is that this is an engine that you feed with ideas, with people, with customers, with knowledge, and with markets. And ultimately, and I see many of you from the acquisitions, including Gene, who we acquired Gene's business, Chris Arens' business, in fact, in 2006, right? And so we've been doing this acquisition stuff for quite a long time. And it is a critical part of growth. Now, we got hammered by short seller claiming that our acquisitions were all fake and they didn't exist and that, of course, nothing would be further from the truth. But the point is, what we do here with acquisitions is one of the amplifications of a product growth company. And it's actually very common for high-quality software companies to have a growth engine that is partly funded and fueled by M&A.
Yeah. And so much of those, that is the people as well, isn't it? I mean, the audience will get a chance to hear from many of them later on today. But when you look around at all of the experience we have across all of those acquisitions we've done, in addition to what we have from the corporates, I mean, there's not many people that would have that kind of bench, I don't think.
So if you think about across that product business, we have benefited from a very substantial number of senior leaders that have come from those businesses. They may have been in business for themselves for 10 or 20 or even 30 years, and they've come in as senior product leaders. I think probably in the drinks afterwards, we'll meet some of those people. But the fact is that that is an amazing way of being able to build depth. And it's the ability to have leadership that have come in, understand the industry, understand software, understand the nature of the customers and the nature of the industry itself, because there's a characteristic in this industry that's quite different to other industries.
To have that without having to go out to the market and hire generically to hire senior people, that is an incredibly powerful driver of highly sophisticated, high-level management talent.
All right. Thank you. We do have some time now for Q&A, so I'm happy to open that to the room. Question over there. Well, it would be great, sorry, if you could just say your name and where you're from before when you're asking a question.
Thank you. Bob Chen from JP Morgan. Just a question around culture. Obviously, we focus a lot about speaking about the mantras and the Credo as well. There's obviously a fair bit of management turnover happening at the moment. So can you talk to how you're planning to manage that with the transition into the CEO and CFO position, as well as maybe give us a little bit of color on what criteria you're looking for in a new CEO coming into the business?
I'm not sure I agree with the predicate of the question about a high level of turnover.
It's very low in fact.
Andrew's retiring one day. But apart from that, our turnover is exceptionally low. I can't remember what the number was, Andrew. Can you remind me?
I think it's 6% across the whole company.
Yeah. It's incredibly low, right? So obviously, the Board, as we think about the company's talent pool, we are obviously conscious that some of the people who have worked with Richard for a long time are actually getting close to retirement. But this is where this sort of feeding talent back into the organization becomes super important, as we were just talking about. And that's a cycle that we do continuously. And we will continue to evolve our talent management and succession processes to a high level of sophistication. It's not to say they're not sophisticated today, but we expect the company to be very much bigger and significantly more global in five years' time. And therefore, we're planning for that. In terms of the CEO search process, we've said publicly we've appointed Russell Reynolds to help us with that. We don't need to rush.
Thanks to Andrew's commitment to stay as it was in the CFO role, now in the CEO role to the end of next year, we've got time on our side. Now, let's agree a year can go quite quickly, but we're going to make sure that we hire from inside the organization or outside it, whichever way it rolls, the person best suited to allow the company to execute on its growth potential.
Thank you. Yes, down the front, please. Oh, a big one. Sorry, at the back.
Paul Mason from E&P here. Just there's a few Eli Goldratt references there. One of the ones I wanted to explore a bit was about customers and their local optima versus global optima, which is like, It's Not Luck book. Maybe if you could talk about it's one thing to have a product that sort of comes up with the idea of solving for something like that. But in practice, that's going to involve your customers often restructuring people out in order to achieve the global optima, right? They have to change to map to your product is a lot of what I think that gets at. So could you talk a little bit about how you actually go about culturally selling into customers that they need to change to you in order to get these better outcomes?
Because it seems to be core to why you're being successful, but it's also quite a lot higher friction than a lot of other software companies as well.
First of all, Paul, welcome. Thank you for that question. I'm impressed that you actually know the title of the book and its core thesis, which is actually the local versus global optima from The Goal. It's not like it's more about the core conflict. But it's great that you've actually read enough in that space. I would tell you that customers do not take on those ideas or changes at all willingly or even see them as a necessity. Where we have a big advantage is that the system itself trends to a global optima because it is an integrated, global, and complete system.
And so customers are not going into the thing and saying, "Oh, look, I've read The Goal and I've read It's Not Luck and I now have this set of tools that I can use and the software helps me do that." And that's not what's happening. We do have customers that are moving to that, but typically it's coming from the low levels of management that are learning about the product and about the education system that we have in WiseTech Academy. And it's not the senior managers. Senior managers have been doing the same thing for 30 years, and they truly believe that if I do it more and harder, then we'll be successful. Of course, that's not right. But the software does create a global optima because it allows the entire chain of processes to be seen as one whole thing.
And if anybody's sort of holding onto a local piece, it flares up pretty badly, and you see that they become a constraint or a bottleneck that shouldn't be there. Now, in the process of selling, you have to be in a position that you don't criticize the customer for the inability to understand things. It's not a great way of going about it. But the way that our customers, the new companies coming on board, they see the improvements in the P&L of their competitors. They see the managers, and sometimes they hire those managers, and they talk to the massive improvements internally about visibility and control and capability and profitability and management control. And those are the things that sell the software. The software kind of implies a global optima.
Now, what we do want customers to do is to think more deeply about constraints, which is kind of like this Drum-Buffer-Rope PAVE implementation. We do have some customers operating PAVE, but I would say that's still an early journey for them, and then we do want customers to think about what is the core conflict and how do you actually make a business materially better than others. Typically, the industry's culture and its long-term history says that this is the way you do things, and people they hire have come from five other companies maybe in their history. They've all done things exactly the same way, and it is hard to change that culture, but the software does most of the heavy lifting.
Thanks. There's a question down the front.
Morning, guys. It's Kane from Goldman Sachs. Maybe just coming back on the management structure going forward. I mean, Andrew, it's probably a question for you around if there is a disagreement around product M&A going forward between Richard and the incoming CEO or today, what steps does the Board take to resolve this? How do you think about actually reaching a decision between the two?
That's the core conflict issue. Yeah. Yeah. I mean, hi, Kane. Nice to see you. I mean, good question. In a mature organization, conflict should be able to be resolved between if there is conflict, disagreement, dissonance, whatever you want to call it, should be able to be resolved applying the thinking principles of the organization. And so as the Board, we think about this as if things are having to come to us to act as a point of resolution, that's actually not a good thing. We're willing to play that role. We accept that's inevitable in terms of setting up the double reporting line. But we've been talking about this quite a lot over the last month. And I mean, we all agree.
All three of us agree that working things through together, which frankly, by the way, is how the company's been operating in the time I've been here, and I suspect probably the way it's been working forever. So it ain't a big shift because that's actually in the resolution framework of WiseTech. And so do we anticipate issues? Yeah. Can you? Yeah, do, please. Yeah, yeah, yeah.
Ultimately, this is a company full of highly educated, engineering-minded people. And we've always had one of the mantras about Creative Abrasion. And the way this works, if you have the good of the business at hand in your sights and you have a disagreement, what you've got is an opportunity for improvement.
It's not the time to override the other person just because you can and say, "This is the way we're going to do it." That might have to happen in the end so you have consistency. But ultimately, what you're trying to do is to stop worrying about the mechanism that you're promoting, that is, "I want to do this. You want to do that." What you actually think about is what is the effect we're trying to create here and how is the best way to create that effect? Now, it might be revenue growth. It might be the release of a product. It might be the restructure of a team. It might be the build of a new product. But all of them have an effect or an outcome that you can define.
And then what the argument becomes, and I mean it by argument in a positive way, the discourse about that is, what do we have to do to make that happen, to create that effect? There's very few times that that creates an ultimate unresolvable disagreement. It may be that there are two people with very substantially differing experiences and views because one comes from a different view of the other. But ultimately, if you focus on the effect we're trying to create and not the mechanism that I believe is the right way to do it, you often come to much better answers. And that, by the way, is a very large chunk of the second Eli Goldratt book called It's Not Luck.
I want to make another comment on this topic, but before I do, I think we should let Andrew comment as well.
Yeah. Kane, it's a really good question. And look, Richard and I have worked together for nine years now, right? And we've not agreed on everything all the time, right? Clearly, there's been things that we discuss and debate. I think a great example, though, was just something that we were discussing together actually last week, right? And going into discussion, we thought we were opposite ends of the scale, right? And actually, we figured out we were trying to achieve exactly the same thing. And then we were just discussing how we were going to get there, right? And one of us threw an injection into the conversation that got both of us basically to the same place of how we were going to move from where we were today to where we were ultimately going. And that was it. And we were done.
And I think it's that maturity that we've got as an organization where we can talk through different views and different opinions and come to common ground to be able to move forward. And that was a 15-minute conversation, right? Something we thought going in, we were 180 degrees, and we actually figured out we were very, very close, and we resolved it very, very quickly. And that's just the way the organization operates.
I think it comes back to what R.W. said earlier. If you guard it by doing the right thing for the organization, you tend to find the answer. That's been my experience of how we approach problem-solving in WiseTech in the three years I've been involved, including at the Board. I mean, this notion that it's been said almost, perhaps not quite as directly as this, that, "But isn't the Board just a slave to Richard?" No, I don't think you don't see it that way. We don't see it that way. It's never really been that way.
I'll just go to one last question because we're running out of time, but.
Sure. Thanks. It's Andrew Gillies from Macquarie. Obviously, this is a product-led business. Richard, how much incremental time do you feel R.W. Yeah. Don't worry. I'm getting the lingo. How much incremental time do you have to spend on product now? And is this actually the best outcome for the business, notwithstanding what happened back in October?
I think I probably had 20% of my time that I could spend on product, and then if I worked weekends and nights, I could get a bit more out of it than that, but it was always what you actually need is some reflective time as well. I probably have 95% of my time on something to do with the product, what we're going to call this Product Council, and then the related issues to do with commercialization and sales, and the also related issues related to M&A. I think my scope of influence is those things, and my scope of direct significant influence is the products, effectively the ideation and the creation of the product. Now, if you look at this, I would be in many senses average in a whole bunch of stuff.
But in these areas, I think I've got a very strong track record, and I know that what my passion is and where I can actually get the most value for the company is in those spaces. So it is the highest and best use of my time. It's always going to be that I'll be pulled into other things. The Board may want me to do something. Andrew might want me to do something. I might have to fly and meet a customer somewhere. But I'm hoping that 95% of my time is the ideation and creation and delivery of product, commercial model, and the M&A structure that enables the growth of the company.
Thanks very much, everybody. We've sort of run out of time for this session. If you do have further questions, please submit them online, and we'll try and cover them later in the day, either in the sessions or on one of the other Q&A panels. But we'll move on to the next session, which is on the commercial model. But in the meantime, please thank our panellists for this session. Thank you. And welcome, Caroline. Thank you. Thank you. So this session is about our commercial model. We'll talk to you about how the commercial model has evolved over time, how our model supports our sales growth, and does that while maintaining very low sales and marketing costs compared to other industry benchmarks. To do that, I'm joined by our two guests here, Gene Gander, who's our Global Head of Sales, and Caroline Pham, our Interim CFO.
Gene, you've been with the business for 22 years and, as Richard pointed out, joined as part of an acquisition. Would you mind giving us a couple of minutes on your background?
So as Richard pointed out, we were a North American logistics software company. We joined in 2006 to be part of what is today's WiseTech Global. It's been a fun ride. In 2018, I moved from North American head of sales to global sales. And at that point, we had a couple of large wins with DHL and DSV. We had a strong sales team in the upper end of the market. So we posted wins with Bolloré and Hellmann and Maersk and CEVA, followed up with FedEx and UPS, and then most recently, Sinotrans last year, which was the largest China forwarder, and then Nippon Express starting out the year strong this year, the largest Japanese forwarder. And that project is going very well. They're going to be visiting us in February to keep the pressure on that.
Where we are today, global implementations in play or completed for 50 of the large global forwarders. Now with Nippon, as Andrew said, we've tipped over the top 25, more than half.
Great. Thanks, Gene. And Caroline, would you like to introduce yourself, please?
Sure. Thanks, Mark. Hi, everyone. I'm Caroline. I'm the Interim CFO at WiseTech Global. I joined this business eight years ago, just a few months after we IPO'd in 2016, and I've got a background in Big Four audit and M&A. So prior to joining WiseTech, I worked in commercial finance for an FMCG, and it's there that I really, I guess, discovered what I liked about that area, which was that you got to combine that technical accounting knowledge that you had with analytical skills and use those to translate data into actionable insights. And the ultimate goal, of course, was to drive revenue growth, and so that was something that was really personally rewarding for me to be a part of. And so it was with that experience that I joined WiseTech.
I'm really proud to say that I helped establish and build out the commercial finance function at WiseTech over the first four or five years that I was here. As part of that, I worked closely with Richard, with Maree, with Andrew, with yourself as well, Mark, and the team that we were building out in that area. And we worked on things such as revenue growth initiatives, price and discount strategy, the commercialization of new products. And just generally, I wanted to increase the rigor that we were providing the company in terms of decision support. So in recent years, I've taken on a broader leadership role as Deputy CFO and now Interim CFO, which I'm really enjoying. I think we've got a world-class finance team.
I think the more that you work cross-functionally across the business, you can really see how deep the talent pool is at WiseTech. I guess in terms of my initial bread and butter, it was pretty much evolving the commercial model here at WiseTech. Looking forward to talking about that here today.
All right. Cool. Well, let's start there. So we're a product-led company, as most people will know. We've got a transactional model at the moment. So the more quality product we add to CargoWise, the more people use, the more they pay, which is great. But it hasn't always been like that, has it? Can you talk us through the evolution of the model a little bit?
Yeah, sure. So if we look back at 2008, that's when we introduced the OTL model, so one-time license. That's a pretty traditional model in software. A lot of businesses today actually still use that model. And what it is, is it's essentially one large upfront fee that you pay one time, and then customers pay an annual maintenance fee thereafter. I guess the downsides of OTL is that you typically had long-term contracts that locked you in for a period of time and for the specific users or modules that you opted in for. And so as a customer, if you wanted to add more users, you wanted to use different modules, you had to kind of initiate this process where you had to sign paperwork, give it back to us. We'd have to check it.
We'd have to set up the settings and basically configure it for you to use those new features or add those new users. So that was a bit of a barrier to growth. And so we introduced a model called MUL. And this stands for Module User License. And customers here paid for a fee per user per month per module. So this was the first iteration of on-demand, which is where you pay for what you use. With this model, it did away with the long-term contract, and we moved to a rolling month-to-month contract, which gave customers the flexibility as they wished to kind of leave or not. And as we've seen with the customer attrition, it's been very low. I guess that came at a time around GFC where a lot of businesses were starting to reduce their headcount as a result of margin pressure.
That kind of led us to further evolve the on-demand model to what we have today, which is STL, so Seat and Transaction License. And what that comprises is a fee for each user, but we also charge fees per transactions that are conducted on CargoWise. And what that helps do is two things. One, it allowed us to, I guess, grow when our customers grew, even if it meant that they weren't growing their headcount. So say customers became more efficient and the amount of transactions that each user could do increased. On the previous version, we didn't really capitalize from that because it was a fee that was charged per user. Whereas here, if they're conducting more transactions per user, we're clipping the ticket each time as well.
And so we found that the STL model is a much higher growth model than, say, MUL or OTL. And it's highly consistent. It means that the revenues are predictable. And it's also the model that we encourage our acquisitions to eventually move on to as well.
Yeah, Gene. So that's a good example of a win-win. The more the customers use, the more productive they become, the more revenue we get. How's that helped you in the sort of sales cycle? And how do you also deal with the complexity of the price list?
So I like to use the word comprehensive instead of complex. So we have a very granular price list. So whatever your exact needs are, the same price list applies to everyone. So if it's just customs in a specific country, you can take advantage of that. Some of the behaviours we have on the win-win is we say all customers are equal, but they're not the same. So depending on how much of the system that you're using is a volume discount that you can achieve. So obviously, the 100 user forwarder is having less of a volume discount than the 10,000 user forwarder. But we're very transparent with this scale. So it's not, "Let's make a deal." It's, "Here's the discounts that are available for you to earn. Let's work towards that." Probably the biggest win-win example is the CCLP, so the Certified CargoWise Logistics Provider.
So a company can be certified. Their individuals are professionals, specialists. And depending on the size of the organization, there's so much certification that they have to have. And then when they achieve that certification, they get a discount. Now, with the win-win aspect, we're as impressed when they get the discount as when we give it to them because we get a few things out of that. We get very proficient users. So a certified individual, a proficient user is easier to support. They use more of the system. They see a greater value in the system. So when we get some of the commercial implications and price increases, they see a higher value product than other people. The other aspect of this is that people move in the industry.
A CargoWise service professional that's working for a CargoWise company moves to a new company that's not working CargoWise. They can be a little of a pain in the ass. Why aren't we using CargoWise? This problem we have, we can solve with CargoWise. What you're doing here, we can do better with CargoWise. So they're basically selling CargoWise within the walls of the organization. And from a very senior level, executives that move from one company to another who have a strong brand and track record for digital transformation with CargoWise, one of the first things they do with the new assignment is, "Let's start taking a look at what it's going to take to put in CargoWise there." So this win-win, I want a discount. I'll give you a discount if you get certified.
There's a win for CargoWise in that we have 28,000 certified professionals out there selling CargoWise. It's basically a flywheel of growth as far as the network effect.
Yeah, and Gene, what do you think have been the main changes that you've seen to the sales model about how you and the team have gone about sales in the time you've been here?
Since 2018, it's probably the relentless focus on penetrating the top end of the market. So CargoWise is a very scalable system, and the price list is very scalable that I mentioned that it's granular. But the strength of CargoWise value, that competitive moat gets bigger the larger and more complex the organization is. So I think the biggest thing is concentrating on the top end of the market where we've got complex organizations that need customs, they need forwarding, they need compliance. And the more they operate across geographical borders, then the stronger CargoWise resonates with them. So we have our greatest return there, one, as far as the competitive moat, but also it pays out bigger and longer just based on scale.
And in terms of the process itself, we lead with a lot of content, don't we, in the sales process. Can you talk to us about that a little bit?
Certainly. So we're a product company, and we've argued about whether sales trumps product, but people buy product at the end of the day. We've got very quality salespeople. They've got good relationships with the customers. But at some point, this customer is buying product, and they have a relationship with CargoWise going forward. We took a look at what made good salespeople good and great, and we industrialized that process. And what we did is we built 1,000 + sales demo videos that this is the problem, this is the solution, which is CargoWise, and this is the benefit to you. So that we can be consistent now leading with content from marketing to sales. On global campaigns, we can have stakeholders at both ends of the globe. So the same message we're delivering in Asia, we're delivering in the US.
It allows us to onboard salespeople quicker because we've got a very structured process, and it allows us to make our good salespeople great because we're leading with sales demo content. Now, when COVID hit, we were digital before it was a necessity. So we were way ahead of the game. We still get in an aluminum tube now when we have to, but it's very late in the sales stage where it's more of a close than early stage sales process.
Yeah. And those demos are really important as well, aren't they? Because we can only create demos on things that we actually have, which differs from other organizations that we come across from time to time, including some of those that we acquire.
So selling what you have is important. When I started working with Richard a long time ago, he said, "I've got enough people who can sell what we don't have. I need people who can sell what we have." And that's huge because we don't sell the contract. We sell the go-live. We sell the commissionable revenue. So anytime we have somebody where there's friction for them going live, we've defeated the purpose. The idea is let's get them live as frictionless as possible. So this sales demo content that I mentioned that we value as far as salespeople, the customers value too. Because think about buying something as broad and comprehensive and deep as CargoWise. If you're sitting in the purchase chair, how can I be confident of knowing exactly what was presented is what I needed and what I bought?
With sales demo content, there's no question because there's been cases where we've worked with a customer, and it's, "Gene, six months ago we had this problem. You showed us, sold us on how you could solve it. Six months later, I forget, and we have a sales demo content we can go back to." So it adds buyers' confidence as much as sales effectiveness.
Yeah. And we also have sort of customer testimonials that we use on top of that, don't we, to support us?
Absolutely. Yeah.
Okay. Thanks. Caroline, how do we think we talked a little bit about the price list, and the price list, the prices that we set for each of those transactions are really based on value. How do we think about the sort of four layers of value that we offer to customers?
Sure. So one thing that we know is that our customers want value. One of the ways that we thought to, I guess, neatly describe the value that CargoWise delivers is these four layers of cost efficiency. If we take the first layer, which is legacy IT costs, these are the costs that companies in logistics are today incurring as a result of many systems that they're using. These can range from the tens to the hundreds of systems that they may need to use to operate their business, as well as an in-house proprietary system that may be thrown in there as well. What you get is really, I guess, a network that's been a network of systems that have been patched together. With those comes very high IT maintenance costs.
That's the first bucket that would be targeted when you use CargoWise because you're replacing those myriad of systems with one single integrated platform. The next cost is labor costs. So in logistics, as we know and we'll hear a lot more about later, it's a pretty manual and inefficient industry for the most part. A lot of our largest customers in the industry, they have teams of hundreds, sometimes even thousands, where their roles are largely manual. So they're doing manual processes. They're doing emails, faxing. They're doing phone calls to operate their business. I think you'd be quite surprised about how manual the industry is.
And so it's that labour workforce cost that can be reduced as a result of moving to CargoWise because of the high levels of automation, the integrated workflow, and the fact that, I guess, they can now digitize what they're currently doing manually. So those two costs there make up about 30% of our customers' total cost base, which is actually not that much. The bigger part, the remaining 70%, is these other two layers. So if we talk about fines and penalties, so here, customers typically have a part of their budget that they allocate to fines and penalties that they just expect to incur as part of doing business. Why is that the case? The processes that they use today, because they're often manual, it means that they have to be quite selective about what they can actually do and be compliant in.
They just simply can't be compliant over every area. And so it's inevitable that fines and penalties will be incurred as part of their business. So with a system like CargoWise, where, for example, in customs or you'll hear about ComplianceWise later, we've worked very hard to build tools where it's seamless for a customer to be compliant in whatever jurisdiction they're operating CargoWise in. And that means that they can significantly reduce and, in some cases, avoid altogether the fines and penalties that they may incur. And the last bucket that we have is freight costs. So these are the costs that our customers and logistics providers are incurring in physically moving the goods from A, B to C. So as you can imagine, this is a huge part of their cost pool.
And it's actually that bucket where if you use tools that we have in CargoWise, like route optimization, we've got air and sea schedules that are constantly being updated due to the connections that we have to all of the industry players there, and also Container Transport Optimization, which you'll hear about a bit later on. These features allow customers to, I guess, better optimize the movement of their goods and result in reduced direct freight costs. So the direct freight costs and the fines and penalties, they make up actually 70% of our customers' total cost base. And it's actually those areas that we wanted to specifically highlight as areas that can be reduced if you use CargoWise, not just sort of the go-to IT costs and labor workforce.
Gene, CargoWise is obviously very deep in terms of functionality, but we do hear feedback that it's expensive. So talk to us about how you deal with that with customers because I'm sure they must highlight that to you.
We're dealing with forwarders who buy low and sell high every day. So everything's expensive in their eyes. But they ultimately want what we have to offer, and that's the productivity and the throughput. They've seen what their peers have done with it. And Richard had mentioned that within the industry, digital transformation that's been happening. But if we take and they're aware of what we've done in the industry. The top 25 forwarders over the past 12 years, the ones that run CargoWise have 85% growth, and the companies that aren't running CargoWise have 12% growth. They have nots, as I call it. So that's a seven times multiplier. So they know what CargoWise can do if it's utilized effectively. And as we'd said, there's the network effect where people are moving around within the industry.
They also are aware that we're generating thousands of enhancements and updates to CargoWise every year, even before we get into the large mega features. And customers are seeing that every day. Now, they don't want to admit that, "Thank you for the price increase, Gene. It's worth every dime." But they do know that for every dollar they're contributing, they're getting 35 cents going into enhancing their product to make their business better. And they also know that all their competitors that are giving us a dollar, 35 of that cents is going in to enhance that product. So there's this co-op effect of moving it forward. So they know the value they're getting out of CargoWise. And let me expand on that a little bit. We've put together a tool to help them quantify this. So we have a CargoWise Value Calculator.
The first thing is CargoWise cost X versus our current IT or the competition. But what we can do is we can sit down with them and say, "Let's go through your current business. We have these nine phases of productivity. You can operate manually. You can operate computerized. You can operate in an enterprise environment, workflow, workflow automation, the buffer management that Richard had talked about. Now let's take a look at your current business. In this part of the business, you're running that manually. This one is computerized, but it's a separate computerized system with this one. Workflow is non-existent. Accounting is separate. And what we can do is we can take a look at it, and we had talked about this here of the cost of labor. We talk about operational cost.
Instead of beating ourselves up about the cost of IT to buy CargoWise, we take a look at the operations cost, and we can basically show them that they can operate cheaper by spending money with CargoWise. And we change that paradigm from buying CargoWise and spending money to operations cost.
Caroline, I suppose we don't get too many thank you cards for the price increases. But at the end of the day, we have pretty low attrition, don't we? So.
Yeah. That's exactly right. So I think with the noise that often accompanies price increase, I guess the ultimate litmus test for us is to look at our customer attrition, which has been less than 1% for the last 12 years. And I guess one other aspect to think about with price increases and the approach that we take is it's how we look at the business. So with the business, we take a product-led approach. And when we think about pricing, we take that product-led approach. That means that when we're thinking of price changes, our primary goal is to ensure that revenue growth is driven by the monetization of very valuable features that we're providing to our customers through new features, new enhancements, rather than a pure price increase.
Yeah. One of the other things that we talked about earlier on that I mentioned was the low sales and marketing costs. How do we achieve this? We're not underpaying the sales team, are we?
Yes.
No.
That's for you, Caroline.
I think that's for me. Sorry. Yeah, that's right. So our sales and marketing as a percentage of revenue in FY 2024 was 8%. And so if you look at that compared to our direct peers, but also other technology providers of similar size and scale, they're usually in the mid to high teens. And so we've got pretty low sales and marketing. And so that's really, I guess, due to a couple of things. So one, Gene spoke about the fact that we take a digital content-led approach. And so we see that coming through with our sales force. As Gene said, we don't fly them to every single sales meeting that we need to have to establish or maintain a relationship. We rely heavily on the thousands of demo videos that we have and product demonstrations that we can do virtually.
The other aspect of this as well is in terms of the network effect that we have in terms of our partner network and also the 38,000+ certified professionals that Gene spoke about. The partner network and the certified professionals, they're not on our payroll, right? But in terms of partners, they're very well-respected logistics providers in the industry, and they're very influential. The more business they can refer to WiseTech, that obviously helps us. It's like an extension of our marketing tool, and that will in turn help implementation and services work. For certified professionals, as Gene said, as they move from place to place in the industry, they take that knowledge about CargoWise with them to influence whichever business they're going to next.
Yeah. And Gene, we talked a little bit about external sales. What about internal? Because we know that our customers are growing. Lots of existing customers are also growing and expanding. What do we do to encourage more growth within those customer base?
In the past, it was sales job to hunt new logo, fuel the growth machine, move on to the next sale. But then at some point, we have a large stable of top 200 customers with an opportunity to get a greater share of their wallet. So we've done a number of different things. One, from a direct sales standpoint, we said your job is to sell new and existing products to current customers as well as logo hunting. And initially, that was a task across the whole sales team. And then we realized some people are good at hunting. Some are better at building relationships. We segmented the team, continue to hunt and do very well. And your job is to grow customers. That's a big part of it. What we also have done with that is the certified professionals that we talk about.
For the hunters, let me take a step back. For the builders, we put together a tool to assist them. So we've got a large data set out there of forwarders that are using CargoWise. So we built a Customer Insight Portal . So we can go to the sales team and quickly say with a heat map, this is an area of CargoWise that that customer is underutilizing CargoWise. Let's focus on that part of the sale. We've also put together a productivity index. So when we're engaged with these customers and we're doing a CargoWise business review and we take a look at their customs operations, we can track their throughput per resource of what they're doing for customs entries.
We can benchmark them against the competition of you're in the 10th percentile or 50th percentile, and that gets to be a very engaging customer story. Service professionals are the partner team that Fergus built and his team is huge. The partners do more than take our customers live. They do a constant process improvement after the fact. Part of that process improvement is showing where they can use and benefit from more and more of CargoWise. Our CargoWise partners are out there pushing CargoWise. The probably biggest scalable item is what we do again with the lead with content. We're constantly releasing product update notes, e-learning videos, major products get a blog for marketing, the customer insight story you had said earlier. All of that is contributing to get the customers to use more and more of CargoWise.
That all gets in front of the 38,000 CCLP users.
These professionals, when they see the content we're kicking out and the CargoWise Community profile that all the users have. And these CargoWise professionals are like CargoWise fan club members. When they see these releases, it's like Christmas morning to these people. So yeah.
Very good. Caroline, talk to us a bit about industry consolidation because that's another sort of tailwind that we benefit from somewhat.
Yeah, sure. So I think in recent years, we've seen increasing activity around industry consolidation. So we've obviously got some businesses that have had a long history of that, such as DSV with their acquisitions of UTi, Agility, Panalpina, and more recently, DB Schenker. But we've also seen other businesses such as JAS and Tigers. We've got CMA CGM with CEVA as well. And I think that industry consolidation is something that WiseTech has generally benefited from because whether it's the acquiring business that uses CargoWise and then brings the acquired business onto CargoWise, or whether it's the reverse, again, it's, I guess, increasing the pool of users that we have on CargoWise. There are other industry factors as well. One of them is that, I guess, as we spoke before, the industry is generally quite a manual process.
So even relatively simple automation can drive above-average growth. And then the other aspect as well is cybersecurity. So I think that's another area where in recent years, we've seen customers who have used many systems sort of patched together and have had a breach in one of those systems. And it's so turning to a system like CargoWise where it's got that single integrated platform and very heavy cybersecurity around it. That's really, I guess, encouraged them to come to WiseTech.
Gene, another question that I get asked a lot is who our competitors are. I don't know of anyone that's really got our sort of reach and scale, but you must come across some competitors when you're discussing with targets.
We do. When you think about the level of market that we're targeting, I had mentioned this earlier. That's where we focused on that. They appreciate what we have to offer. If it's forwarding in a single country, there's a wide competitor field there. We throw in customs, it gets a little bit tighter. We throw in accounting and warehouse, it constricts. And then if they have operations off of many across many different borders, that company. I mean, nobody can really do what we're doing across the globe. They'll pick at us at different places. So then your question is, if not CargoWise, who? Stringing multiple systems together, we've proven it doesn't work. And that's why people are coming to us for a single platform strategy.
In-house development is a strategy that really hasn't been touched in the past decade plus because of what we have out there for options with CargoWise. So I think our biggest competition is having people that are continuing to throw good. We can do to drive them to market. Because if we drive them to market, as I said, if not CargoWise, who? We can win that sale.
Yeah. So really, we've got industry consolidation, GDP growth. Those are all tailwinds for us. We've got an existing and expanding customer base that's rolling out to new countries. And that's all supported by our sort of scalable sales model, our CCLP process, our standard price list, standard contracts so that customers don't need to roll out to more people. And we have a partner network and a growing user base that's really driving our growth. Any other sort of main points?
We've pretty much covered it. I think maybe the one point to sort of emphasize here is that all of those factors that you listed that drive our recurring revenue growth, pretty much all of them are actually within our control. So things such as rolling out new features, the rollout of large global freight forwarders, the fact that we have major new product releases, essentially all of those are within our control, except for market growth, which actually is only one percentage point of our total 33 percentage points growth in revenue.
Yeah. It is also very hard to replicate any competitors. Okay, Gene, we're almost out of time but before I let you go, what can you tell us about the sales pipeline without getting us into too much trouble today?
Very general terms. Our claim to fame is we have the top 25 global forwarders. You would think I'd be losing sleep about that at night of where growth is coming from. But only half of them are in the process or have rolled out globally. Even in that, yesterday, FedEx, who we celebrated that win a year ago, just went live with North American forwarding yesterday on December 1st. So there's a big lump of revenue. Remaining of the top 25 are utilizing us in a specific region or a specific module. When you look at CEVA and Maersk, they started with customs. Once we're inside the walls with CargoWise, it sells itself. Then it evolved to global. We have a lot that we can do there.
If we take a look at the DHL and DSV and European region, that got to be a tipping point and all the Europeans fell. Entering North America, UPS and FedEx fell in quick succession. We're coming off of Sinotrans in China and Nippon Express in Japan. I feel confident that we've got a tipping point happening in the Greater Asia region, so I sleep well at night.
Good. All right. Well, thanks very much, both of you. Appreciate your time. We're going to move on now to a session on acquisitions and integration. So we'll thank Gene for his comments and invite Vlad Bilanovsky to the stage. Thank you.
Thanks.
After you.
All right. So after a bit of musical chairs from Mark and I, we're going to talk about acquisitions and integration in this session. So, oh, that's all right.
Thanks very much.
Thank you. So acquisitions, as we heard from Richard, is a proven strategy to accelerate our product development. What we're going to hear about in this session is why we acquire businesses, what we look for, and a bit more about our integration process. Introductions first. So Vlad, you are our Chief Execution Officer, and you joined the business over 20 years ago, actually through an acquisition as well. Would you mind telling us a bit about your journey, how you started, how your role has evolved over time, and what your role is today?
Thank you, Caroline. Hi, everyone. Yes, I joined the business around 20 years ago together with Gene. Hope he's still here. As a result of acquisition in the U.S. of a company called Fountainhead, but prior to that, I was actually working in the industry. I was managing global logistics operations for freight forwarder, focusing on oil and gas industry with customers mostly in North America, in Europe, and the Middle East, and we also did U.S. domestic logistics, particularly video games distribution, so back then, video games were sold on DVD discs, so we were bringing them from factories in Japan and U.S. in containers to our warehouse, and then on the day of a major game release, sending hundreds of thousands of shipments directly to U.S. stores.
And in order to enable that, we have to build very sophisticated automated integrations with major U.S. retailers such as Walmart, Target, Sears, Department of Defense. And as a result of this, some of the Fountainhead customers started reaching out, asking to help them with automations and integrations as well. And that's how I first met Chris and Gene, and eventually became a consultant for the company. And in 2006, early in 2006, when WiseTech acquired Fountainhead, that's where I met Richard first, Richard White. And this crazy Australian trying to conquer the world. But very quickly, I realized that we share the same passion for changing the world of logistics, that the magnitude of the challenge is huge and exciting. And sooner after that, I joined the business.
We were small back then, growing quickly, and had to perform various jobs, wearing different hats depending on a business need. So I was in development management, in product management, in sales for a couple of years. I was managing company marketing. In 2011, I established a first partner program, and very pleased now to see hundreds of partners across multiple countries and multiple partner programs worldwide. With my experience, industry relationships, and credibility growing, I was involved in more leadership opportunities within WiseTech, and that allowed me to transition to M&A and, with years leading, corporate development and origination. In my current role as Chief Execution Officer, I'm working closely with the CEO and the Board on strategic initiatives with our senior management team, as well as with key product managers, with Mark on acquisitions.
With product management is mostly about how acquisitions and strategic partnerships can accelerate our product roadmap. In addition to corporate management, I'm also looking and managing global customer support, carriers, team, and channel management.
Okay. Great. Thanks, Vlad. Mark, you've got an extensive history in M&A, having worked in Big Four and then obviously joined WiseTech at a really critical time pre-IPO. Could you tell us about your journey, how you started at WiseTech, and how that role has evolved over time and what you do now?
Yeah, sure. So I've been close to 17 years in professional services, mainly focusing on M&A. And as Caroline mentioned, I joined to assist with the IPO. After that, I joined the team permanently. The IPO was a great opportunity for me to understand how much organic growth the business really had and start to understand what the culture was like at WiseTech. So I stayed on and quickly got involved in a number of the acquisitions that we started to make over that period of time. In due course, I also took on responsibility for integration. But what that's really given me is the opportunity to interact during the acquisition process and also the integration process with almost sort of 50 businesses that we've acquired over that period of time. And that's given me some great insights into the logistics industry.
Prior to WiseTech, I didn't really have any particular industry specialization, having worked across a number of industries, and it really has sort of dawned on me how complex the industry is. You've got the shippers moving goods around the world, BCOs and freight forwarders, our customers moving goods on behalf of others. You've got the carriers, the ocean carriers, the airlines, as well as the motor carriers. You've also got facilities. Every time a shipment is shipped somewhere, it needs to be loaded and unloaded, and if that's a parcel, well, that's relatively easy, but when that's a container, that's not so easy, and so there are a lot of facilities and interchange points, and then I've also been struck as well by the amount of compliance that's required, often at a lot of those interchange points, but of course, border compliance as well.
So that all adds up to a significant amount of complexity within the industry. At the same time, I've also been struck by the lack of standardization. There are relatively few standards across the industry, which is really surprising, was really surprising to me. And as I think you mentioned earlier, Caroline, the amount of manual processes, you think we're in the modern world, but the amount of paper that's moved around by the logistics industry that's even couriered around. We've got processes that have been the same for hundreds of years that fundamentally haven't really changed and we're still operating the same way. And all of that sort of adds up to a very sort of fragmented industry. And there are lots of software providers out across the industry, but they're all relatively small. They're solving problems, challenging problems, but they're solving them on a local scale.
And I think what we have with WiseTech is the ability to actually solve that on a global scale. And as a result of that, WiseTech is one of the few, if not the only company I've ever been involved with where I can actually say that I think the vision to be the operating system for global logistics and should actually achieve.
Thanks, Mark. So I guess let's start with the fundamentals. Why do we acquire businesses at WiseTech?
Firstly, I mean, it's important to know we're a product-led company. As has been mentioned a couple of different times, we've got great organic growth because of the investments we've made in product, because of the commercial model that we've got supporting that growth. So we don't have any actual need to buy businesses in order to grow. Because we're product-led, though, we do have the opportunity to acquire businesses to accelerate our growth. And it will come as no surprise that the main attributes we look for are businesses that can add something to our product, which we can offer to our customers. So fundamentally, that's why we do it, is to enhance our products further and offer more. We've got different types of acquisitions. We refer to the footholds we've done. About sort of roughly half of our acquisitions are foothold acquisitions, mainly customs compliance.
That's been really valuable to us because building custom systems is hard in different geographies with different languages, different customs processes. But being able to buy a business, acquire the domain expertise, intellectual capital, and then embed that back into CargoWise through rewriting the system back into the functionality back into CargoWise is really valuable to us. Then we have adjacency acquisitions, which we refer to as either our tuck-ins or sometimes our strategically significant.
Great. Thank you, Mark. And Vlad, in terms of finding these businesses, what are the ideal acquisition targets that we look for? What are the attributes there?
I will repeat again that we are a product-led company. We're focusing on the product. Product strategy determines what companies we're looking for. Strong product and product capabilities would be a key attribute I would be looking for. Specific licenses or accreditations, particularly in a compliance space like customs, would be a very good indication of a maturity of a product and strengths of a product team. If I have a magic wand, I'd like to acquire small and medium-sized businesses, businesses which we share a customer base with, businesses which are profitable. Profitability or breaking even is a good indication that the team can focus on the value and create value, not just go after shiny objects of delivering some functionality. I also really like founder-led businesses. Not always, but typically those businesses have more leadership drive, more cohesive team, and a higher quality product.
I think you will be speaking to some of the founders I see, Carl, there later today.
Great. Thanks, Vlad.
Also, just one more thing. Cultural fit is very important as we need to make sure that businesses will be successfully integrated and then can join our product teams and other key teams and help us to grow moving forward.
Thank you. That's a good point about culture. In terms of how these opportunities get on our radar, could you just talk to us a little bit about that origination process?
Sure, sure. So we have a strong internal research team, right? And we conduct our research ourselves. But this is a huge industry, right? So we work closely with Gene's team, with our sales team, with our local offices, with our existing customers, with our partners, with industry associations, as well as we work proactively with private equities, with investment banks, with advisors. And that enables us to identify all targets in the specific areas we're focusing on. Once we identify these targets, we approach and talk to every and each one of them so we can form our own opinion about market niche or market vertical. Then we shortlist targets and we approach those of them that we believe are most valuable to us. Now, that's where the challenge is because most valuable businesses are usually profitable, successful, and they're not for sale, right? So we are patient.
I think the longest it took me is four years from initial engagement until I was able to have a meaningful discussion with owners of the business to progress, and now we have a successful deal, and it's one of the core businesses for us moving forward with the product expansion in Europe. At the same time as the name and recognition of the company in the industry was growing, we started getting more and more inbound inquiries, right? And again, if I have a magic wand, I'd like every company who's ever considering to be sold. Every day we have several inquiries coming in this time. We also have companies which are in a startup mode or trying to raise a little bit of a capital or get a minor investment to move forward reaching out, and sometimes this turns out into a full acquisition.
Irrespective of how we get our leads or how we get our shortlisted targets, we follow exactly the same process on deciding should we acquire the business or not. We have the opportunity to partner with the businesses. Sometimes it's a better opportunity to accelerate our product roadmap. An example was after reviewing more than 30 businesses in the greenhouse gas emission calculations, we partnered with one of them to speed up our development of corresponding functionality. I think Angela later today will be talking about this as one of the major products. Alternatively, we have more than 60% of our staff in the R&D. We can develop things organically, right? We believe we can develop anything ourselves. So in some cases, acquiring or partnering is not the best approach. It's developing things ourselves. In India and Israel, instead of acquiring local customs compliance businesses, we decided to hire people.
And they work together with our Global Customs teams, and we develop local compliance in those markets ourselves. So it's always a full case in terms of buy or build or partner. We review all three opportunities and then make a decision.
Thanks, Vlad. So I guess that means that we're really thinking about the build versus buy when we're looking at acquisitions. So after the origination process, we move to acquisitions. Mark, can you tell us about the acquisition process? And I guess more specifically, what do we do differently at WiseTech, if anything?
Yeah. A lot of the acquisition process that we follow will be kind of familiar to most of the processes. We have a team of people with sort of Big Four backgrounds that are kind of used to those processes. I think the things that are different really are our focus on product. We involve our product teams, as Vlad mentioned, from pre-diligence, from origination, but also during the diligence phase. We have a close focus on IS as well for security in particular. ESG, we involve our people team a lot. So there's a lot of people from functional teams that get involved in the DD process. And that really is to help speed up the integration. I mean, one of the main focus areas that I have is trying to make sure there's not a gap between buying a business and then integrating it.
We try and bring as much of that integration process forward into the diligence process. I mean, we also have, in terms of how we structure the deal, we use earnouts a lot. We prefer to focus certainly on action-oriented earnouts rather than maybe more traditional earnouts like revenue growth or EBITDA or achievements or something like that. We find that a lot of the businesses, sort of almost by definition, that we're acquiring have not scaled. And scaling is hard. They don't know how to scale. We've got 30 years' experience of scaling successfully. We'd rather help them take the actions they need to scale rather than take a bit of a bet on whether they are able to get it right themselves.
Yeah, and you mentioned the fact that we sort of bring in other parts of the business earlier that will actually help us with integration, so obviously, integration is a key process that we have to extract value from the acquisitions. Could you tell us more about our integration process?
Yeah, sure. I mean, that's really what adds the value at the end of the day rather than actually just buying the business. So we have a sort of five-stage process. The first thing that we sort of focus on is the typical sort of business integration, finance, legal people, those sorts of core functions that we need to align from the beginning. Then we obviously need to make sure we've consolidated our products. So in many cases, that's not actually integrating the product. We may integrate it sort of for the short term, but you'll have heard us talk about natively rewriting software, and that obviously takes a longer period of time. So there'll be some sort of integration or native rewrite.
We also adapt the commercial model, as you were mentioning earlier, bringing a lot of the things that we've learned and the benefits from our commercial model to bear with the acquired business. And then we have productivity injections as well, using tools like PAVE, standard customer support requests, and other things like that. In some cases, we might also build new partner networks to support a lot of these businesses because you can imagine a lot of the businesses come in with high-level professional services and other type of revenue, which is not what we want to focus on. We really have that sort of core recurring revenue focus. And then finally, but arguably most importantly, as we touched on before, is really integrating the culture.
That's really about making the business aware of what the culture is at WiseTech, how it fits in, introducing them to people throughout the process where they can understand that the culture is real and it's not just a nice slideshow. As we mentioned earlier, when I was talking to Richard about some of the processes and tools we have in place to reinforce that. Over time, we see that culture being identified in the acquired business, and they habituate it, and then they start to act in the same way that we do.
Thanks, Mark. And so I guess following on from integration, Vlad, can you tell us about this concept? So one of the mantras that we have is Win-Win or No Deal. Can you tell us from, I guess, an acquisitions perspective, how does that mantra play out for our sellers, for their team, and for WiseTech in the industry?
Sure. Win applies not only actually to sellers and WiseTech. It should apply to all stakeholders in the business if you want to have a sustainable deal, right? So we're talking about key managers. Actually, we're talking about all staff in the acquired businesses. We're talking about customers of the acquired businesses, customers of WiseTech, partners, and industry should benefit as well. So many businesses which we approach are what I call lifestyle businesses, right? Owner, founder, started business 20, 30 years ago, achieved success, now enjoying life. Many family members are involved, key managers are friends, customers are friends, business plays significant role in a local social environment. Throwing money at this business will not get you far because it will represent a significant change for decision-makers. So we have to be creative.
Actually, constructing a win-win for all involved is the most challenging part of a deal-making. So for the sake of time, I will not go into all the tricks, maybe a couple. One is WiseTech equity. If you're talking to a founder, to key managers, to shareholders of the business, we usually find common language on how together we can build more great products, how together we can make more impactful changes to the industry. And that becomes very appealing to decision-makers, to owners of the business, to founders because they would like to be part of this. And I really like when they take shares, WiseTech scrip as a part of consideration. Almost all our deals have scrip as a part of the deal. And I think at least once, one owner of the business did not take any cash, 100% in WiseTech shares.
That's how excited he was about the product roadmap. Another good example is the earnouts. So when we're discussing an opportunity with the business, usually, again, it's about product and what we can do together. And there is an opportunity to take the product and expand into more geographies or have product functionality to be available to larger customers. A lot of WiseTech customers can use this product or functions globally. And all these require usually very deep integration, but more often a native rebuild of the product. And discussions about how this could be done turns out into earnout discussions. So we pretty much agree what needs to be done in order to achieve much more value with the product. And then we add a financial component to this, and we have a deal.
During the due diligence process, we clarify information about the product, about the team, and fine-tune this so it's realistic and it could be delivered straight away. As a result, the win for sellers is they get a higher consideration. For WiseTech, the value is tremendous as we not only get a business, we actually get a business with the product, which is much more valuable to us, with the team, which is much more aligned. Also, once again, I will be talking about founders and key employees of the business. They join us, and during the earnout period, they learn more about WiseTech. They know more how we operate. They know key managers and development teams. This time, they transition into more leadership roles.
They take more responsibility in the company and take us into a geographical expansion or become leaders of the products in the business. And you will be speaking today with Steve Tracey. Where is Steve Tracey? I met Steve in Brussels many years ago, and I was impressed how Steve was talking about the industry. I thought, "Oh, that would be good to have someone like this." Steve joined us as a result of acquisition in Ireland and now managing our customs product in Europe. Carl Marchese will be speaking later today. Carl is now taking his product and expanding into more geographies as a result of the deals that we have. Another good example is Edneia Moura , who joined in Brazil. She was managing a company called Bysoft and now managing our operations in South America.
The experience that these people bring, the knowledge of the industry, you cannot get it. You cannot hire these people. It's not possible. So this is extremely valuable for us. Now, I know I'm out of time, but win for customers of acquired businesses, access to more product features, new product roadmap, value to employees that they have more opportunities, obviously, within the business. They expand into new domain areas, into new geographies. They also have a remuneration equity opportunity, which means they become shareholders of WiseTech, and they benefit from the success of our business. There is also a huge value to WiseTech customers as every dollar that we spend on the acquisition effectively becomes an investment into new product features that customers will benefit from.
Thanks, Vlad. So what we've heard in this session is that we take a product-led approach, not only in the origination phase, but during the acquisition phase in terms of the way that we structure the earnouts around action-oriented goals. And then we have had a chance to talk through our integration process where we have emphasized, again, the product fit, but then also the equally important elements such as culture. I want to thank Vlad and Mark very much for your time on this session today. And we will now actually break for lunch and be returning at 1:35 P.M., where we'll have a short video on our culture and then heading into our WiseTech Way technology development session with Cody and Ian. Thank you all.
And on the count of three. Make a wish. 11/11, make a wish. We brought levity to each other's lives, but there's a lot more to life than that, and I realized that in these last few years. And we just became very different people, and so we had nothing in common overnight. It's very strange that that happens. At WiseTech, our culture is driven by the passion and dedication of our people, united by a shared vision. This is why our continued investment in hiring the right people is so important to us. Our approach of hiring for potential over experience, combined with our ability to empower unique skills and perspectives, allows us to foster a mutually beneficial work environment where our employees feel valued and engaged. As a result, we benefit from a highly skilled, diverse, and tenured workforce with exceptionally low employee turnover.
Approximately 1/3 of our senior management, we've created a work environment that stimulates innovation, questions the status quo, and uses a flat and open hierarchy so that anyone can talk to anybody at any time for any reason. The heart of WiseTech's success is our exceptional team of 3,500 people from more than 70 nationalities, aged from 16 to 75, Earn & Learn program for Year 12 school leavers focuses on attracting more people into tech careers. We want the youngest students to have a very valuable and enriching experience. We aim to provide them with different opportunities. We want them to be exposed to real-world problems. What you learn at university versus what you learn here in the workplace is so incredibly different. As it pays, I feel like I'm learning so much more.
The point of the rotations process is to, first of all, onboard people so that they understand what it is to be at WiseTech. It's about fitting people to teams and teams to people. You need to go and experience different things and try different teams, and the rotation manager's job is to guide you on that journey. We always want to get a great outcome for the business and a great outcome for the individual, and we give people the support that they need to find that home within WiseTech. WiseTech has helped me to be exposed to different challenges, and you know the logistics industry is a complex and constantly evolving field, so I think solving complex problems is quite interesting, I think, for all the software engineers.
I grow so much, and I learned so many things, not only on the technical side but also on the leadership side. We listed on the ASX in 2016, and that really catapulted our growth. I saw that same growth in my career as well. With a company that's grown as fast as we have, you have opportunities to take on roles that you otherwise wouldn't have, responsibilities that are probably a few levels above you. We've successfully hired many talented individuals who may have previously been overlooked or undervalued. By embracing neurodiversity, we continue to foster an inclusive and innovative company culture. Diversity is more than just having or allowing different points of view. A truly diverse workplace means that you're accepting of anybody and everybody. Nobody should be afraid of taking on any role.
I really appreciate that my skills are being nurtured, and not just my technical skills, also skills like communication and leadership, which are critical, and WiseTech has been very supportive of me, as they are to everybody. Continuous improvement of our culture is one of our core values. Overall, it's this combination of such diverse perspectives and a culture that fosters creativity that helps us create a truly innovative solution. Our culture is by design unique. It's the WiseTech Way.
Hi, I'm Cody Love, Head of Productivity and Quality. I joined WiseTech 12 years ago, where I first started in product development, working closely with our CTO, Brett Shearer, and Richard White. For the last eight years, I've been focused on the productivity of our business. That's defining, refining, and implementing the WiseTech Way,
And my name's Ian Larsen. I joined WiseTech in 2018, initially looking after all the CargoWise product and development teams. Now I am Head of Operations. I graduated as a computer programmer quite some time ago, and for the last 40 years, I've been building, selling, implementing, and managing enterprise software. It's honestly an absolute pleasure and a privilege to have learned a new way to do that, what we call the WiseTech Way.
The WiseTech Way is our chosen way of working. It's our systems, our processes, our strategies, our culture. The WiseTech Way is woven into every part of the organization. It's deeply embedded in our DNA.
We have systemized the WiseTech Way such that we can deliver it and implement it in new teams and new businesses in the decades to come as we continue this amazing growth journey.
The tension between speed and quality is something that is in every business. This pressure to deliver something now or quickly versus the pressure to deliver a quality outcome is always in play, and we would say that it is endemic to almost all human endeavor. One of the ways it plays out for us is constantly, for years and years and years, we get customers asking us, "Please deliver this small piece of functionality.
I've got this problem in my business, and I need you to deliver a little piece of functionality so I can solve it." We actually gather those all up, and we look through them, and we look for the ones that are repeated time and time again, the ones that are the deep pain points of our customers, and we take the time instead to build a deeper, much more comprehensive solution that works for all of our customers over the long term. This tension between speed and quality is always going to be with us, and deeply embedded into the WiseTech Way is the understanding of that tension and how to manage it.
At the heart of the WiseTech Way is a deep commitment to invest in the future, to find the best solutions. To get that right, we need to manage the tension between speed and quality.
Our strategy is to focus on the long-term vision. It's something that we commit to every day, month, and year. The WiseTech Way is embedded in every part of our organization. It's in our culture, and one way that we've simplified that is through the mantras that you see over here. The mantras are simple and easy to remember. They are understood by all of our staff members, and they're able to be used to challenge thinking, to bring that thinking towards the organization's cultural true north, and these mantras are used in every team, everywhere across the organization, across all functions.
Slower today, faster forever is actually a really simple concept, and I'm sure that you guys will get this in a heartbeat if you haven't already today. We invest the time now in order to not have to spend the time again and again and again.
One of the ways in which this is evident within WiseTech is the way that we build our software and, in particular, the testing system that we have. For over 20 years, we've been building CargoWise in a particular way, where we write the code and we write tests to ensure that our code works correctly. We've built this sophisticated system for testing all of that, and we started building that 20 years ago. Every time we write new code, we ship it into the testing system along with all the tests, and it tests not just the new code that we've developed, but every single piece of code we've ever developed since we started. That's more than 30 million lines of code now. It's more than one and a half million tests. This is something you cannot do manually anymore.
We are long past the point at which we could test our software manually, and we have saved ourselves millions and millions and millions of hours of effort over the last 20 years that we've been doing this. This is truly an example of slower today, faster forever.
Creative abrasion fuels collaboration. Collaboration between experts with deep knowledge and differing experience is critical to be able to find the best solutions. You see this in integrations when we bring in the intellectual capital from the acquired businesses into our core business and enrich CargoWise. We encourage open and frank communication, collaboration between different people in different functions and scenarios. We want to see people challenging assumptions and working together to find the best solution. This is agreement over control, and it enables creativity to flourish. In product development, engineering leaders and product leaders don't report to each other.
They have a clear purpose and a shared vision, and they use agreement over control in order to execute on it.
Lead with content is one of the most powerful ways that we implement slower today, faster forever in our business. And Gene talked about this to a degree in his talk. When we create a new piece of product, a new piece of functionality, we invest the time then to build all of the material we need. We need marketing material. We need support material. We need implementation material so our partners can implement the product for our customers. We need sales material, and this is what Gene was talking about. All of our demonstrations are prepackaged videos that we keep in a library, and our salespeople don't need to think too hard about how they're going to demonstrate software to our customers.
They simply reach into the library and pull out those pre-recorded videos, package them up, and say, "Here's the functionality that we have in CargoWise. This is how it will solve your problems." And what we can do, what that lead with content does for us, it gives us an incredibly reliable, high-quality delivery of a sales experience time and time and time again.
Anyone can talk to anyone at any time for any reason. We have open and unrestricted lines of communication and the free-flowing exchange of ideas. When information is transmitted up and down a hierarchy, not only does this add delay and add overhead, but the information is easily filtered or distorted. We want every team member to be able to have their maximum impact on the organization and its direction and strategy.
That means that leaders need to be able to engage directly with the staff who are closest to the ground truth, and the functional experts who understand the detail need to be able to impact that vision and direction and how we're going to be able to move forward. From Earn & Learn through to the CEO on the Board, anyone can talk to anyone about anything at any time. Joining an organization the size of WiseTech, especially if you come from a company of 50 or so people, can be intimidating for people. But time and again, I hear people tell me how liberating it is to join an organization where you can just speak to anyone about anything.
If you have a concern, if you have an idea, if you have a suggestion, if you want help on something, you can just speak to the person, and there isn't a worry of if that's appropriate or not because anyone can talk to anyone about anything at any time.
Lead others and manage yourself. For us, this is all about people being the example that they want others to follow. We don't want managers managing managers managing managers, right? That's incredibly bureaucratic. It slows everything down, and it's hugely expensive. We want people to be able to invest in their own capabilities, build their expertise, right? We want people to be able to step up and lead where there's an opportunity to do so. And time and time again, we see people doing it. They step up, they have a crack, and they get well rewarded for doing so.
Lead others and manage yourself is the way people in our business interacting with each other. Click.
Win-win solutions can be unrefusable, implementable offers that scale rapidly with little friction. Our STL model is a win-win between us and our customers. When we build product functionality that enables them to grow, we grow with them. Our approach to acquisitions and integrations is a win-win-win. We win, the acquisition wins, and the staff at both companies win as we can achieve far more together, and our sales strategy is a genuine win-win between us and our customers. We're focused on creating value for them and their organizations. Productivity at the center of everything. We are deeply committed to the systemization and continuous improvement of productivity. When you come and work at WiseTech, you will see our culture all around you.
It is not just something that is on the website and in the onboarding. It's not just something that we're speaking about to you here today. This is something that the vast majority of us live every day. We are always looking for opportunities to improve our processes and practices, and we're talking about step change improvements. We're talking about dramatic changes and trends. We take a challenger mindset, always looking to do better than yesterday. We are not complacent. When you join WiseTech, you'll see processes all around you, from the way that you're onboarded to the way that we approach sales and marketing, our software development lifecycle, the way that we handle eRequests. Everything that we do is systemized and has processes that we can continuously upgrade and improve to make the company better.
In the long run, productivity at the center of everything has set WiseTech up for success at scale. With the gap between us and our closest competitors getting bigger, our moat is getting deeper.
Find the root cause. That rolls incredibly easily off the tongue, but it's actually quite difficult to do. Most people are not interested in spending the time to understand the root cause of a particular issue that's presented to them. They'd much rather stick a Band-Aid on it, solve the problem that's presented to them, and then move quickly on to the next issue. We choose a different path. We take the issues that were presented to us, and we dive in to find the root cause of whatever that issue is, and this presents us with a tremendous opportunity.
When you dive in, you find the root cause, you peel back all the assumptions, you apply a lot of logic. What you find is you develop a deeper, more comprehensive solution, and not just to the initial problem that you were presented with. You end up solving a multitude of related problems in that particular area of the industry. And that enables us to create a solution that other people just don't take the time to build. They don't take the time to think about. And this delivers tremendous value to our customers. I don't have to give you any examples of that here today because we have a bunch of incredibly talented people who are going to be on the stage soon talking about our breakthrough products.
Every single one of those is born of this process where we dive in, find the root cause, and develop a better solution. The whole Credo and all our mantras have been built using that exact same process that Richard White talked about earlier today. He looked deep into what is it that makes a software development company work, what are the fundamental issues, that tension between speed and quality that we talked about earlier, and he's come up with a recipe, the Credo and the mantras that solve a multitude of problems that are endemic to the software development industry. Oops, wrong way. Sorry. There you go.
Culture eats strategy for lunch. Culture will always win out over strategy. Let me give you an example from quality management. We can have a very thorough and comprehensive 13-containment barrier process in our software development lifecycle. We can encourage.
We do that, we focus on three things. We focus on identifying the issue early because a defect that is identified earlier in the process is going to cost exponentially less to fix. We focus on getting formative input from people into the direction, and we focus on the collaboration and upskilling of people around us so we don't just have a single person who understands a domain, but we'll be bringing the team up and building them with us. When we do these things and we have this strategy, that is going to live and die on the strength of the culture. We have a very strong culture, so if we click our fingers and we delete that entire quality management strategy and remove all of the documents and all the processes around reviews, the culture will still be there.
People will be thinking, "I've been working on this for a while. I need some feedback. I need some input because I don't want to get the big iteration at the end." People will be thinking, "I've got this idea, but I think that this person over here might be able to help me make it even better. How am I going to get them into the process?" And people are going to think, "Oh, someone's asked me for help, a rotator, someone from Earn & Learn, someone just graduated high school. I should help that person. I should help upskill them. I should make sure I'm not the only person that understands this. I don't need to hoard my knowledge. I need to make sure that the team grows together." This is because culture. Strategy. We have an incredibly strong culture, and people love it.
This is one of the many reasons why we've managed to have a single-digit staff attrition rate for many years. People love the culture, so they stay around, so they understand it deeper and deeper. They understand the fundamental principles of it, which we're talking to you about today. Because of that, they stay around longer, and that means that they're then there to help the next people understand that culture. And that's what gives us the depth, which is not just Richard and Andrew and the Board. It's not just the senior management team. It's not just the people that work for them, but it is thousands of people at WiseTech that understand and live this culture every day.
And here today is an example of a functional expert in our business, the kind of people that we have and want to be part of WiseTech.
These mantras that we've been talking about just give you a glimpse into the WiseTech Way. There are many other principles and practices that are implemented within the business and used by all of our people every single day. The culture is pervasive throughout the entire company. We have evidence that the WiseTech Way works, and we know we can implement it time and time again in the new teams and the new businesses that join our growth journey in the years and decades to come. Thank you very much. We're going to put some chairs on the stage. I'm just going to put one chair up. Oops.
Okay, thanks. Thanks for that. Now it's time for our Q&A session. Happy to take your questions now that relate to the last few sessions on the WiseTech Way. And we'll start at the front. That was a very quick hand.
This is going to be quick. It's Roger Samuel here from Jefferies. I've got a question about the commercial model from the earlier session before lunch. So back in 2014, you changed the revenue model to STL. So 10 years on, are you thinking about a new revenue model, especially with the new products? Perhaps you can stick with the transaction model, but instead of charging per shipment, you can go one level down, whether it's per container move, so it's by container, or perhaps even more detail, like a line item or an SKU, for example.
Roger, I think you've nicely summarized some of the options available to us. Thank you very much. I think it'd be fair to say that based on what we've done, that we'll take a sort of a value-based approach to that. But Caroline, you'll be well placed to comment.
Yeah, sure. I can expand on that. So I think you mentioned shipments. So shipments is one of the main transactions that our customers conduct on CargoWise. That is true. But actually, some of the other suggestions that you made around line items, actually, that's another transaction charge basis that we already have. So just to give people some color on the STL price list, you've got the seat part, which I think is well understood, and you've got transactions. Transactions isn't just one type. We don't just charge for seats and shipments. We actually have about 100 transaction line items on our current STL price list. One of them is shipments. Another one will be receipt headers in the warehousing space. And we actually also charge per container move depending on which feature you use.
So there is already, I guess, that variability in terms of the charge basis across the STL model. But to address your question around it's 10 years on now, are we thinking about a new model for the new product? What I will say is that the way that we think about the commercial model is not static. Every day, even though we're not coming out with a new model that's called something different, we are thinking about the different ways that we create value for our customer and what's the best way for us to monetize that. And so that's the thought process that's still going on today. Whether that evolves into a new model that's called something else or whether that's just a further iteration of STL, I think just sort of watch this space.
Thank you. Yes, in the middle, please, over there. Thanks.
It's Lucy Huang from UBS. I just have a question in relation to kind of your conversations with customers. And I think you had a really good slide on 30% of your customers' costs are indirect or OpEx-related, and then 70% direct costs. So just wanted to understand how have the conversations evolved, and are customers more now willing to look at kind of your spend with CargoWise as a bigger part of that kind of 70% direct cost picture, or are they still containing their conversations to kind of their OpEx budgets? And yeah, just some color out. That would be great.
Yes. Thanks, Lucy. Gene, you touched on that a little bit earlier, but do you want to expand?
Yeah. The number one thing that customers are looking at is productivity at the center of everything that we talk about.
How can they do more throughput with what they're doing? And I hope I'm answering this correctly for you. They're looking at it in the correlation to the IT spend. What is our operations throughput that we can benefit by spending money on CargoWise? Having said that, I mean, there's been examples of where we can minimize the number of applications that companies are running with a single platform of CargoWise and take that out of it. I think probably the thing that's come to the surface most recently is trying to manage their risk. So Caroline had talked earlier about they actually budget for compliance infractions and for fines and penalties. That's an area now that they're giving more consideration on, not just operational costs, throughput versus IT, but the compliance aspect of conducting business.
Thank you. Next. Yes, down here, please. And then another one down here, Steph, for next.
Yep. Hi. It's Nick Basile from CLSA. Just to ask a question on these mantras, can we talk a little bit about the slower today, faster tomorrow, and how that's influenced past M&A integration and transactions, how you thought about extracting value and growing the business? Thanks. Is there any particular aspect that you're thinking about? I'm thinking about, I mean, the customs strategy. I'm thinking about the U.S. landside. I imagine there's moments in time, as you've learned more about the business, that there's been a decision to be made around how you integrate. Can you give us some sort of raw examples? Because I think it's quite topical given the announcement around container transport, how you've worked through these problems in the past.
Yeah, sure. I might take that in the first instance and open up to the others. I mean, the way that we've gone about integrations over the years hasn't changed hugely. The fundamental, I think I talked earlier, what we're trying to do with integrations is really replicate what we've learned over the sort of 25 to 30 years that we've been developing our model. So we take the same approach with the acquired businesses. We obviously want integrations to happen as quick as we possibly can, but we're not going to sacrifice quality for speed. So we targets. We wait and we make sure that we do things properly. I don't know whether anyone else on the panel. Andrew, you.
Yeah. Nick, thanks for the question there. I mean, related to the customs strategy, a great example is when we have an external change with our customs strategy.
Governments in certain countries are changing their customs systems all the time. And I think a really good example is we bought a business in Germany six years ago, right? And then the German customs authority decided, "Look, we'll change the system." We could have rewritten the German customs system onto CargoWise a whole lot quicker, but it doesn't make sense to do that when the customs authority was changing their system. So we pivoted, slower today, faster forever, and said, "Okay, we'll write it and do the upgrade to CargoWise in concert with the availability for the new customs system in Germany." Now, the long-term value of being able to do that is much, much better. And actually, it's even more complicated than that because the customs authorities don't change the whole system in one go. They tend to change it message by message.
So actually, you get lots of different overlaps. So actually being able to build all the right things to be available at all the right time is really complicated. Thank you.
Yeah, hi. It's Siraj from Citi. Just two questions on the commercial model. The first one, in terms of when you think about the commercial model, where do you think WiseTech's take rate or revenue share of those value savings should be? How do you think about the take rate? It should be 25% of the value, 50% of the value? Just keen to understand how you set that value exchange. And secondly, one of your largest customers seems to be publicly pushing back on price increases.
Just wondering whether you're hitting the limit on that one of those cost buckets. The productivity cost bucket is hitting a limit, and you just need new products to expand the value that you're offering because that's been quite public and topical. Thanks.
Caroline, do you want to talk about how we set prices in the first instance, and then maybe Gene can cover the short?
Sure. Thanks, Siraj, for the question. So I think the first question you asked was around the take-up rate, and is there a certain percentage that we set? So I guess when we think about the pricing for either a new feature or an enhancement that we've done, you're right. We think of it from a value-based perspective, and so we look at how much value is our customer getting from using this feature in dollars.
In terms of a specific take-up rate that we use, there isn't one, right? It really depends on a few factors. It depends on sort of what they're doing now. Is it displacing an already manual process? And then how do you actually put a dollar figure on that? Or are there competitors in the space? And is it highly competitive? So there's a number of factors there that we think about, as well as how does our product stack up against what exists today. What I will say is that in terms of the take-up rate, we want to make sure that we're charging a price where it makes sense for the customer and where there is still a strong value proposition.
So if they're saving, I don't know, if they're saving something like AUD 10,000, as an example, on something that we're doing, then it probably makes sense for us to have a value proposition that's comparatively low compared to AUD 10,000. So it makes it a no-brainer. And that's how we think about pricing for all of our features. We want to make sure that it's at a price point where it's not a barrier to adoption. I think.
Gene, do you want to cover a little bit? Excuse me. Sorry. Just on the pushback here.
Yes. No, I don't think so. When we take a look at CargoWise and how people are using it, maybe the key is allowing them to bring more and more value out of how somebody's using CargoWise. And we also talk about, as we're extending CargoWise and enhancing it, it's a very holistic approach.
So when we look across the customer base as a whole, I don't think that's a point. No one likes to pay any price increase. But the throughput that we're getting for CargoWise hasn't been the question. And possibly, as we continue to extend CargoWise, the elements of what we're extending will allow them to bring a lot more value out of what they're doing.
Thank you. I have a question down here.
Mark, can I just interrupt? We have a question from online.
Oh, yeah. Hold on. I'll come back to you.
Lindsay Sherman from CIML asks, "Based on the earnings update at the AGM, it is clear that you are expecting fast uptake and monetization of container optimization. Can you please talk through the drivers of the fast growth, which has a material impact on company earnings in the first year of release?"
Yeah, sure. Andrew, are you happy to cover that in this session, or should we wait till the?
Yeah, look, let's talk about it here. I think, obviously, Container Transport Optimization will have a rollout schedule. I think when we updated market with FY 2024 results and we provided our guidance for FY 2025, we talked through the rollout schedule. It was going to be the East Coast of Australia first, and then the West Coast of the U.S., and then on from there. Obviously, we've adjusted the timing of that with the announcement and the updated guidance that we provided at the AGM week last Friday. So the rollout schedule is still there.
Whether we see all that coming through in the second half of this year or it continues to allow us to provide future growth into future years at the same rates that we've seen, I think it's a very, very important product for us sort of moving forward. Thanks.
We've just got one down here.
Hi. Roy van Keulen from Morningstar. Following on the earlier questions on take rate and value capture, I think, Caroline, you mentioned or you pointed out that attrition is very low for the sector. But maybe looking on the other side, win rates.
Gene, maybe you could comment on what kind of win rates you have when it comes to other SaaS businesses rather than in-house solutions, win rates, and maybe how those have changed over the last, say, five years or just general commentary around how win rates are looking and how they've been trending.
As far as the win rate versus head-to-head competition of another SaaS solution, I'm less concerned about that than I have been in the past. I mean, the gap between CargoWise and the competition continues to widen. I can't think of too many incidents where we've lost to a competitive offering. It's more likely we lose to a do-nothing. We're not willing to spend the money and go through a digital transformation at this point. We're not perfect when we have lost in the past.
It's just a matter of time before that customer comes back and we start having another engagement on CargoWise, so I think the biggest challenge, as I said earlier, is driving people to market and getting them to invest in any digital transformation.
Thanks. Question over there.
Yeah. Sorry. Garry Sherriff just coming through from RBC. Just a question on pricing. It's funny. We sat with quite a decent-sized customer, and we were fortunate enough to look at the CargoWise software. One thing that comes up from a pricing perspective is that they showed us monthly invoicing, and they very much see value, obviously, in the broader platform. But there are certain things that I guess rub them the wrong way, and it's just little things around being charged monthly for printer access or data movements into or out of the system or actual individual printing of pages.
I just wonder, how do you factor in and sense-check some of those price changes? I mean, there's a lot of value in the platform, but little things like that, it can really get to a point where you have some level of view of being egregious pricing, price gouging from some of your customers. How do you sense-check some of those features in terms of price increases? Are you thinking in terms of how we set some of those prices, or is it more about the pushback we get from customers during sales processes? Yeah. I mean, I don't know. Just sitting there and thinking about being charged for individual printing from the platform or being charged a monthly price just to have the ability to print.
I guess from my perspective, and a lot of customers are probably sitting there going, "It feels a little egregious."
Caroline, do you?
I'll start, and then I'll throw to you, Gene. So I think with transactional charging, I guess one of the slight downsides of that is that when customers receive their invoice, it's very clear to them what they're being charged for, right? So on one hand, it's really good to have that transparency. On the other hand, it kind of gives them the ability to look at each charge and really scrutinize what are the value I'm getting from here. With some of the features, such as in Landside or in Forwarding or in Customs, I think the value is clear, so there's probably no issues there.
With ones such as printing charges, I guess they would ask, "Well, why am I being charged for this?" And I think for us, one of the things that we do is I guess we have a long process behind each value that we provide. So whether it's something that is arguably more valuable, such as a shipment or a booking versus a printing transaction, that still actually requires smarts and compute and engineering to actually make that happen. In saying that, we do actually think about it when we're thinking about the price list. There are features that we don't charge transactionally for. You just get unlimited access for it as part of paying your seat fee. And so that'll be access to HR modules, which are actually critical to the running of our customers' businesses.
And we don't charge for all aspects of that on a transactional basis. It's actually just included in the seat fee. So I guess the answer to it is that yes, I think there are some transactions that may, on the surface, appear more valuable than others, but everyone requires effort and development effort from us to deliver. We are still balancing that discussion internally around what needs to go in the seat fee and what needs to be charged a discrete transactional fee.
Gene, do you get any sort of specific pushback on these small charges?
Some of it is not necessarily value as much as behavior shaping. What if we don't charge for print drivers? You wake up one day, and they've uploaded thousands of print drivers that they don't use anymore.
When they do see that invoice every month and they take a look at their print drivers, they rationalize what the value is to them, and from an infrastructure standpoint, then we're maintaining fewer print drivers. That's just one example there. Part of it is value creation. Part of it is behavior shaping.
Thanks, Gene.
Anything else from the room? Yes, another one down here.
Yeah, just to follow up to that point, I thought that was quite interesting. What is the value behind creating a pricing model that is designed to do that behavior shaping to the broader business? Can you expand on that point?
Sure. Gene, I mean, I guess this is probably around standardization, isn't it, and it goes back to the whole way that we build standard product that everyone uses, but.
Well, can you give me the question again? So what?
It was about what's the value of using price drivers. And I suppose the same would apply to behavioral discounts because it's another side of pricing to change the way that people behave and use the system.
Okay. Now, I need to think of another example. But everything that we're doing is basically, and I'm sorry if I'm talking in circles here, but looking for the win-win. The easiest example is the discounts. And we talked about that earlier. Everybody wants a discount. I want another 5%. What do we want out of that that can help shape that behavior? Part of it is collections and prepayments. So everyone wants a discount. We want preferred terms.
We put together a mechanism of, "You're going to accept our terms, but here's a discount in order to work towards that."
Probably another example might be how we go about services fees or paying for product development. Do you want to speak a little bit about that?
Sure, a little bit. I mean, one thing, of course, is that no matter what pricing model you put up in front of customers, some people are going to disagree. There's always going to be that situation no matter what you do. One of the things we get is, like I said in my talk, many, many requests to enhance the product. And what we do is we offer customers the opportunity to advance that development on our roadmap and pay a fee to have us build that solution sooner than we otherwise would have.
But still, we're always looking to ensure that what we build is a comprehensive solution that'll work for every single customer. We do not build any software that is exclusive and just for one customer at all. And sometimes that takes us a bit longer to do it. But if we get a payment, we will advance it on the roadmap and put it ahead of other things that we would otherwise build.
Yeah. And in terms of the way we charge them as well, I mean, that discourages some customers from even asking, doesn't it?
It does. It does. And at times, we've looked at how much demand we have for that work, and we've increased the price in order to slow down the demand. That's exactly what we've done.
Just sort of add in here. Nick, we've chatted about this before, but there's much more layers of productivity in our system that our customers don't all use, right? So we're giving them tools and pieces of development work that drive efficiency and productivity into their processes that they can continue to enable within their businesses. They do that through the CargoWise Certified Professionals that are in their business, the 38,000 people that are trained that we talked about earlier to adopt some of those productivity to be able to take more labor out and maybe take out costs that's related to printing documents and turn to digital documents, which is another one of our six key development priorities. Anything else from the room? No? Okay. Well, thank you very much. Thanks, panelists. Appreciate your time. We'll now move to the next product session. I think, Caroline, you're hosting this one.
I think Angela and then Brett. Yep.
[audio distortion].
Yeah. That's what I said. And then Angela. Great. Okay. CargoWise Next. So CargoWise Next is our fourth-generation web-enabled platform that will deliver to customers a whole suite of major new features and functions. Today, we'll hear from two long-standing members of WiseTech who, with their teams, have been key to allowing us to deliver CargoWise Next. Brett, you're our CTO and Chief Architect. You're one of the original employees that started with Maree and Richard many, many years ago. Could you please tell us about how your journey at WiseTech started and how that's evolved to the role you have today?
Sure. I started with the organization in 1994. It was quite a long time ago now. More than half of my life has been spent with WiseTech and certainly almost all of my professional career. We started by bringing a product from New Zealand called DataHawk, which we rewrote for the Australian market and then took the CMR, Message Reengineering for Australian Customs, to then launch our new Odyssey product back in 2001. I've been involved in writing the Australian, New Zealand, U.S., and British customs systems. And I've had a real passion for making software that's fast, reliable, and scalable. And so that's what I've been doing for the last 20 years or so, really focusing on growing the software that we build and making sure that the capability meets the market.
Great. Thank you, Brett. And Angela, you have an amazing story at WiseTech. And actually, someone gave me a very interest ing data point about you.
I think you were actually the first product manager that we had at WiseTech. So is that?
That's correct. That's correct. So I'm Angela Gadaev, and I joined WiseTech nearly 20 years ago. In my past, I was head of information services in a shipping company. And I saw the opportunities at WiseTech, and I decided to switch my career from being a tech expert in a logistics company to become a logistics expert in a t ech company. And that's absolutely right. I was the first product manager at WiseTech when the company was just 40 people strong. And it's really amazing to see that most of us are still here. Today, my title, my role is Head of International Logistics Product Portfolio. This portfolio now has about 300 people in 13 countries.
The team looks after our flagship product, freight forwarding, as well as order management, shipping, visibility, automation, and tracking of containers, shipments, vessels, flights, as well as rates, quotations, tariffs, contracts, and integrations to ocean carriers, airlines, and port authorities. So practically all aspects of international logistics.
Thanks, Ange. So, Brett, maybe let's start off with explaining the differences between CargoWise One and CargoWise Next, I guess more from a technical and infrastructure perspective. Could you give us a couple of the key points there?
Certainly. CargoWise One is delivered, and CargoWise Next also in an optional mode, using a technology called RDP, Remote Desktop Protocol. I'm sure during COVID, almost all of us were working from home at some point and were RDPing or connecting into the office. So that technology is well used and well understood, but it does present some security issues.
It's better to not use RDP unless you absolutely need to. We're taking that out of the platform. We have a layer of business layer. Then we have the presentation layer. That presentation layer, we've been able to completely reuse but change how it actually gets delivered to the customer. That increases our security profile within our CargoWise Cloud. It has also increased the performance of the product. It's got a snappier user interface. Because we've reused that layer, the interface is the same. It's completely refreshed, but the customer doesn't actually notice anything different apart from it being faster and the more secure that they can't see.
Right. Then just to go a bit deeper on the removal of that RDP layer, why is that important? I guess what's the benefit to our customers?
I know you engage directly with a number of our large customers. Can you tell us a bit more about that?
So this is a feature that I've actually been chased about all year. So it's great that we're here now. So I have one less call every month. The removal of that layer represents a cost for our customers. So they're paying for either Citrix or RDP licenses. But it also improves that security or removes that concern around having some software that's running inside your premise that should actually be pushed further out. So they're the main areas that that new technology actually really helps with.
Yep. And actually, internally at WiseTech as well, we've actually been using CargoWise Next ourselves. Can you just give us some feedback that you've received from the team around what that's been like?
What we've done is we've been running in a hybrid mode. So we've had the option for our staff to choose to go with CargoWise non-RDP or CargoWise RDP. And what we saw at the beginning was that people stayed in RDP in the early days. And then they started to move across and have a little bit of a look. And then they went back. And then they came across and they stayed. And over the last month or so, we've been doing some finalized testing. And we pushed our user base back into RDP. And there were actually complaints. People didn't like it anymore. It didn't feel as snappy. It wasn't as responsive. And so when we took them back into the new non-RDP version, those complaints, I guess, died away. And everyone's actually really happy with the performance of the product now.
Right. And I guess that really kind of sets us up for the feedback that we're expecting to receive from customers when they get their hands on Next and, again, get to experience that snappier interface than what they might currently have.
That's right. Because it's about productivity in the end. So getting the software to run faster for our users and for our customers' users is really important.
Okay. And maybe just a broader question, not so much on CargoWise Next, but I think it's a question that we get often and something that people want to know. What is the code base that CargoWise is written on?
So when we first rewrote in 2001, we started in C#, .NET version 1.0. And it was before it was actually released to the market. So we looked and we were going to go Java or .NET.
At that point, we chose .NET. We have a SQL Server backend, typically. We also use S3 for object storage. We use Lucene indexing, which is Elasticsearch at scale. And so we've used a variety of technologies there. The ones that suit, we minimize the number of changes that we actually have, though. So it's quite a stable platform for our customers. And it's an easy rollout. So the language that we're moving to now is C#, .NET 8. And that's a big push for our modernization team.
And maybe just sort of expanding on that a little bit, Brett. You spoke in your intro about how you're focused on making our products work faster, more efficient.
But then we've also just touched on the elements of reliability and stability of our platform, which for our customers is obviously of the utmost importance, given that it's the real kind of heartbeat to their operations. When we're making decisions around the technical aspects and the infrastructure of our platform, how do we think about that in terms of reliability and scalability?
So for our largest self-hosted customers, predictability and maintainability are very important. We don't bring out new features that rely on replacing hardware stack or software components within their premise. So it's with a lot of consideration and a lot of planning and understanding of what sort of impacts those changes will have. So what we typically do is we'll bring in a new requirement, but it becomes optional for quite a few years.
Customers can move to that as they see fit when they see the business benefit or when they see the cost that they can or the cost opportunity there to realize. That gives our customers the faith that we're not going to do any sort of sudden moves and push them into something that they don't want to do. Sometimes it takes a while for people to realize that benefit. We all do get there in the end.
Right. I guess the careful and considered decisions that we make to not just sort of roll out something new every quarter, that's something that our customers, I guess, must appreciate, right? T here' s not new requirements that we have.
That's right. We don't want to send them in a retraining spiral. We don't want to make them do regression testing for months on end.
And so it's really important that CargoWise Next extends the reach of CargoWise One without alienating the customers that have already spent a lot of money and a lot of time training and understanding and building on the system that they know and love.
Fantastic. Thanks, Brett. So I guess now we've gone through the technical aspects of CargoWise Next. We'll now move to talking about the major new product features that will be available in CargoWise Next. Angela, maybe let's start with CargoWise Neo. It's something that we have heard about before. Can you tell us what are the pain points that we're trying to solve with Neo?
Absolutely. So imagine a day of freight forwarder.
Freight forwarders get inundated with phone calls and emails asking to request a rate, place a booking, chase the status of a shipment, kind of like arrival date, multiple times a day, are we there yet sort of thing, so that's quite overwhelming for the forwarder. Then there are some platforms that allow either some visibility or ability to book cargo. However, they're not native to CargoWise, and it means that freight forwarders need to switch between the platforms. And manual data entry is unavoidable here, and of course, manual data entry is accuracy. It's delay, inaccuracy of data, or delays that are caused by it, and of course, delay or incorrect information provided to forwarding customers could cause loss of business opportunity.
So with CargoWise Neo, we provided customers of our customers with a modern, interactive, secure, real-time platform where cargo owners can place bookings, request a quote, or check one of our flexible rating options. They can check the status of their customs clearance declaration. They can look at their warehouse inventory. And they have full visibility of a shipment from start to end. And we provide interactive maps and alerts if something is not going as expected. So this self-service portal puts customers in control of their own shipments. This platform can also be white-labeled. And forwarders can put it in their own websites, creating a consistent experience for their customers. And of course, this is a productivity platform for all the parties involved. So customers are more productive because they have all the answers in their hands. And freight forwarders have more capacity to actually move more cargo.
Thanks, Angela. And we've actually got some customers that have got early access to Neo as well. Can you give us a bit of feedback from those customers?
That's right. So we have about 300 customers globally piloting Neo platform. And their response is absolutely overwhelming. The platform, it looks amazing. It's performant. And it's in real time. So it's live and accessible from an ywhere.
Fantastic. If we move now to Advanced Order Manager, could you sort of break down for us what are the pain points that we're trying to solve with this feature?
Sure. So as you know, freight forwarders play a crucial role in supply chain management. They're responsible for smooth cargo movement from origin to destination. They liaise with shipping lines, airlines, brokers, warehouses to facilitate the entire movement of cargo.
They can also get engaged in the supply chain management process by buyers and suppliers of manufactured goods. So this process is quite comprehensive and time-consuming. So buyers place their purchase orders to the suppliers through freight forwarder. Right? Forwarder relays these orders to the supplier. And the supplier can either accept this order or make changes, maybe quantities or dates. And this information goes back to the forwarder, back to the buyer, and so forth. So forwarders find themselves in the middle of the negotiation process. Right? And we're talking hundreds of orders for hundreds of customers for thousands of products. So this manual process is highly unproductive, inefficient, and again, prone to errors and delays. So what we've built with our Advanced Order Manager, we've built portals. So access points to all supply chain players. So there is a portal for buyers.
There is a portal for suppliers, another portal for manufacturers, and another one for freight forwarders. And all of them access the same underlying CargoWise database. Right? All of these parties operate on the same platform but have their own viewpoint. So now buyers can place orders to suppliers. Suppliers get alerted about the order. If there are any changes to the order that need to be made, automatic notification goes to the buyer. Forwarders have the bird's eye view on this process because it's in their CargoWise system. And they can action accordingly. So if there are any issues, they can mitigate them earlier. If there are any delays or any queries or any help that customers require, maybe with compliance or documentary requirements, forwarders can step in. So all the parties have this visibility, real-time visibility and access. Additionally, forwarders can see the supply of orders coming through.
And they can plan ahead. So they can pre-book cargo with shipping lines, airlines. They can put on standby landside providers, brokers, warehouses. So when orders are ready to move, our freight forwarders are ready to go with the entire supply chain and logistics execution chain. So practically, this product makes the whole supply chain work in unison, creating productivity, efficiency, and high-quality product for the customers. And for forwarders, it results in, again, productivity, efficiency increases, and spare capacity that forwarders have. They can now move more orders or sign up more customers.
And Advanced Order Manager is actually a really good example of a development process where we actually worked very closely with, we won't name names, but one of our largest global freight forwarders in actually helping to develop this over many years.
Yes. It is a few-year process.
We work with one of our largest freight forwarders on this process. And we learned a lot about this logistics supply chain process. And they've learned a lot from us. And it's a win-win situation. And we have customers piloting it. It's another very anticipated product in the industry.
Fantastic. If we move now to Contracts and Allocation , could you, again, help us understand what are the pain points that we're trying to solve with this module?
Right. So this product is about management of supply and demand. So as we learned from order managers, freight forwarders negotiate with carriers, with shipping lines, airlines. They negotiate contracts. So there could be a spot quote, for example, spot booking. So booking that is made in a spur of the moment, instantaNeous, ad hoc. And there is no guarantee that there is either capacity available or good price available.
Forwarders negotiate contracts with their suppliers, with shipping lines, airlines. And these contracts are based on price but also on capacity over a period of time. Let me give you an example of a contract. A forwarder might ask a shipping line to provide them a good rate for moving, let's say, 10 containers a week for the next six months. Right? Carriers see that there is a continuous supply of cargo. And they usually provide a good price offer to the forwarder. This is all very well. But now think about the number of these contracts and management of these contracts. We're talking, again, hundreds of contracts for hundreds of customers with hundreds of carriers for thousands of trade lanes. Even capturing these contracts is quite complicated.
And if there are systems that allow capturing these contracts, they don't provide contract management in real time. So our Contract and Allocation Management allows these contracts to be captured in CargoWise easily, electronically, or manually through wizards that we provided created recurring patterns for the contract. And then we manage these contracts in CargoWise in real time for our customers. So the moment a booking is placed to a carrier against a contract, the contractual volumes get recalculated. And forwarder immediately sees the performance of the contract. So they see committed volume. They see utilized capacity and remaining capacity. And they can see this across multiple contracts on the same dashboard. And even further, we recommend, so CargoWise recommends forwarders to select carrier with contractual commitments.
Because if forwarder, like local optima that we've been talking about, if a forwarder in a local office might strike a better deal for one-off shipments, right, the contract quantity might not be met. And forwarders will be penalized. Right? So instead, we recommend the best possible contracts for individual jobs. We even allow forwarders to compare, "What if I put this job to a contract simulation? What if I put my job on this contract or on this contract? How will my performance work?" And of course, these contracts help the industry to balance their supply and demand. Because here we see that carriers are happy to provide this commitment, this contract, if forwarders guarantee cargo in the ports where there is excess capacity, or if forwarders guarantee cargo off peak period when, again, carriers have excessive capacity.
In reverse, carriers commit to provide capacity to forwarders during peak period. It's a win-win situation for all the parties involved. This process is highly efficient. It's automated. One of our another largest forwarder working with us on this product, they actually reported a 74% increase in efficiency in just using this platform for a few weeks in pilot.
Amazing. Yeah. I think that really just speaks for itself. I think it's really powerful what that advanced visibility can do for a customer in terms of allowing them the space to optimize the movement of their freight with all the parties that they work with.
If we turn now to Master and House Electronic Bills of Lading , again, could you sort of describe for us what's happening in the industry at the moment and what are the pain points that our customers are currently experiencing in this area?
Right, so we're going to talk about digital documents here, but let me take you on a time travel with me. Imagine I'm a cargo owner in 1450. Okay? We're starting early, 600 years ago. Yep, I take my goods to the ship, and in exchange, I receive a bill of lading. It's a piece of paper that states who the cargo is from, what type of goods it is, and where it's going to. Now, fast forward to 2024. The world around us has changed, but the industry, the process that surrounds bill of lading paper, remains pretty much the same.
So the process looks approximately like that. A carrier prints a bill of lading, original bill of lading, stamps and signs it. And then a courier is sent from a freight forwarder office or shipper's office to pick up this piece of paper, take it to the office. And then it's transferred internationally, usually by air couriers, to the destination where it gets presented, again, physically to the banks and then surrendered at carrier's office at destination. So you can see there are a lot of things that go wrong with this process. So first of all, it's a piece of paper. It can get damaged, lost, tampered with. Right? So that's huge inefficiency and which will cause cargo delays. Then there is paper. 12 major carriers print about 12 million bills of lading a year. Right?
But we're talking hundreds of shipping lines and thousands of non-vessel operating carriers and thousands of freight forwarders who also print original bills, so master bills or house bills. It depends where they are in the supply chain. So it's paper. Right? It's a waste of paper here. And then, of course, there are courier costs. So it's quite expensive. It's inefficient. It's traffic on the road. And the whole process can be optimized. And the industry, DCSA and other industry bodies are trying to encourage the industry to move towards digital bills of lading, electronic original bills of lading. And we have a solution for it. We've built together with our acquisition, Bolero, we've built a fully integrated electronic bill of lading process into CargoWise's system. So today, freight forwarder, as a part of their booking, can request an electronic original bill of lading from a carrier.
The moment an electronic original bill is issued by the carrier, it becomes visible in the forwarder's CargoWise system. This bill can then be transferred to the next party in the supply chain, to the new title holder, securely. So the forwarder does not have this document anymore, the original. They have a copy. They have a full audit trail. They know where the document is and the whole history of how it's traveled in its own document chain. Right? This process is highly secure because it goes through Bolero's bank-grade security network, which is trusted and used by dozens of international trade finance banks. This process is highly efficient. It takes minutes to get the bill through the entire supply chain. Of course, it's fantastic for the environment because it reduces greenhouse gas emissions associated with paper production, printing, and moving this paper around the world.
And of course, it's an enormous cost saver for the industry.
Exactly. So I think just to sort of put some numbers to what you're talking about so people understand sort of the situation at play. So you mentioned the DCSA. So that's the Digital Container Shipping Association. And they have an initiative where nine of the ocean carriers have committed to converting 50% of their original bills to digital within five years and 100% by 2030. So it's through the use of features such as master and house e-bills of lading that's actually going to help them get there. So carriers are committing to this cause. And they're now looking for solutions that will help them deliver it.
In terms of the cost of switching from physical to digital bills of lading, Angela mentioned that there's that transport cost of actually moving the physical bills of lading around the world. In terms of dollars, if this switches from a physical to a digital aspect, then we're talking about savings somewhere in the realm of $6.5 billion to the stakeholders that incur these costs today. So I think there's some really big numbers here in terms of the parties that would benefit from using this. Now, I guess just talking about sort of the inefficiencies and waste that go along with having to move paper bills, we talk about. Now, one of the new features on CargoWise Next is the greenhouse gas emissions calculator.
Obviously, with the rising topic of ESG and the fact that all businesses today have a corporate and social responsibility to ensure that they can track their greenhouse gas emissions for themselves but also all of their stakeholders, this is obviously a super exciting product for us. Angela, would you mind telling us a bit more about this?
Absolutely. Today, the logistics industry contributes 8% of global greenhouse gas emissions. The industry is on the mission to reduce this figure to net zero by 2050. However, it's expected that transportation needs will double by 2050. Therefore, we need to act now. We have inbuilt a carbon emission calculator directly into CargoWise operational jobs. I'm just stopping here for a moment. This is a fully embedded process. There is no configuration required from freight forwarders whatsoever. The calculator just exists within forwarding jobs.
As early as quotation is requested by the freight forwarder's customer, the quotation can be generated containing pricing, routing options, and as well as greenhouse gas emission estimates so the customer's customer could make a greener choice. When quotation is approved and booking starts moving, during the booking, we know more supply chain players in this particular shipment. Our calculators recalculate automatically carbon emission to a more accurate figure in the background live. When cargo starts moving and we know geofencing of every facility and supply chain players and transport modes that participate in all the segments, we calculate shipment carbon emission very accurately. It happens in real time in the background. What we do in the background of the process, we combine all smallest segments.
So we break shipment into the smallest segments of supply chain for all transport modes: air, ocean, rail, road, inland waterways. And we calculate carbon emission for each smallest segment. And then we combine it together for shipment. So forwarders can see the emission of an entire shipment and can compare and produce reports that are required by regulatory authorities of some countries. This information is also visible in the Neo platform for the customer's customers. And forwarders can compare their vendors, their emission of individual legs of the transportation. And because it's real time, forwarders can actually choose to switch a supplier quickly if they find that it's not the most optimal option or option with the highest footprints. So again, it's highly efficient. It's built into the system. And it's great for our customers, for their customers, for their vendors, and for our environment.
And I know from sort of chatting to you in the office that we've got a number of customers that are actually using this in pilot at the moment. Can you give us just a quick insight into what the feedback has been.
Right. So there are about 70 customers who piloted this product. And the feedback was that it's too easy. It's there. It's available. Some customers try to integrate with third-party calculators. And it's not an easy process to build this supply chain to calculate correctly all the cargo moves. And it took some of the customers months or even years to try to get accurate calculation. So today, it's available in CargoWise at their fingertips.
Fantastic. And just before we give you a chance to take a break, can you talk to us about Market Intelligence and Analytics ? I guess, how is this helping our customers?
Right. This product is about big data helping freight forwarders with their decision-making. As we discussed earlier, forwarders negotiate contracts with carriers. How these contracts are negotiated? They're trying to pick the best carrier possible for their future logistics needs. What does best carrier mean? It could be best on the price, like cheapest. It could be fastest transit time. It could be greenest. It could be best-performing carrier. This performance of the carriers is generally measured by the industry by carrier schedule reliability. It means how reliable carriers are with their estimated dates, estimated departures and arrivals versus actual departures and arrivals. This metric is very good. This is not sufficient. Let me give you just a very simple example. I've got my tickets. I go to the airport. I can see that my flight departs on time.
I'm trying to check in to find out that there is no seat for me, but the flight departs on time. The airline performs fantastically, but not in my case because I'm still on the ground, and the same happens in the logistics industry. Cargo can get offloaded at the origin port or transshipment port, or booking might not be accepted, or booking could be accepted and then canceled later or changed the route, so our Market Intelligence and Analytics reports, while providing all the standard industry measurements, compare these measurements or benchmark industry management to individual freight forwarders' performance, so we still have carrier schedule reliability reports. We also have port performance reports, which show how fast ports are processing cargo, if there are any congestions, and so forth. We also provide reports on trade market flows, imports and exports.
Forwarders can benchmark these reports against their own performance. Then there are some efficiency reports. How efficient carriers are with their booking process. How quickly they confirm bookings, how many bookings get offloaded, and so forth. Even efficiencies for the freight forwarders themselves, how many bookings they do electronically versus manual and where they can actually improve their efficiency and productivity by going electronic. It's industry benchmark against forwarders' own performance. This is quite unique. How do we do this? Our market intelligence reports are based on big data analytics. Our proprietary data sets aggregate every critical point, every movement of every container, every shipment, every vessel, and every flight that goes through CargoWise Network, WiseTech Network, I should say. Our data sets are unprecedented in scope and size. They are timely. They're very up to date.
How do we get this information, so we have good relationships with ocean carriers, with airlines? We get their schedules information. We get movement information. We also work with satellite systems, flight avionics, terrestrials, so we combine all this information together. We normalize, cleanse, deduplicate, and this information is provided in some of our products like Container Automation , Cargo Visibility , Air Waybill Automation , Route Visualizers , so these interactive maps, and also now with Market Intelligence and Analytic s reports. So having this information, forwarders can benchmark their own performance against the rest of the industry, and they can go to negotiation meetings with carriers equipped not only with intuition and experience, as it normally happens, but with real data. And they can either negotiate better deals or request better performance or switch carriers altogether.
Thanks, Angela. It sounds very exciting.
And I think those five that you spoke about are just five of some of the 11 that we're actually releasing as part of the major new product features in Next. So we've heard about the technical aspects of CargoWise Next. And we've obviously heard about some of the major new product features. I guess everyone's wondering, how do we get Next into the hands of our customers and potential customers? Brett, so we've heard Richard talk before about this not being the first time. Right? We've done so we've obviously gone from Deliverance to ediEnterprise , ediEnterprise to CargoWise One. And you were involved in all of those. Could you kind of tell us what we've learned from those rollouts and how will we apply that with Next?
So customers don't like disruption primarily.
They want to make sure that they keep their uptime high and their inconvenience low. When we first worked on doing the ediEnterprise to CargoWise One upgrade, one of our air freight operators tried the upgrade. And it was going to take 27 hours. There were years of development, years of calendar development, hundreds of years of people. And the amount of changes going through the system were quite enormous. That gave us the opportunity to improve our ability in writing upgrades. And we brought that down to three hours. So from over a day into really less than half of a shift. So that technology has continued to be improved over the last decade. We've honed that so much so now that the upgrades can run through typically in under an hour for our largest customers. So that's an hour every three months.
If they take an upgrade every month, then it's even shorter. So that technology stays in the product. CargoWise One to CargoWise Next is no exception. As I said, we try and keep as much of that product running as we can. And we move it forward. So the customers won't see any difference in the normal upgrade process. For any normal CargoWise One upgrade compared to a CargoWise One to CargoWise Next, the icon will change. They'll click through. And then they'll be into those familiar screens that they know, plus all of the new features.
Great. Thanks a lot, Brett. So just in summary, we've just heard a run-through on CargoWise Next in terms of the improved technical infrastructure, the fact that it's got an increased security profile due to the removal of the RDP layer, which will also help customers in terms of reducing their licensing costs.
We've heard from Angela about some of the very exciting major new product features that will help customers optimize and further enhance their operations. We'll now watch a short video from two of our major customers, Kuehne + Nagel and Bolloré, and then return shortly after for the next product session on Global Customs, ComplianceWise, and Warehousing. Thank you.
One of the main challenges in the customs brokerage business is to meet the demands of customers. There's a quest for more visibility and transparency in the supply chain while at the same time also managing the so-called regulatory changes, which is putting a certain burden on businesses, which we try to unravel and make visible to customers for their own benefit. The EU, as a customs union, has specific problems which other countries don't have. 27 member states, each of them has their own customs administration and their own IT systems.
What the Commission is trying to achieve with its reform proposal is more commonality inside the EU so that instead of having to deal with 27 different national systems, there will be one system. So that is a certain massive proposal. The changes that will come from the EU will be to have this unified European system. CargoWise will provide the standardized system with the same fields and the same understanding on how to create a customs declaration inside of CargoWise. WiseTech's approach to developing customs application software is very different to our competitors. We have a global aspiration, and we will provide Global Customs, but we've taken a regional approach. We've acquired key foothold acquisitions. We've acquired significant experience in relation to managing customs interfaces and managing customs systems.
The local understanding and knowledge that we have with our product team and with our acquisitions have really helped us in amplifying and accelerating our development. So CargoWise plays a pivotal role in creating what we call a one customs system that has a business and also a compliance perspective, which means in principle, compliance is at the core of what we're doing. So being non-compliant is non-negotiable. While we use customs CargoWise system as a one platform, which then is an enabler to not only be compliant but also be more efficient towards our customers, which benefits both sides. It's really visibility on what's going on at the moment. And it's also fast to get all the data. It's like you have a very global view of what's going on.
We've introduced CargoWise as a one customs system in selected countries in Europe, not on a big bang scale, but on a country-by-country basis. It's very important to be locally embedded with relevant bodies and customers because the nuances of any WTO, WCO regulation are broken down on a local level. We aspire, with the help of CargoWise, to create an environment where customers, irrespective of where they are located, especially those customers which have regional or global reach, can expect the same consistency in our operations, whether you're in the U.S., North America, Europe, Middle East, Africa, or Asia Pacific, one customs stop, one customer experience, which helps the customer from an executional perspective but also unravels opportunities, so-called untapped duty optimization opportunities on that basis.
All righty. Welcome to the session on Global Customs, ComplianceWise, and Warehousing.
In this session, we're going to take a deeper dive into these three areas and how customers can utilize these features to centralize their trade operations and increase the efficiency of their current operations. Expert Steve Tracey, so you are our general manager for the customs product in the EU. And you actually joined our business through an acquisition, through an Irish acquisition, as part of our foothold strategy. Could you give us a bit of background on sort of your time in logistics, how you came to join WiseTech, and how that's evolved into your role today?
Sure, Caroline. I'm deeply passionate about technology and committed to providing customer value. I started my journey in supply chain logistics in 1996. During those 28 years, I've seen a lot of change. We've managed a lot of change.
We've had the year 2000 bug that came and went, the introduction of a new currency, the euro, which was quite significant, the global financial crisis, and a very seismic shock from a customs perspective, which has been Brexit. I was managing director, as you said, of Customs Matters. And we're Irish and U.K.-based software provider. And in 2018, as Vlad mentioned earlier, I met Vlad at a conference. And I was deeply impressed with both Vlad, Richard, and indeed engaging with Mark on the ambition we have, as I still am really, really impressed to be the operating system for global logistics. And we became part of WiseTech Global in 2018. I initially started as managing director for Irish operations, looking after Irish operations, and then regional manager for our acquisitions. And a s you said, I'm now general manager for a European customs product. And it's really exciting.
We have nearly half a millennium of experience within the customs product team. There's three really important aspects of customs. That is the product people have local knowledge of what actually happens. I'll talk about that in due course. They have also managed relationships with the customs authorities. They have good relationships with their customers.
Fantastic. Thank you. We've got Imraan Khan, who is our Product Portfolio Leader for Enterprise Systems. Imraan, your journey with WiseTech actually started more than 20 years ago. Do you mind giving us a little insight into how you got started at WiseTech, how that role has changed over time, and what you do now?
Yeah, thank you. I started with WiseTech in 2002. I started on the support desk. Then I moved into engineering and then took on the accounting product, which I've worked on since about 2005.
A few years ago, I took on a few extra products. That's now the enterprise software portfolio. It's got about 200 software professionals in it now. One of those products is ComplianceWise, which I'm going to talk to you about today.
Great. Thank you. We've got Geoffrey Eid, who is our product portfolio leader for Warehousing and Facilities. Geoff, I guess not dissimilar to Imraan. You also started just over 20 years ago. Do you mind telling us again how you got started at WiseTech, how your role has evolved, and what you do today?
Sure, Caroline. I also started actually the same year as Imraan, so 22 years ago. I think you got me beat by maybe a month or two. I have a background in computer science. So I started as a software developer.
In the early years, I spent a lot of my time helping design and develop our then-core architecture. After that, I led a number of technical teams. And probably for the last five to 10 years, I've been in a more product-oriented role with a particular focus on Warehousing.
Thanks, Geoff. Steve, I think it might be helpful just to sort of break down what is customs execution and what are our customers trying to achieve in this area?
Sure. So customs execution is timely and accurate customs filing of documentation associated with movements of goods and services across international borders and boundaries. Think of it as a tax return for goods and services. And the actual customs authorities have significant power in relation to what happens. So accurate and timely reporting is an essential part of what happens.
The customs authority, if they're finding errors with customs declarations on a regular basis, have an actual right to audit a company, have a right to prosecute the company in relation to errors. And they can interdict the goods that are actually moving within the supply chain. And one other area is that if they see errors associated with customs, they can look at other tax heads in an organization, such as Corporation Tax or GST, where they'll actually examine that.
Right. So I guess it's about making sure that you're, as a freight forwarder or customs broker, filing your customs declarations in a timely manner, but also to ensure that you're paying, I guess, your taxes and duties at the appropriate rate. In terms of the pain points and complexities in this industry, could you tell us a little bit more about that?
Sure. It's a complex environment, as I'll try and articulate. So navigating the complexity of that, there's three real pain points. So the navigation of the complexity of international trade and particularly of customs, there are local nuances associated with each and every country and each and every region. If I could look at one trading bloc, the European Union, there are 27 member states of the European Union. They have all signed up to what's called Article 6 of the Union Customs Code. And that mandates harmonization and standardization of customs procedures across the European Union and greater usage of electronic documents within that process. But we've had significant differences within that. So for instance, the analogy I would use is that there's a pizza base, which is the UCC 6, but each individual country has an individual pizza slice and a topping, which is slightly different.
I will get into some detail on that in due course. A second area and a pain point is ensuring compliance, so ensuring that you're actually complying with the regulations. So if I look at standard reference data, and the standard reference data would be tariff codes. So we have the World Customs Organization, which defines a Harmonized System . That operates at a six-digit. So there's 5,000 commodity codes within their nomenclature. And that changes every five years. If we look at the EU, the EU has the combined Harmonized System . That operates at an eight-digit level. And then the ninth and tenth digit are actually utilized for countervailing duty and anti-dumping duties within that. But even within that, in Germany, there's an 11-digit for national taxes and for regional taxes. And then the last trading bloc is the United States. And they have the Harmonized System .
So there are 10 actual digits associated with that. So as you can see, it's quite complex. That's just the reference data that looks after that.
Yeah. And one thing that you and I have spoken about as well, which is, I guess, an added complexity in this area, is the ever-changing landscape, isn't it, Steve? It's not sort of the customs regulations aren't static. Could you sort of explain that element as well? So within the customs regulations, the local requirements are quite they move quite a bit. They're quite fluid, right?
Correct. And that actually impacts on our customers' ability to actually trade and interact with the actual customs authorities. So having actual people on the ground and product people with local knowledge is really important in actually ensuring the speedy movement of the goods through that process.
Right. OK. I guess let's go to how are we actually solving for these problems then?
OK. I suppose the landscape we have is that there's a myriad of systems that are being utilized, so customs systems that forwarders are utilizing. I think Gene referred to us that people do nothing in relation to certain things. And I'll talk a little bit about that. It's a management issue in relation to that. With the local and myriad of systems, there are non-standardized workflows. There's different release cycles. There's probably more danger of cyber attacks in relation to the surface that are exposed. And there's different contract arrangements. There are different support arrangements associated with that.
What we can provide in CargoWise from a customer's perspective is a single hardened platform with a single standard user interface, with a single architecture, standard workflow across the whole process, and a single vendor, a single contract, and single terms. We also have a very elaborate follow-the-sun environment that we actually support. But we also have a WiseTech Academy, which we've spoken about earlier, which has a full reference material in relation to information to do with customs and to do with the actual understanding of actually the process involved and the localized process associated with that.
Right. And so I guess in your view, what makes CargoWise Customs so revolutionary in what we can offer our customers?
Sure. I think that the single access and the single standardized environment. So we have many customers who are looking at in-country customs clearance.
But there are sort of out of business matters. They look at centers of excellence and centers of competency where they actually want to provide customs clearance services. And some of these are lower-cost centers of operation. So for instance, we have customers who are actually in a center of excellence, are actually looking after export entries from the United States. And someone within that center is also looking after import entries within Europe, within, say, Germany in that. And I think it is a really powerful tool. It's a really powerful, hardened environment that actually gives great security to our customers in relation to what they're doing. We also have, obviously, Kuehne + Nagel, we're on the video there. And certainly, they have seen the importance of actually having standardized reporting.
Having a myriad of local systems and their customers requiring certain reports and certain information to be consumed in a certain fashion, they actually have that in one location.
Right. And I think the other aspects that you mentioned before, which I think is important to draw out in terms of what makes CargoWise Customs so revolutionary, is that depth of knowledge and experience that we're leveraging, not just with the existing sort of WiseTech teams, but through the foothold acquisitions that we've done. So we've done about 25 foothold acquisitions in the customs space. And if we just assume that each one, like yourself, has a founder or MD that has over two decades of experience, that's the half a millennium or the 500+ years of experience that we've got in our team building out the Global Customs platform.
I think it's that depth of knowledge that would be really difficult for someone else to replicate. And so that's one of the key differences, isn't it, Steve, when we're comparing what we offer?
Correct. I think that knowledge, as I said, it's half a millennia of experience. It's absolutely essential. The three really important aspects are management of local relationships with the customs authorities. As I said, having those relationships and understanding how the changes are impacted and how we can quickly react to the changes that actually happen, understanding the role of customs and understanding the importance, because goods and services can't move if the customs entry is not completed on time. Understanding the urgency and it's a mission-critical application. Finally, the relationship with the customers is really important. Our product managers really have that experience to actually make our products a success.
Right. And so I think we've heard about, I guess, how valuable CargoWise is to our customers. Could you perhaps talk us through what are the challenges to adopting CargoWise Customs?
Sure. So many of our customers have given local P&L responsibility to the country managers. And they would have a narrow focus of their responsibility as just looking at what they need to do within country. That would be one issue. Second issue would be team members' resistance to change. They've always done something a certain way. And they've kept using a local provider. And they're happy with that. And then the third issue associated with is just the capacity to implement change and to implement a change system. And we can solve those problems.
So if we look at the first issue, we have companies like Kuehne + Nagel who have a centralized approach in relation to pushing out the importance of a single source of truth and giving them a controlled-tier view of their customs landscape. So they have actually engaged with us, where we've used our local product managers to work with their local country managers to give them confidence and to boost. So we've overcome that. Second issue is in relation to inertia and team. Just we've always done it this way. And we don't like a new system. We can allow the adoption at their pace. So with the WiseTech Academy, there's a whole raft of material that can be utilized and self-onboarding at their pace. So it overcomes that barrier.
The final one is just having the actual ability and the budget and the actual time to actually implement a new system. We have a fantastic network of WiseTech Service Partners who can actually enable that and make that happen.
Fantastic. I guess in terms of customer uptake, so we've got CargoWise Customs available in every major English-speaking country. We've more recently rolled out CargoWise Customs in France, Italy, Germany, and Spain. Can you just briefly tell us what's the customer uptake been like?
Sure. It's been very strong from our global customers and their interest. Again, if I could use Kuehne + Nagel again, who really have seen the benefit. You've heard Marc Bernier talk about actually having a single source of truth. In relation to our local engagement with the product managers, that's really helped in pushing that out.
We have DHL have an aggressive rollout in pushing customs. Increasingly, we're bringing more and more customers online. I think another area that if we look at what we're providing is that we're future-proofing their investment. Within the EU, we're currently operating on what they call the Union Customs Code 6. There's a recast customs code coming down in 2028. That presents some significant changes in technology and messaging. We look after that. We future-proof that investment. To come back to your question, we have quite a number of our global customers who are really engaging and engaging at a local level in their rollout. Certainly, I think there's an understanding that if we push from the center, there's going to be a quicker adoption and take-up of CargoWise Customs.
Thanks, Steve.
I think one of the other names as well that we spoke about is actually FedEx, who have committed to use Global Customs as part of their forwarding rollout as well. I think the other thing to mention is that with the commercial model we spoke about, where customers have access to all the functionality in CargoWise without having to enter into new paperwork, as new countries become available in CargoWise Customs, all customers would have access to that. There's no barrier to use. They can just actually start using in any one of those new countries. Thank you very much, Steve. If we move to ComplianceWise now, Imraan, maybe let's kind of set the scene. Coming off talking about Global Customs, what is the difference between customs and ComplianceWise?
So customs is about all of the work that goes into creating and managing and submitting customs filings to customs authorities around the world. And that's required when goods are moved across an international border. ComplianceWise is about all providers in the logistics execution space. And this product will help them all understand their obligations when it comes to sanctioned party screening and commodity screening and other import and export regulations.
OK. Great. Thank you. And in terms of the pain points that customers are facing in relation to compliance, could you just shed some light on that for us, please?
Yeah. So I mean, the compliance landscape is changing all the time. And so there are constantly new people and parties and businesses being added to sanctioned party lists by various governments. That's a problem. Those lists are changing all the time.
Commodity screening requirements are also changing all the time. So new commodities are being added as the requirements for different countries who are looking after their security concerns. As those change, those lists are updated. And customers need to be aware of that. So that's a problem. The second problem is that a lot of these processes today are manual and are executed outside of the standard execution system, which is CargoWise. And that's a problem because the manual processes that we're talking about are often email-based. They're often Google search-based and standard operating procedure document-based. So they're often based on operators and staff being careful rather than a systematized process. And the consequences for getting it wrong, I think we heard about that earlier today. Fines is a big thing. A bigger thing is when you have your export license revoked. That's a business killer right there.
Something that people don't often think about is the senior manager liability. Senior managers are now personally liable when there are enough breaches within a business that they can face jail time.
I guess even with a single breach of compliance for a large global forwarder, that could be quite damaging in terms of their reputation, not just the monetary impacts that would come with that, but their reputation as well, right?
Yeah. If you're a forwarder and you've had a single breach, that attracts attention. A regulator will come to you. They will ask you, well, show me your process. Show me that you've actually executed that. Show me the evidence that you've executed that. That's very difficult to do if everything that you're doing is outside of your execution system. That's actually a very important part of ComplianceWise.
It lets you evidence to an auditing authority all of the compliance work you've done in your operational system.
And maybe just to give everyone a basic example of what compliance obligations would come up in terms of the who, what, and where. Can you give us an example, Imraan?
Yeah. So I mean, if we're being glib, ComplianceWise will help you think twice about shipping weapons to a sanctioned country like Libya. And that's a very obvious requirement. But something that's not very obvious is that if you're shipping ball bearings, something that's pretty innocuous to a country that is also innocuous, those goods also attract some controls. So if we just zoom out for a second and think about a customer with maybe 10,000 users who are all empowered to move freight, maybe you've got millions of shipments moving through their freight network at any one time.
One of those operators gets a call saying, I need to move some ball bearings from Australia to Malaysia, maybe. That operator says, well, ball bearings are innocuous. Let's allow this to happen. That should be no problem. The problem with that is that some types of ball bearings appear on a Strategic Goods List in Australia that means it's either a military good or it could be a dual-use good. A dual-use good is a good that is designed for civilian use but could be used to cause harm to the country who produced it or could be used for weapons of mass destruction. So if you take that example and you let it through, and then you let it through enough times, then a regulator comes to you and says, well, you didn't do any checks. You allowed these restricted goods to proceed.
I can't s ee any evidence that you've actually executed a compliance process. You are going to get fined for sure. And that also causes reputational damage. What's much better is if you have a process that highlights that this particular good is a controlled good and needs some activity to investigate and assess if the shipment in question needs more work, like a permit or, in fact, a refusal to move the goods. You're in a much better position to not only stop your business from facilitating that shipment, but also you can evidence to the authority that you either stopped that good or you organized for the customer to get a permit to ship the goods. And you fulfilled your compliance obligation.
OK. So I think you've painted a pretty good picture there in terms of the pain points that our customers would be experiencing compliance-wise. Specifically, how is it solving for these pain points? What features does it have? And what can it do?
Yeah. So we talked about how ComplianceWise is solving for the who and the what and the where of compliance. The who is about sanctioned party screening, which I mentioned earlier. And the what and the where is about commodity screening with the sensitivity of which countries you're sending from and to and through. And there are three ways that three tenets, I suppose, that ComplianceWise has to solve for this. The first one is that we provide a single place for you to see the who, what, and where of compliance for any given job. And that means it's completely integrated into the day-to-day operational system. That's really important, as we mentioned. The second tenet is expert-curated content.
And that's also extremely important because you can't really run a process without the content to back it up and notify you that there could be a problem with the goods that you're shipping. And that information comes from our product, BorderWise. So you can think of ComplianceWise as a pretty deep integration between CargoWise and BorderWise. BorderWise is a product that consolidates tariff books, legal books, and other compliance requirements for the countries that content is produced for so that you can then understand what compliance requirements exist for the goods that you're shipping through the countries you're shipping them through. And the third tenet is about visibility and audit.
As we talked about, ComplianceWise allows you to record your compliance activity and then evidence that to senior managers who are liable if you do something wrong, but also evidence that work to a compliance authority who comes to do an audit.
Thanks, Imraan. And maybe to, I guess, reinforce a point of difference, why can we do it better than anyone else?
Yeah. I think when you take the best execution platform there is out there that is so widely used, that's CargoWise, and then you mix that with the expert-curated content that's produced by expert brokers in BorderWise, you get something really unique. You combine two products. And you get something that's greater than the sum of its parts.
Great. And then in terms of launch, so I know we've only just recently launched it in quarter one of FY 2025. But what's the customer feedback been like so far?
Yeah. So we piloted with about 20 customers. And some of them have been using in their production systems. And some of them have been using in their test systems. Feedback's been good. I think they appreciate the integrated workflow and the expert-curated content that will highlight a problem in a much more systematic way than what they have today. And the other feedback is that they're asking for more. They want this to be in more jobs within CargoWise. And they want more coverage of more countries in BorderWise as well.
Right. And I guess speaking of asking for more, could you tell us what's in store for phase two of ComplianceWise?
Yeah. The biggest that'll come out of phase two is the Classification Assistant .
That's a tool that's designed to simplify and streamline the broker activity of classifying a good that needs to be shipped. And so you can imagine that you might start with a very basic description of goods. It might be shoes. And in order to classify that down to the right level, you need to know more information about those shoes. So you can't submit an entry to a customs authority and just say, "I'm importing shoes." The customs authority needs to know what size the shoes are, maybe what color the shoes are. And maybe there are other attributes that need to be known. And so the Classification Assistan t is designed to help highlight these things to you and make it much easier to perform the classification process.
Right. So essentially, I guess, guide you through that process, right, and make it quite easy for an operator to do that.
Right.
Thank you. All right. Geoff, Warehousing. Maybe let's start with the basics first. Can you maybe just briefly talk us through the CargoWise Warehouse Suite and each of the five areas that we specialize in?
Sure. So the CargoWise WMS, WMS is abbreviated for Warehouse Management System, caters to five types of warehouses. These are transit warehouses, which are facilities that accept goods in bulk. They deconsolidate these, then reconsolidate them for export either to another warehouse or point of sale. And the goods are generally received in the form of pallets or cartons. Next, we have the product warehouse. These facilities store products or raw materials on behalf of owners. And they'll hold those until they go into distribution or until they're sold.
There's the e-commerce warehouse, which is really a subset of transit warehouse, but they handle high-volume, low-value goods, and so they need particularly lean processes for the deconsolidation and reconsolidation process, then we have our bonded Warehousing. That's comprised of two components, we have short-term bonded warehouse, these are typically transit warehouses. They temporarily store goods at import borders under customs control until they're released for dispatch, and finally, there's the long-term bonded warehouse. This is typically a product warehouse. They'll store products or raw materials for extended periods, deferring customs duties until those goods are put into consumption, and this is particularly important for products that attract high duties, such as alcohol or tobacco, and the CargoWise WMS is a unified solution for all of these Warehousing needs, but we have a particular specialization in each of these five areas.
OK. And then, I guess, in terms of the pain points, can you talk us through some of the pain points that our customers are facing in Warehousing?
Sure. So some key pain points we see in this area are the high cost of labor. There's a transient workforce, which is further compounded by fluctuations in seasonal volume, often requiring warehouses to deploy low-skilled or untrained staff. We see a lot of process errors and just widespread inefficiency in the warehouse. And this is largely caused by using fragmented systems, a lot of manual processes, and a reliance on email, telephone, or some bespoke systems of communication. The Warehouse Management System itself, so implementing, maintaining the software, brings with it its own challenges. So implementing a typical WMS requires costly ongoing consulting and services in order to configure the system.
They tend to require bespoke integrations to be built in order to provide access to sort of the broader supply chain, so transport systems, customs systems, forwarding systems, and so forth. And finally, they take a long time to implement. A typical WMS will take anywhere from 12-24 months or more to implement. And if we think of a customer on thin margins, this time to go live is costing them money.
Right. And so how is CargoWise WMS solving for these pain points?
So broadly, we solve with a lot of capability. But I'd like to sort of highlight four in particular. And these are end-user tailoring, rapid deployment capability, what we call a system-directed approach, and our powerful integration with the broader WiseTech ecosystem. So it's generally accepted practice in Warehousing, at least, that everybody's different. And therefore, everything must be customized.
Fundamentally, we don't think that's true. We instead have a belief that the industry is by and large the same. There's many small deviations. For this, we've built a system that allows for end-user tailoring. What this means is that the warehouse administrator can directly tailor the system with no reliance on consultants or developers or WiseTech for that matter. Because of this end-user tailoring, we can actually deploy the CargoWise WMS in less than three months, which is much faster than what we see with other providers. Furthermore, sorry, to deal with process errors and sort of the widespread inefficiency that we see, we use what we call a system-directed approach.
So unlike other systems where floor staff handling cargo must make numerous decisions in their day-to-day operations, which often leads to these issues, the CargoWise WMS empowers the administrator to create rules that will create, sorry, to configure rules that will create step-by-step processes for the floor staff to follow. So what this effectively does is it shifts the decision-making from potentially hundreds of floor staff back to the administrator. This reduces errors. It allows training requirements because on the device, they simply just do what they just follow instructions and allows the administrator to sort of control the orchestration of freight on the floor to provide sort of more of a global optimization of operations. Finally, we have a very powerful and very tight integration with the broader CargoWise ecosystem. And what this does is it allows us to streamline process flows, in particular between different departments.
So, for example, jobs that are created in forwarding or customs or transport don't need to be rekeyed in the warehouse. When freight is received in the warehouse or when it's dispatched, this information automatically updates the forwarding or other systems with what was received. This can include things like damaged or missing parcels, unexpected freight, perhaps dangerous goods, details that are captured in the facility, security screening processes that might have been carried out, as well as their outcomes. And this is invaluable for our forwarders because they, in fact, need this information in order to progress the job. Without a system such as this, there's a lot of back and forth between forwarders. And so that really decreases their throughput.
OK. And so maybe to bring some of this to life, I might just ask you to step us through some examples. So maybe the first one is, can you give us a specific example of, say, a customs integration with warehouse?
Sure. So we've got very, very strong customs integration between the bonded Warehousing, which is customs, and the Warehousing products. An example would be where the customs broker has access to live data from the warehouse. So they can see everything that goes into the warehouse and everything that exits the warehouse. And from this, they can actually just make inventory selections, which will automatically populate, effectively build the customs job for them.
Fantastic. And then in terms of maybe a specific example about how a warehouse manager might use this end-user tailoring that you spoke about?
Yeah, sure. So let's imagine we have a warehouse and they're onboarding a new client. And perhaps one of the products they want to store is raw chicken.
It's typically ordered by the pallet. The warehouse administrator would create put-away rules for cold storage and corresponding picking rules for full pallet picking. As a result, broken pallets, should they occur, will be overlooked in the picking process. They'll expire. Now, there'd normally be a couple of options here. I mean, the warehouse manager could deal with this manually. That might be fine for a small mom-and-pop operation. If we think of a warehouse with hundreds of clients and potentially hundreds of products per client, and many of those will have their own processing and handling requirements, manual intervention is just not scalable. Using a typical WMS, you could reach out and pay for some consulting to configure the system to build the process to deal with this. That costs time and money.
With the CargoWise WMS, however, the administrator could simply add a new rule that prioritizes picking these broken pallets if they're close to expiry. They could choose to improve this further and say, let's only apply this rule for jobs where, say, the service level is not express or maybe the client's not one of my A-list clients. And so high-priority picks or jobs are not subjected to this sort of loss of efficiency. I say loss of efficiency because handling a broken pallet is much more labor-intensive than dealing with full pallets. So in this way, the product is correctly stored. The picking is optimized. And exceptions, should they occur, are handled automatically with no intervention necessary. It's important to note that rules such as this can be modified at any time without needing to upgrade the system.
And this is quite critical because Warehousing needs change all the time. And their clients' needs change all the time. So our administrators can simply go and add new rules or modify existing rules if they want to improve some process. They don't need to upgrade the software. In fact, they don't even need to restart CargoWise.
Right. And I guess that's really powerful, right, because we're giving the tools to our customer to, at any point in time, modify those rules to whatever they need to optimize their warehouse. I guess if we turn our attention now to the competitive landscape in Warehousing, I understand that there's differences in the competitive landscape for the different types of Warehousing. Could you maybe shed some light here on the competitive landscape, say, in the transit warehouse e-commerce space?
Sure.
The transit warehouse space, what we see here mostly are in-house cross-docking systems that are actually built by our forwarders. These are costly to develop and maintain. They tend to provide limited system workflows. As a result, they rely on auxiliary applications to help them manage things like compliance, border security, dangerous goods, and so forth, control, sorry, cold chain control, and so forth. What this results in is a fragmented system and very clunky operational workflows. There are some external competitors here. But they lack the depth, reach, and integration capability of CargoWise.
What about in the product and bonded warehouse space? What is the competitive landscape?
It's a little different. There are some big-name competitors here that operate only in this space. They're very expensive. They take a long time to implement, as I said earlier, a year to two or more.
They do require ongoing consulting and customizations for the lifetime of the product.
I guess to sort of summarize that competitive landscape, it's really that most of the competitors usually only operate in one type of Warehousing, whereas with CargoWise WMS, we're offering that suite of five. I guess in terms of CargoWise WMS and how we differentiate ourselves from the competition, can you talk us through some of those key things?
Sure. I think we're quite different to the norm. I want to highlight sort of three key areas where we really differentiate ourselves. Firstly, we don't require ongoing consulting or services or any sort of bespoke customizations for the lifetime of the product because of our end-user tailoring capabilities. Second, we provide a global integrated system with the CargoWise ecosystem. And that replaces a large patchwork of systems and technology stacks.
Think of the cybersecurity risks and operational processes associated with running 10 or more systems. And we replace that whole lot with one product. And finally, we achieve rapid go-lives with minimal startup costs. We have many customers that go live in a couple of months.
Thanks, Geoff . And I'm sure everyone's probably interested in this. But what's the market opportunity for WiseTech in terms of the warehouse space?
Sure. So in 2022, the global TEU, which is 20 ft equivalent units, i.e. shipping containers, was 850 million, so 850 million TEUs. We estimate that nearly 20% of these goods end up in a forwarder-operated product warehouse. We also estimate that about 10% of this global volume flows through a forwarder-operated transit warehouse. Now, if all these warehouses use the CargoWise WMS, we clip the ticket each time a parcel moves through.
To give you an idea of volume, this represents, talking about the transit warehouse one here, this represents it's a mix of pallets and cartons. And it's a number of annual parcels in the billions. Another thing to note is that these parcels will move through multiple transit warehouses on their journey. And we clip the ticket eac h time. So the opportunity is huge for us.
And I guess we've really talked about the fact that a differentiating factor with CargoWise WMS is that we offer a suite of five, right, as opposed to just the one. But is this important? Do customers typically operate more than one type of warehouse?
Yeah, they do. So more or less all global forwarders will operate transit warehouses. Many of them will deal with e-commerce freight as well. And a very large number of them also have product warehouses. And they may or may not offer bonded capability. And so we offer a unified solution for all of these Warehousing needs.
Right. So I think if we think about our large global freight forwarders that we often talk about, all, if not most of them, operate transit warehouses. And so that's a sort of next-step opportunity for WiseTech in terms of what we could sell to them. I guess how would you summarize the opportunity for WiseTech in this question, Geoff?
So firstly, it's important to know that we're starting from a low base. WiseTech leads in forwarding and in customs. And we're now investing very heavily into Warehousing. Also, we're very far from market saturation with our existing customers, let alone new business opportunities. So we've got a big runway ahead of us. And as I said earlier, we offer an out-of-the-box solution for the market.
Typical competitors don't do this. They engage in lots of consulting. Their models are often professional services-based. We don't do any of that. So we offer them a full solution with the adjacent capabilities of the broader WiseTech ecosystem out of the box.
Thanks a lot, Geoff. So I guess in closing, we've just gone through three very valu able areas of CargoWise. First, we spoke about Global Customs and what we're doing there to revolutionize the way that customers manage their customs operations, taking them from a myriad of local systems to one single integrated platform and also helping them to future-proof their investment in customs by allowing us to stay on top and manage the ever-changing landscape in those areas. We also spoke about ComplianceWise, which is helping us manage the who, what, and where. Did I get that right?
In terms of goods that customers are shipping to certain countries, to certain people. And then we just spoke about Warehousing and the fact that a key differentiator for us is that we have a suite of five specialties in the warehouse area as opposed to just the typical one. So I just wanted to thank Steve, Imraan, and Geoff for their time today. And now we'll break for 20 minutes and return at 4:20 P.M. to hear about our developments in landside logistics. And that includes Container Transport Optimization.
We started out, people would call us Wimsey, Lindsey, everything under the moon except for Wimsey. Today, a good number of the people in the Kansas City, Chicago area recognize the name as a leader and just our ability to communicate and deliver on what we promise. I'm always reinvesting in positioning Wimsey to be a leader in the industry, and that's why we use Trinium's TMS system. It made us a better company. So I came in as head of business technology, and my focus was how do we really implement technology into the company. People were familiar with Trinium TMS, even though it was implemented unsuccessfully twice, not because of Trinium, but because of just how fast everything was moving, and there was no one really to, like, pioneer and project manage it.
You know, I give a lot of gratitude to the team that I brought in that were able to do all this. I think without them, you know, we wouldn't be where we are today. You know, you look around the office these days, and you know, we're all on our computers, but back then we had folders, we had T- cards, we, you know, a whole lot of more manual things. There was a lot of printing, a lot of paper. There was the emails with the work orders, handwriting, a lot of it on the T card. You know, just if you don't remember where you put it, it gets pretty hectic, or it got pretty hectic now. It's a little bit different with the Trinium TMS. Our operations now is completely paper-free. All of those processes got moved and integrated with Trinium TMS with different action codes.
You know, now the order entry team puts in all the information. Dispatch instantly, you know, can see it. You know, once it goes through the pre-dispatching system and it's ready to go out to the driver, you know, we use the MC3 app, just a couple clicks, and the driver has the most up-to-date data. Once the driver leaves the pickup location, going to the delivery location, it'll auto supply, like, the ETA that they would have customer. You definitely become more capable. The system is going to prevent certain errors from happening, of course. You know, whether it be using an auto rate feature or if you don't have proof of delivery with invoicing too, you go through and you just invoice, and it'll automatically email out your invoices to them. You know, it's smoother sailing as far as getting right prices for each order.
It makes things a lot simpler. We integrated our EDI connection with our customers, and it allows, you know, for seamless transition between orders being accepted and live data, and you know, those KPIs being fed back to the customers. If we weren't able to have the EDI connections, especially like the document providing API or the, you know, order entry or the invoicing, there's some customers that I think we would have got less, if not, you know, all business lost. We work with bigger companies because we are able to use EDI. It makes their life so much easier, and it makes our life easier too, with so much of the automation. From my perspective, there's definitely been a reduction in errors. Like, our errors have gone down tenfold.
In terms of, like, efficiency and then just time, I think our invoicing timeline, you know, from order entry to invoicing has gone down. Having people working eight hours versus 12, they were working overtime, and that was cost to us as a business, and you know, it was cost to their mental health as well and their well-being. And then I think it also just allows, you know, us to have a structured process versus, like, organized chaos. Trinium's doing what it was meant to do, and that's make Wimsey more transparent to their customers and give them the proper documentation and data that they need to have a successful international move. So really, it comes down again to your infrastructure, the assets that you add to that infrastructure. The team you have running processes.
You don't get to where we're at today without having a lot of good people on your team to help you achieve the goals you want to do every day.
Thanks, everybody. Welcome to our session on landside logistics. Today, we're going to cover some of the complexity that's in the industry. We'll talk about the significant number of stakeholders that are involved. We'll talk about some of the solutions that we have on offer. And towards the end, we'll also talk about Container Transport Optimization, which I'm sure you're all aware of. Because of the complexity, I've got some key people with me. I've got John Pritchard, who's our Head of Product Development at WiseTech, Carl Marchese, who's our Managing Director at MatchBox Exchange, and Michael Toolan, who's our Head of Domestic Delivery portfolio.
John, I might start by just asking you to introduce yourself, please, and your experience at WiseTech.
Thanks, Mark. Hello, everyone. I'm John. I'm Head of Product Delivery at WiseTech. I get to come in every day and work with a bunch of talented, knowledgeable people, and we get to work out how we're going to add value to our customers every day. I spend probably half my time with the core CargoWise teams, brainstorming ideas, creating alignment across teams, and creating transparency across teams. I spend the other half of my time with the acquired businesses, helping them to identify and extract the intellectual property that they bring into the business, and then working out how we can embed that value into our core product offerings. I've been with WiseTech for five years now, two and a half years in this role.
Prior to that, the past 28 years, I've been working with many large, complex organizations, helping them to extract value from their internal supply chains through the use of software, mainly in the form of automation and decision support tools. The key difference that I find working at WiseTech, as compared to my previous experience, is that here we are transforming an industry as opposed to an individual company. When we say that we aim to be the operating system for global logistics, we mean it literally, and I find that extremely invigorating, being a part of that. It's exciting to be part of WiseTech, and I'm really proud to be sitting here today.
Thanks. And Carl, you have a long background and experience in this industry. Eight years ago, you founded MatchBox Exchange, and WiseTech acquired that business just over a year ago.
Can you talk to us a bit about your background, but also, you know, why you were keen to sort of sell to WiseTech and become part of a larger organization?
Yeah, sure, Mark. Hello, everyone. Great to be here. As Mark mentioned, I've spent quite a lot of time in the container transport industry, in fact, well over 20 years. I spent 13 years of that time as a CEO of a large container transport business, and the last eight years, of course, building MatchBox Exchange. It was during my time as CEO that I witnessed firsthand the many challenges that the container transport industry faces, and that was the inspiration behind the creation of MatchBox Exchange, which is a very unique and successful online platform for the reuse and exchange of containers, which essentially removes waste and costs from the movement of containers.
Now, fortunate enough for us, we were introduced to WiseTech in 2023, and I met with Richard White, and it became very clear to me that we shared a common vision around the way container transport could work in much better and smarter ways, and the more and more I talked to Richard and Vlad, I could see that I was more and more drawn to the strength and the scale of WiseTech and the capabilities that they have, many of the missing ingredients that we needed to really take our business to the next level.
And so for me, that was really a positive thing because if you look at WiseTech, and we've talked a lot about their capability today, and you get a good sense of the enormous amount of data, capability, and assets they have, the product development, innovation, and capability, and of course, their customer base and their reach across the world, it was very clear to me that by joining WiseTech, we could take the shared vision to the world of container logistics in much bigger and better ways. So that was the main reason I decided to join, and I'd be very happy to be part of the group, of course.
Thanks. And Michael, you also joined as part of an acquisition at SmartFreight in 2018, and from that, you sort of moved from being responsible for SmartFreight product and development up into more larger CargoWise roles.
What's it been like for you, and what have been the main advantages of being part of a larger organization?
Yeah, thanks, Mark. Good afternoon, everyone. So as you mentioned there, Mark, I'm now currently the portfolio leader for Domestic Delivery. So inside of that portfolio, I lead our teams that are building the products that our customers use to execute their domestic freight movements. This includes deep consolidated freight, as well as what we call landside, and obviously the container optimization project. As you mentioned, I came from the SmartFreight acquisition, which was made in about 2018, but in total, I've had probably about 25 years of experience building applications in and around the transport industry, including things like manufacturing, Warehousing, freight, as well as shipper products and agencies, etc.
So in terms of what's it been like coming on board at WiseTech, I think working for a smaller business like SmartFreight, especially in domestic transport, you can see a lot of opportunities and a lot of innovations that could be actually made in the industry. I mean, we spoke earlier about the paper that moves around. So it's easy enough to identify these innovations that you want to make, but as part of a smaller business, you don't necessarily have the capabilities or the reach or the resources to make those changes that you can identify. And that's probably the big thing with moving into WiseTech. You know, like, we employ a lot of very smart people, and we have that capability to make these changes.
In terms of my professional growth, I suppose that's one of the key opportunities that WiseTech's offered, and I suppose that's how I've got to where I am today, is actually identifying these potential changes and really pushing those through with our internal teams.
All right, thanks. So while you've got the mic, talk to us about landside logistics. What do we actually mean by landside logistics?
Yeah, sure. So I think in order to define landside logistics, everyone needs to understand that shipping containers, those big steel boxes that we associate with sort of ocean freight, the shipping containers are the property of the ocean carrier, and they remain the property of the ocean carrier. They're hired out to importers and exporters to fulfill a single job, and at the end of the day, those shipping containers need to get back to the ocean carrier.
Therefore, you can probably think of the term landside as a marine freight industry term, and it really refers to the extension of that ocean network into the domestic market. It's about moving containers, the consolidated freight through the domestic transport space. This can be done road and rail.
All right, thanks. And in our investment materials, we've got a slide that sort of shows the logistics chain. It's just up on screen at the moment, and it has landside logistics. And like when you look at that slide, it looks nice and simple, but it's a bit more complex now, isn't it? Could you give us an example, you know, of a container movement to illustrate some of the complexity?
Yeah, and that's really good, Mark, because I think talking to some of our audience members here, pardon me, out of the coffee cart there, a couple of people have actually asked about this. So to illustrate some of the complexities in the supply chain around landside, if we took an example like a manufacturer of, say, car parts somewhere in Asia who needs to get their goods to, let's just say, Detroit in North America, that manufacturer, first of all, has produced those parts, and he needs to pack a container. That container needs to be delivered to that facility. So there's probably a road or rail freight movement to get an empty container to that manufacturer so that he can pack those goods. And then in turn, that container needs to be taken to a port where an international move kicks in. That's obviously not landside.
It's taken to the West Coast of America where it's unpacked. Again, that container is probably loaded onto another truck, taken to a railhead or a rail terminal where it's loaded onto a train. Now, one of the nuances in North America is that the rail networks are privately owned, and they're not necessarily connected. So that train will travel to Chicago, where again, that's offloaded onto another truck, and it's driven cross town where it can then be loaded onto the next rail network. Hopefully, we all get the idea. It's then another truck involved to get the goods to the final destination. Each one of these steps, however, requires handling of the goods. It's potentially a different party. It's localized transport in each one of these destinations.
It's worth noting as well that on the rail network in the U.S. as well, there's different sized containers, isn't there? So it's not just marine containers that go on. There's also domestic.
That's right. And that's probably where our transit warehouse module kicks in, because at each one of these steps, the freight can be consolidated, it can be deconsolidated, it can be repacked into different containers as well. So rail networks can have 53 ft containers, whereas ocean freight is generally 20 ft or 40 ft sized containers as well.
And John, like motor carriers are different as well, aren't they, to say, ocean and air? Can you explain for us how that impacts our customers?
Well, if you're a large multinational freight forwarder and you're dealing with ocean carriers, you've probably got tens of carriers that you have to deal with. There's not that many of them. When you're dealing with airlines, you're maybe dealing with 100, maybe 200.
When you're dealing with land transport providers, you could literally be dealing with thousands, maybe even 10,000. So you can imagine that the logistics and complexity of dealing with so many carriers is an orders of magnitude more than dealing with the others. So managing that fleet of, let's call it a virtual fleet of providers that you're using, which trade lanes they operate in, what their rates are, what they're accredited to carry, what their performance is like, being able to do EDI messaging with them, request quotes, set up contracts, get invoices back, make payment. Like that whole ecosystem is extremely complex to manage.
Yeah, and messaging to the facilities they have to load from or unload to.
Yes, absolutely.
So what solutions do we have, John, currently to address some of the complexity in landside logistics?
So you saw on the video earlier the story about Trinium.
So we've purchased a number of entities, mostly in North America, but also in Australia. I'll talk about them briefly, shortly, but our offering is in two major areas. Number one, we help the asset-heavy carriers, so the truckers themselves, manage their resources efficiently and effectively. So helping the trucker, the trucker's got a list of jobs that they need to get through, helping them match people and vehicles to that in the most efficient way that they can, given the orders that have been placed on them, giving the drivers access to a mobile app where they can, the center can track their progress, they can complete legs and provide status updates, proof of delivery, that sort of thing, and they can connect, make appointment bookings with various facilities and so on. So that's for the asset-heavy customers.
We also operate on the other side of the fence, which is the planning of the execution. So for the freight forwarder or the shipper, I just mentioned earlier that they have to engage with potentially thousands of carriers. We have the capability to help them plan that move effectively. So if you're a forwarder in Los Angeles and you want to get some goods to Detroit, there's multimodal moves that you have to plan. There's various logistics service providers that you're going to have to engage with along the way. Could be six, could be ten, and so having all of that information at your fingertips, being able to contract with them individually, looking at the schedules that they offer, some of these guys have schedules, and making sure that you can move the goods from A to B in the most cost-effective and most timely manner.
We have that planning capability as well.
Okay, and we also offer visibility solutions, don't we? But in the break, we were talking about others that also offer visibility solutions. There are other companies that offer something similar. What differentiates us between other visibility providers?
Well, visibility is important and probably a prerequisite for running an efficient supply chain, but it's insufficient on its own. We offer the execution capability as well, and having visibility just being part of that. You heard earlier in the day, Angela was talking about Container Automation and getting all these events back to the forwarder. In the landside space, if you consider, for example, our Blume acquisition, if a customer orders a particular move through Neo, that gets placed on the freight forwarder. Freight forwarder will execute the international move.
A different department will then receive a transport booking from CargoWise that can flow to, say, Blume. A person in that transport division of the forwarder can log into Blume and plan the move along the lines of what I just described. An order can then get placed on a trucker who's potentially using our Trinium software or our Envase software. And a driver will use a mobile app, and we will have visibility of when the goods are picked up, where they're dropped off, when deliveries happened, when they've gated in, etc. And all of that information will flow all the way back through Blume, through to CargoWise, into the forwarding job. And so the freight forwarder and the customer in Neo has got full visibility of the whole path, but they've also got the ability to execute, which is a comprehensive offering .
Yeah. I've heard you also talk about the sort of the three levels at which we offer solutions. I mean, one of the things we've talked about is rebuilding the product into like best-of-breed products. So we'll do that, presumably, with a lot of these applications. But what else? I mean, what will make some of the parts more valuable?
Okay. So the three levels really are inside an organization, inside the carrier. We offer this ability to optimize the processes through the use of our software. We then have the second tier is their ability to connect to other industry participants efficiently and effectively. So we'll have native integration to, for example, ports and facilities and to the customers, etc. So this messaging connection to the community. And then the third tier on top of that is the ability to optimize the whole community.
And we'll talk a little bit about that later when it comes to, let's call it port community optimization. We have the ability to make sure that we're placing the right orders on the right parties at the right time to get global optimization of that whole community.
All right. So Carl, before we move on to talk about Container Transport Optimization, from your experience, can you talk to us a little bit about some of the pain points in the industry? There are obviously a lot of participants, a lot of facilities. What happens and what sort of led you to come up with MatchBox?
Sure, sure. I could talk about this for a long time, but I think it's fair to say that you've all heard today how big and complex the container transport industry is.
There are actually a large number of stakeholders that are very closely interrelated or impacted by the way containers move through the supply chain. These stakeholders include the ports themselves, empty container parks, which are locations where containers are stored for and on behalf of the shipping lines, usually. Obviously, you've got the transport companies that are charged with the responsibility of having to move these containers, the road network that the trucks have to use, and of course, the importers and exporters. When you look at the way the supply chain or container transport industry is set up now, there are each of those key touch points or interchange points where containers transit through, have to transit through in most cases, are very closely interrelated. There's lots of when delays are incurred, there are big downstream impacts that take place.
The other thing to call out is that at each of these key points, ports, container parks, and customers, and the road for that matter, there can be a huge amount of variability that happens. What I mean by variability, you might send a truck into a port to collect a container, and today it might only take an hour, but it's not uncommon to see those queues grow. And I'm sure many of you have seen over the years how trucks can queue at ports and at empty container parks. And you get huge variation in the amount of time that trucks can get jammed or stuck at these locations. So if you think about that, it makes it really difficult to coordinate the movement of containers across each of those touch points.
And the visibility sometimes around the movement of those containers and the delays is sometimes not the best. So this all manifests into significant congestion and delays across the landside, so containers moving across the road. And with congestion and delays, you get a large amount of waste. And if I can just talk about some examples of what waste means, it manifests in a lot of different ways. So the obvious one is queuing and trucks, very expensive trucks sitting in queues for hours. So that has a huge cost to the freight task because usually those waiting time costs are passed on to the freight buyer.
Another really good example of the, I guess, the impacts of waste is that because trucks get stuck, it forces the transport operator to allocate more equipment, more trucks to deliver other jobs that are planned for that day, which results in what we call a lot of dead legs, where the trucks are essentially traveling without a container or not in the most optimal way, and the other sort of byproduct we see around these delays is containers, a lot of transport companies are often forced to handle the containers more. What I mean by that is if trucks are stuck in a queue, well, then they can't meet a delivery, so what will happen is they'll send another truck to do that job.
When that container finally comes out of that queue, they'll usually have to move the container back to a staging facility, which is almost like a buffer between the ports and customers. The ports also have very strict rules around how you can get containers in and out of those points. There are appointment systems in place, which sort of, I guess, help the terminals plan their workload, but it creates an enormous amount of challenges sometimes for trucking companies and freight forwarders because I'll give you an example. An appointment for an import container may only be able to be secured at, say, 3:00 A.M. in the morning because that's the only appointment that may be available at the port terminal.
But the customer for which that container is for may not be able to take that container until 9:00 A.M. or later that day. So that forces the customer to, the trucking company, to move that container back to their transport yard. Okay? So there are a number of things. I mean, one thing I just really want to call out because this is a significant impact to industry, apart from the congestion delays and the cost that it translates to, there are all these additional costs that add huge operational administrative workload to all the participants. So when a truck's delayed, there's a charge usually, and that means a bill has to be generated and someone has to process all that. And the environmental impacts is probably the next thing to talk about because it is significant, right?
These trucks, if you think about that, the more congestion and delays that exist across the port community, the more trucks are needed to move these goods. And so that's obviously not good for the environment and the emissions. So overall, the industry right now is there's an enormous opportunity to optimize the movement of containers, and this is the problem that we're aiming to solve.
Yeah. So John, we've heard about the penalties and sort of direct costs of these delays. There's driver wages that are obviously sat in these trucks while they're being held up. There's the underutilization of the assets, and then there's double handling as well. And all these costs get passed on to, well, our customers or our customers' customers. What are the further impacts of some of these delays and the inefficiencies?
There are some additional sort of hidden costs in addition to these.
If you consider the example that Michael spoke about with a car manufacturer with components being manufactured in Asia and assembly being done in North America, when you have uncertainty in the supply chain, normally manufacturers like to do just-in-time manufacturing, and they try and keep the inventories throughout the supply chain to a minimum. When you have uncertainty in the supply chain, they have to increase the inventories, so you move from just-in-time manufacturing to just-in-case, and just-in-case means that you increase your inventories, which sucks up working capital, which has another whole cost impact to the manufacturer and hence to the consumer as well.
Yeah, so I guess there are loads of different layers of these costs, whether they're direct, indirect, or more indirect in terms of inventory holding and that sort of stuff, which impacts tens or hundreds of thousands of businesses worldwide.
So Carl, how do you sort of think about the size of the opportunity on landside compared to, say, ocean or air?
Well, the industry is growing significantly in terms of the amount of the freight task. And if you look at, there's a number of different metrics that are out there in terms of container movements. But if you look at the amount of containers that move across ports and once they get to each of their destinations, they usually transit then inland to a customer. And obviously, the last bit of information looked at, we're talking in excess of 7.8 billion container movements across the world that transit in and out of ports. So these are movements inland that, I guess, are subject to the challenges that I just talked about. So the challenges I mentioned don't just relate to Australia.
They relate to many countries, in most countries for that matter, because as soon as a container leaves the port, there are usually a number that they have to interact with the road. They have to interact with container parks. They have to interact with the port. So the challenges I've talked about earlier exist in most markets in most countries. So this is the opportunity to optimize container transport movements at a global scale is there. It's a significant opportunity that really hasn't been addressed to the full extent possible. The MatchBox Exchange business that we started was aimed to optimize container movements by removing wasteful movement of empty containers to and from depots and their customers. Okay? But that is really just one form of optimization.
There are many other things we can do through enhanced data assets, some of the things that we've talked about that WiseTech has, reach over the customer base, enable to get visibility over the amount of containers that are moving more broadly across a port community, and of course, supporting that industry with products that enable that containers to move in the most direct way to and from customers and the port. Okay? And this is where there's a big opportunity for us as a business to optimize container transport in a way that no one else is really able to do.
Yeah, so Michael, talk to us about Container Transport Optimization then because that's an example of the sort of community-based solution that we're trying to build to address some of these pain points.
Can you talk to us about what it is and then maybe give us an example of how it would work?
Sure. So I think we've just heard from Carl there saying that one of the biggest constraints of the industry is the amount of choke points and the variability. All of those choke points add to handling, containers being handled. It's more stops. It's more legs in terms of the container movement. So what we're doing with Container Transport Optimization is we're effectively trying to minimize that. Less legs, less stops, less container handling. We're doing this by utilizing our data set that we have as CargoWise. We're taking transport bookings across our forwarding base, and we're clustering those together virtually to identify these optimizations that can be made.
And can you give us an example of how an optimization would actually work?
Yeah, sure. Every transporter is a little bit different on this front. But if we thought about an import container coming into any given port, there's a transporter. He probably has his own yard, and let's just assume this is the first job of the day. He'll need to drive out to the port, probably with nothing on the back of his truck. So that's a dead leg, as Carl was referring to. He'll pick up that container from port, and Carl's briefly touched on the difference between opening hours of ports versus BCOs or importers. So that container will be driven back on the back of the truck. It's a full container to the truck's staging yard where it's probably unloaded, packed away for delivery later on in the day. Then at some point, when it's ready, it will be loaded back on the truck, taken out to the importer.
Again, another leg, another stop. He'll leave the container there because the BCO or the importer is free to unpack that over a certain period of time. So he'll drive back to his yard, and he'll have nothing on the back of his truck. I mentioned earlier, the shipping or the ocean carriers own those shipping containers. They want them back at the end of the day. So once the importer's finished unpacking that container, the trucker will drive all the way back to the importer, nothing on the back of his truck again, pick up that empty container now, and he'll take it to an empty container park. And to make matters worse, I'll just cut this short in case I'm losing everyone. But again, there's an opening time disparity between empty container parks, so he might stage that back at his yard again.
Then this empty container will be either taken to an exporter that has a need for an empty container, or it might be taken back to a port because we've got an excess of containers in this country at least, so they need to be taken back overseas where they can be reused elsewhere. So that was a mouthful. Hopefully, you understand sort of the complexity and the number of stops and the number of times that container's handled and the number of dead legs that are involved. So one of the optimizations that we're looking at in the first phase of container optimization is something called triangulation. This is something MatchBox has been doing for quite some time, but at that local optima level. Triangulation is effectively identifying opportunities where we can reuse those containers and effectively cutting out those legs.
This can have so in that example I gave, I think we're somewhere between eight or 10 legs for the shipping container. By identifying this reuse opportunity, we can cut out at least four of those legs in that scenario. So you can understand the benefits there for the forwarder and for the trucker in removing four legs.
Yeah. How are we going to sort of drive adoption? How are we going to get our forwarders to actually use CTO?
Yeah. Okay. CTO is not a new module for CargoWise. What we've done is we've baked the functionality into the existing modules that our forwarders use today. Our forwarders use shipments. They use transport bookings. Container Transport Optimization, you can think of it as a switch. Our forwarders will turn this on, and they start utilizing Container Transport Optimization straight away.
So it's really easy for our forwarders to adopt, and therefore we're anticipating a relatively rapid uptake of the product as well.
So it's just there in the existing module button to press once?
Yep. It's as simple as that. It's baked right into the existing module.
It's simple for the forwarder, but there's a lot of complexity in the background because CTO is a new product for us, isn't it? So there's a lot of smarts in the background, but.
Absolutely. Absolutely.
Okay. All right. So in summary, you can see that landside logistics hopefully is very complex. There's a huge amount of waste in the industry, and we've got solutions that address some of those problems at different levels, including Container Transport Optimization, which is kind of at that community level. So thank you very much for that.
We're now going to move on to the final Q&A session of the day for the last half hour or so. I'm going to invite back to the stage those people that were involved in the other product sessions, and Caroline's going to come up to moderate. So thank you very much. Thanks, gents.
All good? Okay. Thanks a lot, Michael, John, and Carl. So welcome to the product Q&A session now, where we'll open to the floor on questions either on landside logistics, including CTO, Global Customs, ComplianceWise and Warehouse, and CargoWise Next.
Maybe just before we start, I might just sort of open a question on CTO, given that we just finished that session there, and I'll open it up to the panel. I guess in terms of the opportunity for Container Transport Optimization, did we want to perhaps sort of summarize what that is? Maybe Richard, did you want to start with that?
Thank you. Look, I think the way to think about this. I want to simplify what is an incredibly complicated set of problems and an industry which has been trying to optimize itself unsuccessfully for probably 30 years. The lack of a fundamental overarching model of high-level data that allows you to choose the best possible routes through a system at a whole-of-port capability is what we're really trying to build here. It's not just about matching an export container with an import container release.
It's not about optimizing the gates of the port. It's not about stopping truck wait times. It's not about stopping dead legs. It's not about stopping inefficient use of trucks. It's all of those things as a single component. And it's such a huge problem, and the cost of the industry is so massive. The economic opportunity in that space is truly huge. It's probably larger than any other one of our business areas. The fact is that it's a very complicated problem that can only be solved at scale and with very sophisticated data science and with very sophisticated layering of applications and instructions and embedding the community, the forwarders, the cargo owners, the supply chain managers, the ports, and all the other participants, the trucking companies, and so forth in a single model that gives everybody in that chain a better outcome. And the outcome isn't 10% improvement.
It's not 20% improvement. It's probably more like 40 or 50% improvement in cost base if it's done at scale and to the maximum of the efficiency that can be done. So imagine an industry which spends $100 billion a year on transport of trucks, and you save half the cost. That's a huge, huge opportunity. It's also complex, and it's worth getting it right before you get it out. So one of the things we're trying to do here is to make it so that it is perfected to the point where it is unassailably good and irresistible. It's as implementable and irresistible.
Great. That'll do it. Yeah. No, that covered it. Thank you very much, Richard. We'll now open up to questions on the floor. Please raise your hand. Yes. This table over here.
Sure. Thanks. Andrew Gillies at Macquarie. Richard, you just spoke to a 40% improvement in the cost base of logistics providers, and there was a little bit of talk earlier in the day of potentially changing the revenue model. It seems like if you are sort of helping these global 3PLs save money on logistics, it is a value share where maybe you deliver a 40% benefit to their cost base and you get a certain percentage of that. Is that a reasonable way to think about a potential evolution in the revenue model?
It certainly is. I think any time that you're extracting so much cost base, I mean, when we're doing optimization in international logistics forwarding, we're probably taking 10%-15% of the cost out, and we're doing that through licensing of the software. And look, there are improvements in models that we can work on in all these areas.
One of the things that we are thinking for the future as a generality is the idea of what do the new models look like and how we can make those work. If you're saving half of an entire cost base, and in some cases, you've got one live leg that's a container onboard a truck moving from somewhere to somewhere and two dead legs of roughly the same distance to affect that one live leg. At its worst, it can be two to one inefficient. Three legs of which one is a paid leg. There's a lot of opportunity to improve. You're not going to fix everything every time, but if you can continue to optimize and you can do that at a global optimization level, yes, the revenue model would be to extract a fee for that service.
In fact, MatchBox right now, Carl, actually extracts a matching fee, which I think currently is about AUD 50. Is that right?
It's AUD 70 currently.
AUD 70 for just one of the optimizations, of which there are probably 10. So I think we're probably in the right space in terms of revenue opportunities. The question here is what happens with MatchBox is it's coincidental that you get a match. Its model is a collaborative matching of import container being de-hired and export container being re-hired. That's opportune, but the match number, the number of matches you can get is relatively small compared with all container moves, but it's a AUD 70 opportunity for the match. What if we took that to 80%? That's probably 5% of containers.
If you took that to 80% of containers and you still charge the $70, that might be. I'm not saying it is the revenue model, but that might be a way of thinking about that.
And then maybe just one quick follow-up. In terms of a lot of the products we've heard about today, it seems like WiseTech has historically been thought of as freight forwarding execution in the first place. It seems like the product set is more developed now for shippers, I mean, Maersk customer, BCOs as well. It seems like there's kind of more of an expansion into addressing customers that perhaps historically have not been thought of as WiseTech customers. Is that a fair assertion? And should we be thinking about potentially addressing that part of the global manufactured trade volumes that you haven't historically addressed directly?
That's a great question, in fact. We were probably going to try to ask that question because you didn't ask it.
It's been asked.
The way to look at this is that let's think about this as a set of logical constructs. So first of all, freight forwarders and logistics operators generally are asset-like businesses. They don't own boats, they don't own trucks, they don't own planes, they don't own rail. They are basically two things. They are a piece of software. In WiseTech's case, CargoWise One, CargoWise Next, is a very deeply integrated whole-of-system product, an enterprise-level capability. And then sitting on top of that is their profit and loss balance sheet and their labor force.
And what they're doing is they're taking highly integrated software, adding their financial capabilities and their labor force to it, and then providing a service to the industry to enable supply chain consumers, beneficial cargo owners and others, importers, exporters, etc., to move the freight. All right? So our customers are in fact labor-hire organizations with a software package. Now, all we're trying to do here, and by the way, we are not planning to go to our customer's customers and start winning their business and to exclude the forwarders from the business. Quite the reverse. I've said this. We've been asked this question many times, and I've answered it very distinctly, very specifically, despite a number of commentators saying that I must be planning something different. I'm not. We're not.
The issue is that our customers are best when they provide the ancillary services for logistics and that the software drives the process. So if you continue to add value to software, if you create more and more of that capability and you put that into the hands of the importers, exporters, and other beneficial participants, shipping lines included, what you're doing is you're basically taking that global integration that we talked about with the forwarder, who's—forwarders aren't really forwarders anymore. They're actually global integrated logistics providers, meaning they do all the layers up and down, import, export, the landside bookings, all the other things. They're integrated as a vertical capability, but they're adding labor to software and bundling and selling it as a service.
We're planning to do that at scale, going further through the supply chain to all the participants so that they have a single global capability: the shipping lines, the cargo owners, the importers, exporters, all the traders, and the forwarders. And we're hoping to be able to make this model so that the forwarders actually have more business with those people because they're adding efficiency and they're outsourcing the labor that is their main game anyway.
Thanks, Richard. I think we've got a relevant question just from the online platform, just to sort of reiterate the market participants and who we're targeting. Can we have that question, please?
Yeah. Sure. Thanks, Caroline. Yes. Question is from Alex Liu from Artisan Partners.
Given the vision for CargoWise is to be the solution for the entire logistics industry, what is the plan for the company to penetrate the BCO market while avoiding the perception of competing with CargoWise's existing customers? With the availability of Neo, is there anything still missing from either product or go-to-market perspective for the BCO market?
I think, first of all, that has been answered relatively comprehensively, but I'll just add the Neo piece to it. And many of the people around this group here are actually involved in that Neo integration. And Neo is a front end to the CargoWise backend that allows our forwarder customers to participate directly into the integrated logistics piece, but it doesn't extend into their trader and trade relationships.
Now, so there is a global trade management piece, which we are planning to add to this, which connects to CargoWise Neo but is not CargoWise Neo itself. It's an extension to Neo. And that trade piece would be connecting to CargoWise. It would also be connecting on the other end of the application, doing all those trade pieces that we're connecting to Oracle and SAP and Microsoft Dynamics and many other MRP and ERP systems. And it would also be able to connect to non-CargoWise forwarders in much the same way as it connects to Neo and to shipping lines in much the same way as it connects to non-CargoWise forwarders and Neo. So we're not planning to just make this about CargoWise.
We're planning to make the supply chain management piece, the global trade management piece, using many of the capabilities that we have, but marketing and bundling it through those customers who are the logistics providers. It's the trade, transport, and logistics industry brought together as one platform with those GTM components, those global trade management components as an add-on to what is already there, but an extension in the sense of making it truly global across all the parts.
Okay. Thanks, Richard. I think that's abundantly clear now. Yeah. Yes. A question over here, please.
Yeah. Thank you, Garry from RBC. Thanks so much for the demonstrations today on those three products. It was very valuable.
I guess if I had to isolate, or if you could for us, if we could isolate each of them and try and rank them in terms of one, the long-term revenue opportunity, if you could help us frame that up for each of them, and two, in terms of adoption, I mean, what in your view is most likely to see faster uptake or adoption and why?
So I think maybe I'll sort of start here and then maybe throw to a couple of the panelists. So I think in terms of the opportunity, what we've said in the past is that I guess where WiseTech is today is predominantly off the back of forwarding. And if we have a look at customs, we think that it's probably equal in size to what forwarding could be.
If we talk about warehouse, again, it could be equal or a little bit more than what forwarding could be. And then we just heard Richard talk about landside, which possibly could be bigger than all of those. Right? So I think in terms of the potential market opportunity, that's one of the ways that we look at it. I think the other question was around adoption. So I think with forwarding, even though that's the predominant area that WiseTech has built its success and growth so far, we know that out of the top 25 global freight forwarders, only just over half of those are on a global CargoWise rollout. And so there's actually still plenty of runway to go there in terms of the forwarding module itself. And I think with Warehousing and customs and landside, obviously they're not as far penetrated as forwarding.
So we still have plenty of opportunity in that area. Andrew, did you want to add some comments?
Yeah. Thanks. And Garry, just to clarify, were you asking about the three breakthrough products as well? Specifically, yeah. Okay. Look, ComplianceWise is out there. It's with our customers right now. We've heard from the team today just in terms of how that product works and how important it is. The uptake on that we expect to be quite quick because it's there as a core part of the product. Angela did a fantastic job today talking through all of the new product features that are in CargoWise Next, right? Or at least half of them. Anyway, we could have been here for another three days if we'd have gone through them all, to be quite frank. It's that extensive in terms of some of the new product features that are there.
A lot of customers have been using those new product features in our early access program over the past 12 months or so. We know they work. They're out in the market. The customers are wanting them, and we expect that the uptake on that will be quite quick. I think you've just heard how important Container Transport Optimization is, and once we launch that product at scale into the marketplace, we get the industry using it, the cost savings are just tremendous. So again, you would expect that the uptake of that product, even though it's in a sort of new area and it's attacking that fourth layer of cost efficiency for us where we're reducing the direct cost of shipments for our customers, it's a different cost bucket, but the demand for that product will be extensive when it rolls out, so it takes out penalties as well. And the ComplianceWise on the penalties, yeah.
Also, there's penalties in transport optimization as well.
Yeah. So look, it's hard. What's your favorite child, right? They're all great.
Thanks, Andrew. I think we've got a question at the back there.
Paul Mason from Evans and Partners. Just on Container Transport Optimization and the rollout plans and pace, you guys used the word rapid, which is a word I think a lot of people were hoping to hear. But could you maybe expand on that word a bit and give us a bit of information about sort of the number of integrations that you have got versus what you need for global coverage?
If maybe you've got all of the integrations you already need with all the ports and things like that already, but if the integrations to get the right data isn't the roadblock, then why is there sort of a geographical country-by-country sort of pace to the rollout?
I might take that first and then I'll pass to John. The first thing here is that all integrations, the way that you think about this is the dataset that we need to make the optimization work is largely already with us. We have very, very strong visibility of container bookings, where the containers are, what they can do to match them. There is still more to do, and it is a very complex problem because many of the terminals have independent systems, and some of them are actually trying to lock them up and make it hard for external.
They want to kind of own the platform themselves, so they make it hard for a non-customer to integrate that data. But again, we've got a solution for that. There's a lot of pieces that we can do now. There is more that we can do over time. And you really need to have visibility at every level and every moment. And we've got a lot of that, but we haven't got. And that's why we bought Blume and Envase. It gave us more of that visibility. But there is still more to do. And so maturity is different to adoption. Adoption, once you've got a value proposition that is as strong as we think it is, it'll adopt because of the cost savings. And it'll be a rush to get to the cost improvements.
But there is still going to be a maturing of the model to give more and more perfect match, effectively. John?
Yeah. Look, I don't want to dampen anything, but it is important to recognize this is a new product. And we're going to start piloting in Sydney. And as with any pilot, we'll learn from that and we'll modify, and the product will improve over time. We're focusing on a single optimization first. There are many, as Richard mentioned before. There are probably 10 different optimizations. We're focusing on one initially, and then we'll expand the model to cater for all of them. This will take some time, but it's important to recognize that after the piloting, whatever's worked well, we'll roll out quite quickly to the rest of Australia and then the West Coast of the U.S.
Thanks, John and Richard. I think we've got a question here at the front table. Oh, over here. Sorry, on the right.
Hi. Roy van Keulen from Morningstar. It seems that MatchBox has the potential to be a business that's got great network effects and the likes. But to get those, you need a certain liquidity within the network. So I'm wondering how you built that, how you achieve it just first in one place. And then there's often a strategy of rolling out network effects first from a central atomic network and then going to adjacencies like Facebook starting at Harvard and then going to the next one. So how are you trying to achieve liquidity in first-to-first location and then spilling that into other movements, other geographies? What's the strategy on that?
Probably a good way to answer that is to talk about the key things that WiseTech brings that MatchBox in its before joining WiseTech was missing. Okay? Because to truly optimize container transport movements, you need to have access to data. So you need visibility across the port community. You need to have the ability to influence or control the freight movements itself. So you can see the container movements that are taking place, and you're able to make decisions about how those containers should move through the supply chain. So it's access to container movements themselves. And you need a pretty innovative product solution that's an automated, sophisticated engine that does two key things: identifies the optimization opportunity to start with, but more importantly, it then actually makes the execution of that optimization easy for the people that need to take advantage of that opportunity.
And the product around that is really important. So then if you think about what we've achieved by joining WiseTech is we've heard over today the extensive data assets that we have. And as Richard said, there's still a bit more to do. But we've got, when I say we, WiseTech have a lot of the key data assets that are needed not only for this market, but for many countries. If you look at the customer base, the world's leading global freight forwarders, top 200, we've got a good percentage, a large percentage of that business. So that means we already have visibility and influence and control over the container movements moving across many countries. MatchBox didn't have that. We didn't have the rich data assets that WiseTech has.
And the other thing, as much as we were a product company ourselves, one of WiseTech's biggest strengths, of course, is its ability to develop innovative products. Right? And they were the three key things when I met Richard, and we looked at the opportunity. We thought we could achieve so much more by being part of WiseTech. And so to answer your question, I think WiseTech's in a perfect position to optimize container transport globally better than anyone else can because it already has the key assets that are needed to truly optimize. And you're right. To get a network effect, you need participants. And participants will come when they see value. As I have with MatchBox, they could see value in collaborating with other parties to exchange containers.
With having those key things I've just talked about, when we look to introduce this in other countries, everyone wants to run their trucks as efficiently as possible. The freight buyers want visibility. They want reduced transport costs. So the needs and the problems we solve are the same globally, and WiseTech's in a position to take this to the world at a pace that I don't think an yone else can.
I just want to add to that network effect comment. We are talking about at least two-sided transactions where there's a benefit to the buyer and a benefit to the supplier. But in many of these cases, there are multiple parties in one transaction. There's the shipping company. There's the terminal. There's the trucking company. There's the forwarder, in some cases, or the cargo owner directly.
And there's almost always four people, four parties that will benefit from the efficiency. Less containers globally, less congestion at the gate, less containers having to be returned and then rehired, and less dead legs. There's a whole bunch of things that benefit every party in the transaction. Now, you shouldn't ever stand between a freight forwarder and a bucket of money. You're going to run over in the rush. This is actually what's going on here. If you can reduce that to a quantifiable economic benefit of substance, people will adopt quickly.
Thanks, Richard and Carl. Yeah, there's a question on this table here, please.
Yeah. Hi, it's Siraj from Citi. I have three questions. Just first one. At the AGM update, there was a mention about significant other developments. Just keen to hear a bit more color on what they are.
Is it just the new features you mentioned here, or is it trade management that Richard was talking about? Just any color on that would be great.
Yeah, sure. So I might just throw to Andrew on this one if you wanted to shed some light on this one.
Yeah, thanks, Caroline. Look, Siraj, I think it's what we talked about this morning, right? A third of our revenue is reinvested in R&D every year. 5,600 new products over the last five years. AUD 1.1 billion invested. We're always working on things that you don't know about. And we're not going to talk about them today either. Just thought I'd try. Second one. It is getting late, but we're still here.
Second one. In terms of Container Transport Optimization, pretty clear there's significant savings here. But I'm a bit confused because it seems like it will take time.
It's starting in Sydney. It's only one optimization that you're trying for right now. So that $75 million revenue impact at the midpoint, is that just for that one optimization? Is that the way we should be thinking about within those regions?
Yeah, sure. So I think, Andrew, did you want to start, and then maybe we can throw to one of the landside guys?
Yeah. So look, we've reduced our guidance. There is a delay in CTO versus our initial expectation. That's all centered around making sure that the product that we launch is truly the product that delivers the benefits that we've spoken about just here. There are other things in our guidance, again, that we've not discussed yet that sort of make up the difference. So I think you doing the math there is fine, but there are a few other variables to that equation.
Look, when Container Transport Optimization does launch, we'll have a clear idea about the uptake and the match rates and the amount of penetration that we're getting through the industry, how quickly that rolls out in the pilot markets that we've talked about, and then where we go next with the product.
Can I just add? It's very important you don't think of us as a one-trick pony. We've got a significant number of smaller adaptive changes that continue to flow through the application, and they'll all be in CargoWise Next, not in CargoWise One. But we are working within that 1,000+ per year that we do. There's probably 10 that are very significant and two or three that are really big. And as a matter of course, we don't pre-announce those things unless there's a reason to do that.
In the case of the future, we've got plenty of ammunition, and we've got a lot of things that we've got loaded into the barrel, but we haven't lit the fuse.
And just last one, Richard, just following for the BCO discussion, quite clear that you're trying to make the freight forwarders win more business. But there is a significant 50% of volumes that's directly with carriers. And you have CargoWise for carriers as a solution, right? Is that an area that needs more development work and more functionality to sort of address the whole supply chain? Thanks.
So the difference between a freight forwarder and an ocean carrier or any other transport provider that owns assets is just the assets they own. They're both providing the same service. Some are doing it by directly controlling the assets.
Some are doing it by managing the logistics around and reselling the assets. But what we're trying to do here is to make the recognition that we have a very substantial customer base in the integrated global logistics space, what we call freight forwarders as a colloquial term, and also in the shipping lines, which is about 90% of all international transport, is done through ships. And we have very strong relationships. We've developed and worked very hard on the relationship with shipping companies over the last 10 years. And that relationship is starting to pay dividends as well. Now, we're not saying that we're going to just go through freight forwarders and not deal with direct-to-ocean liners.
But the thing is that a freight forwarder, as a service provider, can still provide various services on a global scale that most beneficial cargo owners, most supply chain consumers currently use with small local companies. And if you have the most efficient software and you have the right integration model, our large customers can provide that to the world as well.
Yeah, just here at this front table.
Thank s. It's Nick Basile from CLSA. First question is on ocean carriers and the role or the relationship, how that's evolving. Specifically interested in, for example, the fact that over the last 10 years, you've built very close relationships with forwarders and arguably created a bit of competitive tension where those that are on CargoWise are getting the productivity benefits and those that are not, as you've highlighted, are not getting the same level of volume uplift.
So when it comes to Container Transport Optimization, have you had much buy-in yet with these carriers who own the assets and how might that evolve? And the second question is just on data science. You talked about the fact that you've made some hires there. What's been the role in data science or AI potentially in terms of developing this product? Because you've talked a lot about the data assets, but obviously, it's also about harnessing those assets.
So I think just on the first one, I might just actually ask Carl to comment on ocean carriers because one of the very valuable things that we acquired as part of acquiring MatchBox was actually the relationships that you had established with carriers.
Sure. Yes, I've had a lot to do with the ocean carriers over the last eight years.
What I've learned about them is that they are very open to leveraging the expertise that sits outside the ocean carrier. What I mean by that is the ocean carriers have ambitions, obviously, to provide a broader range of services to their customers, more end-to-end. But in order to actually do that and provide the service, offering the service and being able to deliver the service are two very different things. This is where they understand they need to collaborate and work with other service providers that have got the capability, the data assets, the tools, the software that will support their own strategic agenda.
So this is why I think that, knowing what I know about ocean carriers and what they're trying to do around supporting their customers, someone like WiseTech offers them a suite of products and solutions that would enable them and will support the strategy that they have. So I think that they will view someone like WiseTech and the capabilities that we provide in a very positive way because they understand that for them to develop the capability themselves or acquire the data that's needed, that is going to take them a long time. So it comes back to this, well, let's partner with someone or leverage and work with a party that's got the capability now to support our own agenda. So that's why I think ocean carriers will be drawn to doing more with a business like WiseTech.
I think for CTO specifically, ocean carriers are one of the parties that Richard spoke about, right? They're one of the participants that would benefit overall from what we're trying to do with CTO in relation to, I guess, more effective utilization of their containers is one aspect. But they're actually a beneficiary of what we're trying to do with CTO as well. I think your question was around, is it data science and how we're harnessing the use of the data?
Yeah. So I mean, I think with that answer, we get the sense that there's value to carriers and therefore they're going to benefit from this product just like forwarders will, which has been a lot of the focus.
As you said, the second question was just how are you using data science or AI, perhaps, with this specific product given it is described as a breakthrough?
Sure. John, did you maybe want to comment?
Yeah, sure. Look, in WiseTech, we have quite a sophisticated data science team. We're probably employing more than 40 data scientists at the moment. In this specific product, the algorithms that we're using are not. I wouldn't say that they currently fall into that category of AI. They're pretty well-known search-type algorithms. It's not to say that we're not going to use AI in this product. I'm sure we will over time.
I think we'd say we're not going to use GenAI for this. GenAI is a different thing. This is conventional data management and using optimizations that are clear queries of the data.
But the difference for us is the data is at such a scale that we have a lot of optimization opportunities out of that. If you've got 10 containers and they're sitting all over the metropolitan area, trying to optimize them is quite hard. If you've got 10,000 containers, then your optimization opportunity becomes massive. That's not to say that we're not using GenAI as well. And there's a number of projects, including the Classification Assistant , which we will probably end up being an automation. That's a GenAI product. And there's a helper coming out for CargoWise, which is an interactive helper. That'll be GenAI. There's a number of other areas.
We're not a one-trick pony, so there's many things we're doing at once because the way the team structures are, there are people working in their specific areas and their specific goals, and there's an alignment across the company about bringing all the values out.
Great. Thanks a lot, Richard. So that brings us to a close on the product Q&A today. So thank you very much to our product panelists and to Richard and Andrew. I'd now like to invite our chairman, Richard Dammery, to the stage for closing comments. Oh, okay. Thanks.
Carolin e. Firstly, you can hear I'm losing my voice a little bit. I've had this nasty bug for weeks. Congratulations on your staying power. It's been a long day. I said this morning when we opened the session that we really had two objectives from this Investor Day.
The first was to deepen your knowledge and understanding of what we do in WiseTech. And hopefully, you feel that's been met. And the second was to allow you to see the depth and quality of the management team. When I went and met with people after being appointed as chair, I had the feedback from a number of you that people knew Richard, people knew Andrew, but you didn't feel like you knew the rest of the team. Well, I think from the feedback I've received in the sessions over morning tea and lunch, etc., I think you've now seen the depth and quality of the team and the longevity of the team. A number of you have commented. We talked this morning about culture and the Credo as being an essential part of WiseTech's success. I think you've seen that in action today.
Thank you for coming. We had around 100 people in the room, and I'm told about 400 people online on the webcast. I think that's enough interest to have justified having an Investor Day. We'll look forward to seeing you again. We've got drinks on outside, so please come and join me and the Board and the rest of the team.