Good morning and welcome to WiseTech Global's 2020 Digital Investor Day. I'd like to thank you all for attending today's event, and I'm excited to share with you the incredible lineup of presenters across today's agenda. I'd like to begin by acknowledging the traditional owners of the land on which we meet today. I would also like to pay my respects to elders past and present. Today's agenda is focused on our three P's: Product, Penetration, and Profitability. Richard White, our founder and CEO, will open the day with a session covering our strategic priorities. This will be followed by a series of presentations from our product managers, our senior management team, and our valued partners, Zinnovate, and conversations with two of our global customers, DHL and Aramex.
The materials and content that you will see today will be made available on our website, and the presentation slides have also been lodged with the ASX this morning. Before I hand over to Richard, there are a few housekeeping matters. There will be a five-minute break following the product session. As you watch each session, you will be able to submit questions via the Q&A box located on the right side of your screen. Please include your name and company when submitting your question. We'll address these questions during the Q&A session at the end of the day. Our team is on hand in case you experience any technical difficulties. Please email investor.relations@wisetechglobal.com or submit your questions via the Q&A box. We will now play a short video on WiseTech Global before Richard commences his session. Thank you.
At WiseTech Global, we are deeply embedded in advancing human potential. We believe human ingenuity, combined with technology, unlocks opportunities never thought possible. We are a force for good, improving productivity, connectivity, and resource usage across 160 countries worldwide. We are systems thinkers with a track record of delivering globally relevant solutions with deep automations, clean data sets, integrations, and powerful compute engines. Our future growth and innovation come from the talent, motivation, and enthusiasm of our people. Our team of 2,000 extraordinary innovators spans across more than 55 offices worldwide, and we continue to grow rapidly. Our global family of companies and their products bring together centuries of supply chain expertise and intelligent software solutions.
With more than half of our people focusing on product development and innovation, we are positioned at the forefront of technology in managing international and cross-border logistics, changes in trade patterns, and evolving logistics regulations. Our breakthrough software solutions are renowned for their powerful productivity, extensive functionality, comprehensive integration, deep compliance capabilities, and truly global reach. We bring meaningful, continual improvement to the world's supply chains, replacing aging, legacy, proprietary, and domestic systems with efficient, highly automated, and integrated global capabilities. Our global logistics execution platform, CargoWise, streamlines the movement of goods and data across the world's supply chains, enabling logistics service providers to execute highly complex transactions in areas such as freight forwarding, customs clearance, warehousing, shipping, tracking, land transport, e-commerce, and cross-border compliance, and allowing them to manage their operations on one database across multiple users, functions, countries, languages, and currencies.
We are evolving rapidly, expanding into more products, deeper functionality, more geographies, driving our long-term growth and market position with each new innovation. We are building a global supply chain solution that is modeless and borderless. We are transforming global trade. We are WiseTech Global.
Good morning, everyone, and welcome to WiseTech's Virtual Investor Session. The purpose of today's session is to provide you with greater insight into how we see the opportunity that exists for WiseTech in terms of the size of our total addressable market and its ongoing growth in the context of structural changes taking place, the competitive landscape, including the opportunity for WiseTech to increase its market penetration, and most importantly, why WiseTech's strategic focus on product, penetration, profitability, and of course, our people ideally positions us to be the logistics software of choice for the major players in the market. We will share with you today demos of our technology and the details of our R&D pipeline and provide you with an update on our acquisition integration process and our strategic priorities to deliver the greater market penetration and growth.
Let's kick off with an overview of the size of the total addressable market and the structural changes that are taking place. As you know, we operate in the global logistics service provider software market. Our CargoWise offering provides a cloud-based supply chain and logistics execution software platform that enables our customers to manage their involvement in logistics and the global supply chain in areas such as freight forwarding, customs clearance, tracking, warehousing, cross-border compliance, and transport by air, sea, rail, and road. According to research firm Armstrong & Associates, the global logistics market is valued at approximately $9 trillion and expected to grow at approximately 5% through to 2023, reflecting increased global trade flows. Gartner estimates transport and logistics IT expenditure in 2019 was valued at $164 billion, or approximately 2% of the global logistics marketplace.
Looking more specifically at the supply chain execution segment, Gartner estimates this to be valued at U.S. $4.7 billion in 2019, with the broader supply chain management IT segment valued at $15.2 billion. This is supported by Allied Market Research, which estimates the global supply chain management market to be valued at $15.9 billion. We have for some time spoken about growth in global logistics occurring at a time when structural change is also taking place. Logistics service providers are facing a myriad of challenges, including increasing supply chain complexity, greater regulation, compliance hurdles, and cost pressures, resulting in a move to digitalization or what we call straight-through digital processing when you consider CargoWise One and CargoWise Neo, growing demand for an integrated global logistics technology solution, and further industry consolidation.
Recent events such as Brexit, trade tensions, and many others are compounding the complexity of global logistics operations and dramatically increasing the volume, complexity, and compliance requirements of import and export customs entries. Formal requirements for international trade, including customs and border requirements, have also been moving to whole-of-government electronic processing called Trade Single Window in recent years, a process that will be continuing to add complexity and data requirements for some time as each country implements the WCO Single Window model. The structural changes we are seeing in response to this complexity have accelerated as a result of COVID-19. At the time of our full year 2020 results in August, I noted that when governments globally responded to COVID-19 restrictions designed to contain the spread of infection, the complexity and risk for logistics service providers increased dramatically.
At the same time, demand pressures intensified to get goods through as behavioral changes took place, with much discretionary spend moving from services and leisure to being channeled to spending on goods, resulting in what we note is a goods-led recovery. All these pressures have provided the impetus for many logistics providers to rethink their business models. Once the initial impact of COVID-19 was dealt with, it became even more critical for logistics service providers to remove legacy systems which rely on aging core systems surrounded by many small, glued-together third-party systems with inherent cybersecurity risks, and replace them with integrated digital solutions, focus on providing global capability and scale through industry consolidation, and moving to implementing specific e-commerce processes as part of the core business model blended into their well-established bulk freight models.
This pressure has continued to increase with growing demand for globally capable, highly productive, integrated logistics technology that is truly multimodal and capable of rapid adaptation to manage the changing global landscape, a demand that is perfectly matched to CargoWise. Despite the large size of the total addressable market, the competitive landscape is fragmented. WiseTech competes with a range of companies that vary by market segment and geography. In freight forwarding, WiseTech's largest opportunity remains replacing aging proprietary in-house systems, each built long ago by logistics service providers and supported by many glued-together country-based third-party systems in order to comply with modern requirements that vary widely between countries, regions, and modes of freight. In customs and border compliance, in which we have a substantial foothold with CargoWise offering a truly global product architecture, our competitors tend to be domestic-based, providing regional or partial solutions.
As the software industry has evolved, in particular with SaaS and cloud-based delivery systems, and given the substantial requirements that apply to all providers, there has been a move away from self-developed proprietary solutions towards commercial software that provides economies of scale with development, upgrade, and maintenance costs spread across many customers. There is significant complexity in the global logistics market, which affects the competitive landscape. Sophisticated, truly integrated software takes time and is complex and expensive to develop. It requires significant knowledge of the global, regional, and local environments and deep design, development, and testing to achieve high levels of capability, robustness, and reliability. It also requires regular updates to keep pace with the many concurrent changes that occur across each country and region and to best utilize the evolving capabilities of advanced hardware, operating systems, and networks.
In addition, development capability in the form of attracting, retaining, and training key talent and building specialist technology teams with embedded industry knowledge takes time and is very difficult to build and replicate. It requires a unique culture that cultivates innovation, creativity, and out-of-the-box thinking, and combines industry experience, product-led innovation, and deep technical skill sets that can identify the opportunities for new approaches and solve pain points with enhanced productivity and many unique capabilities. It is something WiseTech has built over 25 years and continues to finesse. Other relevant factors include user familiarity, integration with business processes, and the cost to customers of switching to a new technology solution provider, all of which create customer stickiness over time. This is evidenced by CargoWise's low customer attrition rates of less than 1% per annum over the past eight years.
Most importantly, customers value the network effect of having access to extensive data sets that are entered onto the platform but shared across multiple processes and departments at different stages of the supply chain. By not having to source and rekey data many times across these glued-together country-based third-party systems, customers have increased control and visibility, enabling them to operate more efficiently, productively, and cost-effectively at a higher level of compliance and at a lower level of risk. Developing extensive trade data sets and live status feeds across many modes of freight is complex, difficult, and time-consuming, and requires sourcing data from a large range of participants in the supply chain and global logistics sector. Again, this is something that WiseTech has built over many, many years and is deeply skilled in.
To understand WiseTech's competitive strength in the market and the vast opportunity for growth that we have, you need to understand our evolution and our customer value proposition. As many of you know, I founded WiseTech in 1994 with Maree Isaacs and a small team of people, including Brett and Ben, who are still with us today. At the time, we were writing code for core freight forwarding, customs, and accounting functionality through a first-generation solution with a focus on building a leading position in the Australian logistics service provider market. In 2002, we turned our attention to developing a feature-rich software solution that can meet the needs of multi-region logistics service providers. And by 2004, we had developed our second-generation global software solution, edi Enterprise.
Having built and implemented in New Zealand and Singapore, we entered the U.S. market in 2006 via an acquisition, and later that year, entered the E.U. organically, creating a true multi-region customer database with live customers and transactions that spanned across many trade lanes. At this point, we reached a critical juncture in our evolution of WiseTech. Our competitors were offering custom-built, custom-designed products with high marginal costs and without the ability to reuse much of the custom developments across other customers and regions. We realized that to achieve our objective of becoming the global operating system for logistics, we needed to make the difficult decision to focus on standardization and globalization rather than customization, and as such, our entire offering needed to be rebuilt, this time with the deep modularity needed to enable end-to-end implementation of a global nature.
I'm going to pause here because this was a critical decision that encapsulates the fundamental principles upon which WiseTech's culture and product design philosophy is built, such as Slower Today, Faster Forever. It meant that WiseTech could forfeit short-term profits and instead commit to the slower, harder, but substantially better route and begin the journey that invested 2.5 million development hours across 14 years in standardizing the thousands of global variations in freight forwarding across permutations such as countries, languages, trade lanes, transport modes, tax codifications, pricing, currency, customs and international regulations, conventions, data models, and product classifications. Our focus was on incorporating all these variables into a single integrated modular product that consolidates and integrates data and front-and-back-end processes and automates workflow, requiring data to be entered only once.
From 2008, we started to radically build on our global foundation, introducing software as a service and on-demand pricing, which allowed us to accelerate sales and further penetrate the market. By 2012, we had released our own cloud-based capability, further enabling customers to access our software solution anywhere, anytime, via internet-connected devices. In 2014, we launched CargoWise One, the current generation of our software solution, which replaced our second-generation edi Enterprise platform.
Our CargoWise value proposition to prospective customers was, "If you're willing to invest time, money, and effort in continually repeating a task, then let us invest time, money, and effort in you no longer having to do it at all." CargoWise was designed as a single standardized product whose modular front-end and back-end can navigate complex tax codes, carrier schedules, bookings, freight rates, and regional product classifications, and can leverage its customer base, their insights, varied service offerings, and data. Importantly, it meant that unlike our competitors, we would not need to rebuild every new service, tax regime, or currency that customers wanted to add. This is an important differentiator of CargoWise vis-à-vis our peers and characteristic of our offering that cannot easily be replicated. We have remained true to our commitment to standardization rather than customization and have not customized code for customers since 2008.
Instead, we have learned to productize by addressing individual customer needs and delivering a solution that can be configured extensively by the customer and be used industry-wide without code changes. This approach encapsulates our development philosophy of identifying the pain points in the logistics and supply chain cycle and developing long-term technology solutions rather than customer-specific workarounds and quick fixes that are not sustainable, maintainable, or scalable. The power of our CargoWise offering was demonstrated in 2016 when DHL, the world's biggest freight forwarder, moved from its SAP-based in-house development and signed up for a global rollout of CargoWise, the initial implementation of which is due to complete at the end of calendar 2020.
Having achieved this significant milestone, we started to think about expansion beyond freight forwarding into new adjacencies and geographies, which would enable us to triple our total addressable market by offering customers the benefit of end-to-end integration. As a result, we embarked on our ASX listing and IPO in 2016, which raised AUD 125 million to fund our expansion strategy. Since then, we have completed a further two capital raisings and over 40 acquisitions, which have delivered faster entry into new geographies, new adjacencies, relevant customer bases, and additional skills in the form of specialist technology teams, as well as access to intellectual property that we are converging with our own technology to optimize our development pipeline and expand our geographic footprint. Our targeted acquisition strategy has been deliberately aggressive to provide us with a unique footprint in the global market that would be very difficult to replicate.
The strategy was never about acquiring revenue. It was about bringing in talented and knowledgeable people in our new markets, accelerating our geographic expansion, and solidifying WiseTech as a differentiated offering in the market. We have always remained focused on the bigger picture of designing better solutions for industry pain points by creating a better product at a lower cost on a scale larger and leveraging local expertise to give us a competitive edge over other geographies. Over the past four years, we have invested AUD 348 million in R&D and established 40 development centers, tripled our global workforce to around 2,000 people, expanded into new segments and established domain leadership in global logistics execution technology, and signed up 42 of the top 50 global third-party logistics providers as WiseTech customers, as well as all of the top 25 global freight forwarders, with 23 of these using the CargoWise platform.
Developed an incredibly powerful data set that facilitates customers' ability to plan, visualize, and control global operations, and since IPO, we have more than quadrupled our revenues. Today, CargoWise provides a unique customer value proposition that differentiates it from competitors and positions us well to continue to grow our market penetration. We offer customers a global application built on a single data set with integrated modules that might otherwise be provided by gluing together many separate software applications and many vendors. Key competitive strengths of our CargoWise offering compared to other offerings in the market include integration within and across modules, which means data is immediately available in other modules, thereby eliminating duplicate inputs and allowing real-time access across functions. Integration across geographies, which means data is instantly available across regions and is translated across currencies and languages.
Integration with other customers, enabling logistics providers who interact with each other to benefit from improved productivity and greater operational visibility when they both operate on CargoWise, with data flowing through the one integrated system. Integration with other third-party systems, providing customers with flexibility to roll out CargoWise across their businesses, enabling them to integrate with other systems and other vendors' products, as well as their customers' systems. Integration with government systems such as customs, biosecurity, tax, food and drug, and other government agencies, allowing electronic processing, faster turnaround, and reduced rework. From a customer's perspective, the benefits can be enormous. They achieve productivity gains, cost reductions, scalability and capability to expand into new geographies and services, and compliance and risk mitigation.
Importantly, given that CargoWise is built using the philosophy of data-defined configurability and workflows rather than customization at the coding level, it facilitates faster rollout of enhancements and functionality. In FY20, for instance, we rolled out over 1,100 product enhancements that our customers easily accessed without requiring rewrites of customizations and proprietary functions. Also of note is the fact that CargoWise incorporates intelligent development features such as customer-definable automation and customer-definable reporting without the need for a software developer. These product characteristics are incredibly appealing to logistics service providers and make CargoWise unique and difficult to replicate. Importantly, as you will hear later today, we remain relentless in continuing to invest in R&D and product innovation to ensure that we remain at the forefront of the competitive landscape.
Despite having over 17,000 customers, including all 25 of the largest freight forwarders, we are still in the very early stages of market penetration, so the opportunity for us is vast. We have made significant progress in signing up global rollouts for freight forwarders, with a dramatic ramp-up occurring more recently. It took us more than a decade to sign up our first seven global rollouts for freight forwarders, but momentum has been gaining pace. In the last nine months, we have signed up six new customers committing to CargoWise global rollouts, a much faster pace than ever before. It is important to remember that new large customers take multiple years to roll out CargoWise across their global business. This is significant because it points to the growth opportunity that we have been in growing revenue amongst existing customers.
As these many global rollouts progress, usage and transaction revenues continue to grow as customers progressively add new countries, adopt new modules, and implement our productivity tools. This is evident with our large logistics customers, DHL Global Forwarding and DSV Panalpina, both expanding and accelerating their global rollouts on CargoWise in FY20. As of today, we have more than 20 large global freight forwarders, 11 of which are in the top 25, who have either completed their global rollouts or are currently in the process of a global rollout on the CargoWise platform. There is significant runway available in both the top 25 global freight forwarders, the top 200 logistics providers, and other international and domestic logistics segments. Initially, global rollouts were largely driven by our powerful freight forwarding product capability.
Now, however, CargoWise includes native customs in many countries built on a global architecture and new V2 e-commerce platform, transit warehouse and contract warehousing modules, and looking ahead, you will hear today about our progress in developing CargoWise Neo, which opens up a new customer segment to us and could dramatically increase our total addressable market. Whilst to date, CargoWise has been focused on third-party logistics providers, CargoWise Neo is designed for use by beneficial cargo owners, such as importers, exporters, and manufacturers. The longer-term vision is to create a multi-sided, multi-participant network that has the potential to become a global operating system and a logistics marketplace. By expanding into product adjacencies, including warehouse, e-commerce, road transport, and to difficult customer bases via Neo, not only could we significantly increase WiseTech's total addressable market, but we can also create substantial network effects and enhance our competitive position.
We can drive growth by expanding our global platform through innovation, enabling and creating greater usage by existing customers, increasing the number of large global customers using the platform, simulating network effects by creating an expanded multi-sided participant platform, and accelerating our market penetration and competitive edge by remaining attentive to our strategic acquisition opportunities, albeit at a less aggressive rate than we have adopted over the past four years. You will hear shortly from the team who will talk to our focus on product penetration and profitability, and of course, our people. These are the core tenets of our business strategy and investment proposition. Without further ado, let's start with a closer look at our product innovation and development.
At WiseTech Global, we foster an environment that encourages innovation. We solve complex industry problems and challenges with a test first, fail quickly, and improve rapidly approach.
In all of our innovation centers, we create a work environment for our tech creatives that support bold ideas and inquiring minds, where everyone is encouraged to ask questions, to rigorously test our thinking, our decisions, and our innovation.
The tension between speed and quality would normally be a problem for a software development company. We almost celebrate it and use it to our advantage.
Slower today, faster forever, or quality before delivery. This is one of our mantras. For us, it's a lot.
When we build software, we practice test-driven development. Now, test-driven development ensures that the software actually performs the tasks in the right way.
We have very solid and strong defect containment processes. Taking time to design a solution, investigate, evaluate, and then creating iteration processes in the development cycle helps us to avoid defects in the first place.
One of the things I really enjoy about WiseTech Global is that we're always trying to build the solution that works for the whole industry and for everyone.
What that gives us is a true scalable solution that solves the core problem.
One of the really effective ways that we build software is that we like to build architectures that help us give things to customers more quickly than we could otherwise deliver.
Every time we're doing a particular process, we'll do it once, and the second time, we need to automate that process and get rid of it.
Whenever we get given a request, we think, "Okay, why is this person requesting this?"
The more you ask why, the more you can really understand the root cause, right? And then the actual solution to the problem may be nothing like what the customer has asked for.
So through this process, we solve multiple problems, not just the one that the customer has said, and find a better solution than what they imagined.
We take time to create solutions that look at the root problems for our customers. We try to understand their need, their deep need. And based on that, we create solutions that have a synergetic effect on our business, on our software.
At WiseTech Global, we connect the unconnected, think creatively, solve problems, and come up with game-changing solutions. We encourage each other to see things differently and to push past the obstacles that hold us back. We break down boundaries, interrogate our own thinking, and shift paradigms. We are changing the world, one innovation at a time.
CargoWise Neo is a web-based integrated platform that enables beneficial cargo owners, importers, exporters, and shippers to link directly with their logistics provider and plan, price, book, track, and manage their freight with a control tower or digital linkage to their own ERP system, MRP system, or other back-office system. It is different to CargoWise One, where customers are freight forwarders or logistics providers who provide many services, including the consolidation of freight and the linkage of road, rail, air, and sea carriers into a full service for importers, exporters, and shippers in order for goods to move seamlessly. Neo provides easy onboarding via a portal and a digital pathway that allows digital straight-through processing of logistics transactions. It removes paper and email documents, replacing them with digital data-driven links from front to back office and from start to the end of the customer journey.
It is important to note the world's international trade volumes move via freight forwarders and logistics providers and BCOs. A substantial portion is from the BCO direct to a carrier or carriers. Therefore, Neo enables our existing customer base to better serve their customers, the Neo users, and also to allow those BCOs that have direct relationships with carriers to automate and bring into a single platform the many carriers, schedules, rates, booking, tracking, invoice reconciliations, and digital dispute managements that are required to have direct carrier relationships. It opens up a new market for direct purchasing and self-reporting BCOs, creating standardization, digitalization, and productivity for freight forwarders, logistics providers, and carriers alike. The initial market for Neo users will be the BCO, the customer of our customers, and will be distributed via our existing customer base to their customers.
Many import and export businesses use freight forwarders and 3PLs to handle the logistics processes of moving their goods. These businesses still have management and oversight of the process. Neo will allow these BCOs to communicate, share data, have visibility of logistics processes in a clear and meaningful way, and allow them to be a fully digital part of the process. While it's like a control tower for our customers' customers, it is much more than that. Built on Glow, Neo's foundation engines come from CargoWise One. Using Neo, we're enhancing and extending the CargoWise One single file system further into and across the supply chain. This reduces the need for bolt-on disparate systems and glue-like emails, spreadsheets, and PDF documents. Logistics and its interactions with BCOs is still a very paper-heavy industry.
Neo will allow digital straight-through processing of information in both directions between major parties, cutting out the need for paper, calls, emails, faxes, and manual web lookups. From schedules, rates, quotes, planning, booking, invoice reconciliation, and dispute resolution, Neo will provide automation and digital data exchange. This provides a level of data connectivity and information visibility that is becoming even more important for businesses in the cost-conscious and competitive supply chain and logistics industries. With this two-way communication between the freight forwarder or 3PL, carriers, and their customers, the return is an increase in reliability, reduction in time lags, effectiveness and efficiency, planning and execution, higher levels of predictability, and compliance with regulations, all of which translates into cost savings. With freight forwarders, 3PLs, and carriers able to provide their customers with capability that provides straight-through digital processing, they can focus on providing enhanced but low-touch customer service.
We have already been testing the platform with a select group of customers and recently deployed a beta version of Neo this month through our customers to a select group of BCOs. This beta version of Neo will have key areas of functionality but is the beginning of the major product roadmap and will be enhanced continuously while we work directly with live customers. Our test-first approach is in play here. We want to put it in the hands of early adopters and development partners to use in production and provide feedback as to improvements and additions they see as valuable. We will continue to develop and enhance the platform over the next few years and increasingly open the platform up to new customers and increased users over this time. Mike will now show you a short demo of Neo and its functionality.
Thanks, Richard.
Now let's take a look at the current development of CargoWise Neo that showcases its functionality and user experience. CargoWise Neo is a web portal that is based on our Glow platform. It works in any modern browser but can also be installed as a progressive web app or PWA, which gives it a look and feel of a desktop application. At the heart of CargoWise Neo is the tracking dashboard, which provides an overview of different types of jobs such as forwarding shipments, purchase orders, and customs declarations. CargoWise Neo is integrated with our vessel tracker to provide near real-time location of sea shipments. We are also working on flight tracker integration for the location of air freight shipments. The dashboard displays the latest milestone for each job but also allows the user to see detailed tracking history.
Milestones and events come from CargoWise, so they take full advantage of container and airway bill automation. The dashboard also contains several widgets that provide information such as the number of shipments arriving or departing this week or what's currently in transit. Clicking on the widget drills down into the details behind those numbers. There is a container-centric view of the dashboard, which also includes vessel tracker integration. CargoWise Neo provides users with a significantly improved way of making bookings. You can easily repeat a previous booking by selecting from a list of recent shipments. You can also start a booking by selecting a transport mode or a packing mode. For example, if you know you're making a full container load or FCL booking, you can click on the FCL button, and the system will let you pick from a list of commonly used container types.
There are several items on the immediate roadmap for CargoWise Neo. We're working on integrating the rate service into the quotes module, which will bring rate and schedule comparison from multiple data sources. We're adding eConversations, which will allow users to communicate with CargoWise staff regarding specific jobs, replacing the old method of using email. There's also a project to bring order management capabilities, providing access for buyers and suppliers. I hope you enjoyed this early look at CargoWise Neo. I'm personally really excited about building this product, and we're all looking forward to getting it released. Thanks for watching.
Thanks, Mike. We are really excited by Neo and the opportunity this brings to open up a new market and deepen our reach into and across the wider supply chain while enhancing the customer values of CargoWise One.
It is important to note that Neo is a long-term vision with a multi-stage release program. Through Neo, we are leveraging our existing customer network and providing a value add for our customers to provide to their customers. This creates a network effect that builds the ecosystem and increases our penetration across more of the logistics chain and multiple providers and consumers of logistics services across the industry. We are cementing the importance of the CargoWise family as a logistics execution platform and Neo as a value-add technology solution that provides an integrated platform of capabilities to the customers of our customers.
My name is Darren Matthews, and I'm part of the business development analyst team here at WiseTech Global. I've been with the company for 12 years and in the logistics industry for 23 years.
In today's presentation, we're going to take a look at a few of the many ways that CargoWise helps our customers work smarter, become more accurate, and increase their overall productivity. CargoWise is a comprehensive logistics platform that enables forwarders to streamline their shipments and boost their profitability. CargoWise is a purposefully designed logistics management application with simple interfaces consistent across all verticals and geographies. But although it's simple to the user, behind the scenes, it contains many complex and comprehensive data sets, powerful workflow and automation engines, and industry and government-verified data sets in order to handle the many complexities across the logistics industry. But it's all presented to the end user in a very logical, simple, and easy-to-understand way. The power of CargoWise lies in its deep integration capabilities, and the first of those integrations is between the different modules.
Using an only-enter-data-once philosophy, CargoWise can transfer data between a warehouse release to immediately create an operational shipment file, and from within that shipment file, it can create the customs declaration, the pickup and delivery instruction, and route optimization. In this demo, we're going to be taking a look at how our customers will take a quote to their customer and turn that quote into an operational shipment, a master file, and an invoice in a very simple and streamlined way. With CargoWise, everything begins with the customer, and inside CargoWise, an organization is any business entity that our customers trade with, whether that's a carrier, a warehouse, an overseas agent, or a shipper.
All addresses inside the application can be screened against over 200 million address data points, ensuring that any address created is formatted correctly, helping to reduce delays in the goods movement and minimizing the risk of financial penalties for incorrectly created documentation. CargoWise also records all of the personnel that work inside this organization. We've just taken a look at how the application helps keep our customers' data accurate, but far more importantly than this, CargoWise helps keep them safe in the supply chain by screening all of the addresses and the contacts against over 200 watchlists from around the world, and should any party be flagged on these lists, operational blocks will be used until somebody with sufficient security rights determines the best course of action for this situation, but the organization database is more than just about names and addresses.
It can be used to store all of the financial information regarding the customer, offering full credit control processes and financial visibility across operations and the finance teams, and to help speed up data entry and increase accuracy, templates can be set based on a relationship between the shipper and the consignee, as well as the various modes of transport, and all of this helps speed up the data entry, the data accuracy when we're processing an operational file, and with eDocs, CargoWise provides a repository for any digital document that needs to be stored against that customer record. Documents can be stored and visible globally and accessed directly inside the customer record, allowing our customers to remove paper from the supply chain and minimize their environmental impact. With the customer data in place, this can then be used across any operational record inside the application.
One of the many benefits of CargoWise is its ability to drive profitability through cost reduction, and for this, let's take a look at a spot quote. With the basic information added, such as customer, destination, and container type, CargoWise uses its deep integration capability to generate the optimum cost rate based on many carrier tariffs available from within the application, including CargoGuide and CargoSphere. Rates are populated, complete with all margins and surcharges included, helping our customers to maximize their profitability and reduce their overall cost. CargoWise's deep integration and complex data sets help our customers maximize their profitability and secure more business. With the benefit of the only-enter-data-once philosophy, at the click of a button, all of the information is transferred from the quote into an operational shipment file without having to re-key or re-enter any of the information.
To help choose the optimum routing of the cargo, CargoWise provides deep integration to all of the global sea freight and air freight schedules, helping our customers select the fastest service to meet their customers' needs. As CargoWise works on a single global database, this information is now visible to both origin and to destination, allowing both offices to work on the file all at the same time. Any changes made at destination will be immediately reflected back at origin, helping to provide a single version of the truth to all parties across the supply chain. With the booking now in the system, in order to increase productivity and operational throughput, CargoWise's workflow module comes into action.
Not only automatically delegating tasks to staff, but automating many of the manual processes, such as the creation of a document or the sending of an email, which dramatically increases productivity and freeing up staff to concentrate on more higher-value tasks, such as building customer relationships, negotiating better rates, or even being deployed to different areas of the business. The workflow screen gives managers enhanced visibility over all staff activity and of the shipment's progress. Workflow helps ensure that tasks are handled in the correct order and can release work at the appropriate point in the process, also notifying of delays or exceptions even before they happen, helping to avoid unnecessary penalties and always keeping the customer informed of the current status of their shipment.
Workflow sits at the heart of the CargoWise system, helping our customers do much more with the same amount of resources and scale their business without needing to scale their headcount. CargoWise is also deeply integrated into various customs systems, allowing our customers to submit their customs declaration information, as well as advanced filing messages to various governments, such as AMS, ACI, and AFR. With these built inside CargoWise, our customers no longer have to re-key this data into external portals or pay third parties for completing this task. But integration doesn't just stop with government systems. CargoWise allows our customers to book directly with the carriers and receive all of the transport movement details directly into their operational job file. This all helps move the goods in a much more efficient way, all from inside a single global application.
Our container automation capability means that container movement updates are pulled into the CargoWise system automatically, removing the need for our customers to scour customer websites. If and when a container is delayed, our customers will be notified immediately, and the appropriate messages can be triggered, keeping all parties informed and help reducing penalties and wasted charges along the way. The geographical integration between offices means that managing both the import and the export declaration can all be done from within the same operational record. CargoWise's global customs solution is removing borders to make customs clearance easier and faster. Using the customs tab, users classify and submit a job for clearance with the appropriate authorities direct from inside the operational record without needing to re-enter data into external platforms, saving time, money, and user frustration. Status updates are immediately reflected in the online shipment tracking portal.
With the shipment now finalized, all parties have been notified of each and every milestone along the way, thanks to our deep integrations with customs, airline and shipping lines, and port authorities. This has happened without our customer needing to make a single phone call or send a single email. With the job complete, the integrated accounting module means that operators can automatically generate the customer invoice based on pricing information already in the system. With CargoWise, our customers can reconcile that transaction and all of the operational payments from inside the single record. And with full control over which fields can be edited following the file closure, CargoWise ensures that data stays secure within the global database, maintaining a full history without the risk of information being changed. CargoWise also provides a multi-language and multi-currency platform, allowing screens and documents to be viewed in over 30 different languages.
For customs and compliance, the software is constantly updated to reflect changes in laws and local legislation, allowing our customers to overcome language barriers, calculate local taxes, and submit the right paperwork to avoid any penalties. Just like that, the shipment is processed quickly and accurately. From the point of the quote being created inside the application, the information is instantly reused to create the operational shipment file, the customs clearance, and the invoice to the customer. With workflow and the integration to all of the different carriers and rate services, CargoWise helps our customers work smarter, faster, and become more productive. CargoWise is the end-to-end solution for all logistics companies around the world, helping speed up the overall time to completion and allowing customers to standardize their processes while becoming more productive and more scalable.
Once again, my name's Darren Matthews, and thank you for attending today's demonstration.
At WiseTech, more than half of our global workforce focus is on product development, and this team of innovators, product visionaries, and developers are spread across 40 product development centers worldwide. We attract and retain talented people who have a passion for solving complex problems, and as a team, we are relentless about innovation. As you heard from Richard earlier, our goal is to be the operating system for global logistics. The logistics industry is ripe for disruption, and what we are building creates a seamless, global, integrated operating system that allows our customers to differentiate their businesses and have a competitive advantage through the use of our product.
When we build software, we look for the root cause of our customer's problem and solve for that pain point, providing a solution and technology that can be deployed globally. CargoWise provides a single source of truth with reliable, accurate data throughout the supply chain. Customers can build and configure their own platform on top of our system and ensure high compliance, which leads to lower risk for their businesses. Our internal structure is also designed in a way that enables our teams to work smarter, faster, and more efficiently. Our productivity accelerator, PAVE, allows us to run developer teams worldwide without bureaucracy, stripping out multiple layers of management and eliminating high defect rates. It also enables us to reconfigure the focus of development activities across the globe within a matter of hours to deliver highly engineered outcomes.
Similarly, GLO, our internally developed Build Once architecture, dramatically reduces the need for coding by software developers, allowing product managers to build software once and to deploy on any device or operating system. In this way, our development teams can be nimble and the environment agile. Now, the developers I'm going to introduce to you shortly are extraordinary innovators who think outside the box and are not afraid to challenge the status quo. They lead teams who are empowered to tackle difficult problems, understand the industry's pain points, and are committed to solving them. They are growing our technology pipeline at a rapid rate, building more global capabilities, data sets, and adjacent technologies to expand our addressable market. First up, I'd like to introduce Igor Malin, who leads our data science team.
Igor's team focuses on the latest breakthroughs in machine learning, natural language processing, and combinatorial optimization to extract and maximize the value of our available data. So, Igor, we've worked together for quite a few years now and are familiar with the freight industry and the vast amounts of data that it both produces and consumes. What sort of challenges does that present the industry?
Brett, this is a really good question. I think that our customers and the freight forwarding industry face a lot of different challenges, and I would like to structure them into three different sets. So the first problem that our customers are dealing with is the data entry. So the logistics industry, unfortunately, is still quite paper-driven, and our customers spend a lot of time and money on data entry into the system. So what we do is we help them with that area.
The second one is the normalization of data once it's entered the system. So we know that, for example, addresses, they can be typed in all sorts of different variations and styles, and we can have two different ways to write the same address by humans. So what we do is we take the textual information and we normalize it, such as in the system, the customers can see that it's actually the same point on the map. The third set of problems that our customers are dealing with is once they have the normalized data in the system, they have to extract the value from it. So it cannot just sit there gathering dust. So what we do is we build models to take advantage of this vastness of information that our customers have and give them back the value that we've produced.
And so what sort of value do they get out of it?
Yeah. So, for example, we track the movement of sea vessels that carry the containers of our customers globally. And using these global data sets and this global view of the movement of goods across the globe, we can produce several pieces of value for our customers. So the first one, we can give them the insight of their performance, the performance of the movement in the form of intelligence information. The second point is that we build models that allow us to predict the time of arrival and the time of departure of the sea vessels. And what essentially this gives to our customers is that they can optimize the connection points. And you know that the logistics industry is like a relay race.
Given that sea vessels, they move with a relatively constant speed, what's important is what happens at connection points. By optimizing this using machine learning, it helps our customers to increase the effectiveness of their processes.
What sort of feedback have you got from the customers that are using this technology now?
We have a bunch of customers which are our development partners, and we frequently iterate with them to gather feedback, and the feedback is really, really positive. The reason is that the logistics industry is ripe for digital innovation. In particular, if we are able to provide the estimates of arrival, estimates of departures, events in a much more reliable and accurate form, this results in savings for our customers because they don't do the futile trips.
Their trucks are not burning fuel, waiting in line, waiting for the ship to arrive, and so on and so forth. So the feedback is really positive.
Thanks for the update. That's really interesting information.
Thank you, Brett.
Freight forwarders are always looking for the best rate for the origin, destination, commodity, and quantity that they want to ship. CargoWise's comprehensive rates platform provides freight forwarders with rate visibility and control via an accurate and searchable database. I'd now like to introduce Angela Gadaev, our product manager for international logistics. Angela manages one of WiseTech's largest development teams responsible for many aspects of the CargoWise platform, including rates, freight forwarding, carrier connectivity, global tracking, and geo-compliance. So, Angela, out of your portfolio that you manage, we'd like to talk a little bit about rates today and specifically the buy and sell rates and the complexity around that.
What can you tell me?
So we start with the freight forwarder receiving a request from a customer. Forwarder needs to be able to produce quotation as soon as possible to avoid losing business to competition. But in order to calculate a quote or sell rate, forwarder needs to know what their costs or buy rates are going to be. And the process of finding the correct rate, buy rate, the correct cost is very cumbersome and time-consuming. Even if there is a contract that exists between a forwarder and a carrier, like a price list for a certain trade lane, the contract in itself is very complex because there are different port pairs involved, different cargo types and sizes. There could be oversized cargo requiring special equipment. So it's very hard to interpret the contract.
There are pages and pages that forwarders need to churn through, and it's just for one carrier. And in the supply chain, of course, there are hundreds of different carriers and service providers that forwarder needs to go through. And we're talking about just base rate. And then there are surcharges or discounts that apply, and they're live and they're changing constantly depending on weather, peak season or low season, port congestion, and multiple other factors. So there are a lot of complexities involved in this process.
And how do you help solve those problems? What's the solution?
Our rate engine automates the process of searching and applying buy and sale rates and calculating correct rates for the jobs. We can compare it with the case of when you look for a flight on an airline aggregator website.
You put in the search criteria, and the system fetches you the most appropriate competitive prices from multiple airlines, so rate engine does the same, but for the supply chain industry where rates or buy rates are collected from multiple ocean and air carriers, from CargoSphere platform for ocean and Cargoguide for air, as well as CargoWise buy and sale rates, and we can look at it as a virtual library of rates that is standardized and normalized and available for forwarder to compare easily, and then auto-costing and auto-rating feature uses comprehensive calculators to calculate correct cost over consolidated shipment and apportion this cost to individual customer bookings.
And is that available from within the CargoWise product suite?
Correct. It's available at the fingertips of a customer, so forwarders can press a button and compare different rates and shop for best carrier, best routing, and best costing option.
Or the process can be fully automated through the workflow when jobs are auto-rated and not costed and fully integrated with our accounting system, creating WIPs and accruals.
That's fantastic. So that really pulls back to the same message that I've heard from a lot of teams where you're trying to reduce the duplication of work. You're trying to use a single source of truth to get the correct information from the data, and you're trying to maximize that throughput of the industry. It sounds, again, like a win-win for everyone that's involved.
Absolutely.
Well, that's great to hear because I think that's what the industry needs. So thank you very much, Angela.
Thank you, Brett.
Our speed to market with regulatory change, relationships with many major governments, and dominance in deep cross-border compliance capability ensures we're well placed to build out the trade and border compliance ecosystems.
Joining me now is Glenn Lawson, Customs Product Manager, who is part of the global customs team developing our international customs platform designed to cover 90% of manufactured trade flows. Hi, Glenn.
Hi, Brett.
We've both worked in the customs space for quite some time. Tell me a little bit about the complexities of that.
Well, one of the main complexities of the customs space is the amount of people that are involved in it and the complexity of the data that has to be supplied to customs. So a simple export from one country and import into another involves many messages and many different actors that will take part in it. So from producing manifests by the shipping companies to producing an export declaration for the export, a manifest for the import again, and an import declaration.
And getting all of that data correct is becoming more and more important.
And so CargoWise captures all that information and allows it to push that information between the parties?
That's correct. So we could produce the manifest out of CargoWise. We can also do the declaration, both export and import. And we can also reuse the data between the export and the import declarations.
And the people preparing that information, do they actually need to be the same organization, or do they share between trading partners?
They can share that data between trading partners. So where one person fills many roles, which you sometimes have where they are both the carrier and the forwarder, for instance, they can use CargoWise to produce all the messages that they need.
This space sounds quite legislated and quite complex. Does that present any challenges for operators?
There's no doubt that the legislation produces huge complexity because there's lots of rules around producing declarations for customs. And those rules aren't negotiable rules, and 99% is really not good enough. These things are either correct or they're incorrect. And if you are making incorrect declarations, there are huge penalties and fines that can also be brought in by customs, and people can go out of business.
Okay. And I've heard a little bit about the Universal Customs Engine. Does that help in that regard?
Yes, absolutely. So we have a Universal Engine where we've actually extracted data from multiple countries, all the ones that we are currently live in, and we've actually put them into one global data model. So we can reuse that data model when we do a new country. And what we do is we just plug their data into that data model.
That's from a technical point of view of how we can use it. When we present it to our users, we then present a very consistent-looking system across both imports and exports and across countries. There is obviously some localization that is required for every country to meet its different requirements, but we try and give a global
view of that data to people.
WiseTech has made a number of acquisitions and bought some companies specializing in the customs space. Are they helping you build out CargoWise for those countries?
Absolutely. In fact, that was my first role within CargoWise. I was in South Africa, and we were one of the first acquisitions. And so I came on board to help develop the South African product originally and was helped by the people here in Australia.
Now I'm fulfilling that same role and mentoring the people in the countries that we've acquired overseas to help them get their customs systems developed natively into CargoWise.
That must present some challenges in itself. How do you ensure quality or make sure that people are working on the right things for you?
Yeah. Well, we use PAVE, which is CargoWise's internally developed system for monitoring work and workflow. So we have the very real scenario where we have a specification done in Germany. It's reviewed here in Australia. It might be developed in China and then tested again in Germany. PAVE handles the prioritization and the movement of that work from person to person seamlessly without us having to worry about it. It's also consistent. The entire company is using the same thing.
And so everyone has the same view of where the resource constraints are, etc.
Now, you said the word test in there. How do you test all of this software to make sure it actually works and stays working?
Well, at CargoWise, we use a test-driven framework, which means that we write unit tests for functionality as we develop it. And those unit tests ensure that that functionality continues working without us having to retest it manually every time. So these tests run at night, and they will tell us if any development has broken anything that used to work. Now, as you're adding more and more systems, the complexity gets bigger and bigger, I suppose. So what happens is you would have to retest all of your production systems before you could roll out a change to a new system.
So if you're developing in Germany, it would mean you'd have to test the 11 systems that I just mentioned before you could roll it out because you obviously cannot break something that's already in production.
Right. And that even stops the check-in. The code doesn't actually go anywhere until it passes all of those tests.
That's correct. It doesn't make it as far as the code base. It stays only in the developer's repository until such time as it passes all the unit tests.
Great. And in the industry, do you see any new challenges arising on the horizon? Is there anything coming up that's making the landscape more difficult?
Well, I think that what we are seeing is that there's a bit of protectionism coming in around industries.
And so you have people like the U.S. bringing in new laws about who can bring in steel from Canada and implementing those things really quickly. And we've tried to actually make a lot of those sort of rules-based things data-driven so that we can implement those new rules without rolling out new systems. But there is a lot of change coming, I think, in terms of governments speaking to each other. So sharing data where they will share the data to make sure that what the exporter says he's sending out is the same as what the importer says is arrived.
So it's becoming even more important to have one source of truth to make sure that the data is correct.
Yes, I think so because I think that they are putting in more checks and balances to make sure that people are not working the system. Right.
Thanks for the update on the industry, Glenn.
My pleasure.
Thanks. Thank you. When you think about e-commerce, you may think of the big online retailers where you buy and sell goods over the internet, and those goods just turn up to your door. At WiseTech, we solve the complexities involved in connecting all the parties and different pieces of data together to move those goods from A to Z. Stephen D'Ascoli, E-commerce Product Manager, oversees our International E-commerce platform, which combines shipping, customs, international freight forwarding, parcel, final mile delivery, and full track and trace from origin to destination. Stephen, we've been talking to some of the other product managers today, and a common theme of bringing data through the system and communicating between parties has become very important. Obviously, in the E-commerce space, that's important too.
But the volumes, I think, are where the problems are in the industry. Can you talk about the size of the E-commerce market and the volumes they have to deal with?
As an example, last year in 2019, there was 1.92 billion consumers that purchased goods online. If you put that into perspective, that's a lot of pieces of data that need to flow from the online retailer all the way to the consumer's door and the different parties that are involved in that supply chain using different systems and different sources of data. It makes it very complex.
The E-commerce space deals with a vast amount of data in comparison to some of the other parts of the industry that we're touching with, which are still very large amounts of data. What sort of volumes are we talking about in the E-commerce space?
Yeah.
From an air freight perspective, we're seeing average volumes of 1,000 online orders in one consolidation. From a sea freight perspective, we're seeing up to 20,000 or 50,000 in one container.
That's completely different to the regular international freight industry, is it?
Yeah, exactly. In comparison, if there's 1,000 online orders on one consolidation, a normal freight forwarding commercial shipment would be one.
It's really important to have good control of the data coming into the system and to categorize it and process it appropriately to keep that streamlined approach to business.
Yeah. And the visibility. All the parties involved should have visibility and be able to see where an exception is going to occur so they can mitigate that risk before it actually occurs.
CargoWise has an E-commerce module, and you're responsible for that. How does that help solve the problem?
Yeah.
So the E-commerce offering we have is International E-commerce. So we offer a solution that combines your origin freight forwarding, your origin depot, your customs clearance, your international freight forwarding, your destination freight forwarding, and your last mile carrier.
So that's covering data collection at the source so that you've actually got that one parcel of information flowing through the system, which radically improves productivity and the reliability of the data.
Yeah, that's right. So the visibility that that gives to our customers and that they can give to their customers is very beneficial. So they can see the data as it comes in from the online retailer all the way till it gets to the door of the consumer.
And which countries are you currently using the software in? We're across Australia and New Zealand with all transport modes and directions.
We've recently released the product into the U.S. with a couple of pilot customers. So yeah, we're definitely seeing a big increase in the volumes in the United States.
And is it the same software globally? Do you have different takes on it for different markets, or is it a single global product?
It is a single global product. It is country-agnostic. So we just plug in the solution from a customs perspective for that country. So each country may have a different customs declaration. So as the customs team build out new customs declarations that apply to low-value goods, we'll just plug that solution into our solution.
And what new things are coming? Is there something new happening in the space that you're excited to be involved in?
The biggest thing for us is new markets. As I said, the U.S., that's a very big market.
There were some new legislation changes last year in the U.S. for low-value goods, a new declaration type, so we're on the forefront of that, and then after that, we're following the customs plan where we just go into new countries as they go into new countries, so every country has its own challenges, but yeah, that's the exciting part for us. So it sounds like this is a great success story. It's working very well. It's hitting the market, solving a lot of the problems of the industry.
That's great news. Thanks for your time.
Thank you.
Thank you.
If you want to give your customer so much more that adds value to their business, you want to implement CargoWise.
CargoWise is going to allow us to play a larger role in our client's supply chain, where we've been able to say, "We've got CargoWise." And the person on the other side of the table has said, "That's good to hear."
Adopting for us to use advanced software is the key to the success and also the speed that we can deliver to the customer.
Knowing where your shipment is in transit is everything. That's why we moved on to CargoWise, what I wanted complete supply chain visibility.
You will be more effective. You will optimize your time, the cost. Customers will be more happy since they will receive the information on time.
I think the next not only a few weeks, a few months, but the next few years are going to be really exciting times.
I think we can really look forward to a pretty bright future working with CargoWise.
Our customers are the people who move the world. They are integral links in the world's supply chains and use CargoWise to increase their productivity, reduce costs, and mitigate risks. We continue to create solutions that support our customers wherever they operate, optimizing processes across multiple modes of transport with greater compliance, greater predictability, and greater productivity.
I'm a 20-year industry veteran of CargoWise. CargoWise is instrumental in the facilitation of international freight. I'm proud of the role that we play in that. But quite often, the supply chain has taken it for granted until it's interrupted and there's a disruption of goods not readily available. Never before has the industry been so critical or so visible as it has been in today's movements of goods.
COVID-19 has taken a toll on logistics service providers as well as the normal pressures that they've had of capital constraints, heavy regulatory compliance, and pressure on margins. And because of that, many of these international logistics providers today are embracing a digital transformation strategy. These companies have been saddled with legacy systems, with inherently strung together microsystems, with an ever-increasing concern of cyberattacks across multiple platforms. And because of that, they're looking for a single global integrated system to execute that digital strategy. And we are well-positioned today to assist them in that growth. Our 17,000 customers range from large multinational operations to small and medium-sized regional and domestic players. They include 42 of the top 50 global 3PL companies and all of the top 25 global freight forwarders. 23 of them use our CargoWise flagship product.
And we're proud to say that nearly half, 11, have either completed or are in the process of doing a global rollout. We continue to penetrate our customer base. There's a significant runway ahead of us in the top 25 global forwarders as well as the top 200 logistics service providers. Quite often, when we're in the walls of an organization, we grow with them. The product essentially sells itself. We might start with a customer on a geographical need or a functional need. And then once within the organization, it's a logical progression for them to move to a global rollout. So keep in mind that as we make a sale, there's a large revenue runway ahead of us in three fronts. One, as they're rolling out a system globally because it's complex geographically and compliance-wise, that takes time. So they grow with the product.
Secondly, they grow their business either organically or through acquisition. So they grow their business. And then lastly, we keep extending the product and offering more and more product for our customers to consume. We grow the product. Taking a look at the revenue growth of these global operations as well as our low attrition rate, we realized years ago that the exponential growth was going to come from this segment of customers for a number of reasons. They are less volatile to negative market conditions. They have aging legacy systems that need to be replaced as part of their digital transformation strategy. They appreciate what CargoWise has to offer as far as a single platform, as far as their quest for productivity and throughput. And also, they realize CargoWise has a proven scalable success record with global implementations. It's a low-risk option, which is normally a very high-risk project.
So now we have a seat at the table. If not CargoWise, who? Our biggest competitors are the do-nothing. So our job at this point is to work with the multinationals proactively and drive them to business. Enter Team Delta. We took our most successful and experienced sales individuals, and we formed a team. We realized that the deals we were going after were too diverse geographically, too complex, and too large for a single individual. So from a team aspect, Team Delta, the whole was greater than the sum. After posting a number of successes, we were able to document our strategies and processes and scale that out, not only from the top 25 forwarders to the top 200, but also across the greater sales team as a whole. It took us nearly a decade to sign our first seven global deals. We've picked up our momentum, though.
In the last nine months alone, we've signed six, and these include a. hartrodt, Aramex, cargo-partner, Seafrigo. Combine this with the top 25 forwarders we signed in that time of Hellmann Worldwide Logistics, CEVA Logistics. That, in conjunction with the 17 companies that have done global rollouts with CargoWise, includes the largest of the largest of DHL Global Forwarding, DSV Panalpina, and Bolloré Logistics. These operations need a technology that helps them drive cost efficiencies, improve staff productivity, as well as mitigating risk. CargoWise has this deeply embedded in its DNA to help them plan, visualize, and execute global operations. As we grow, we have seen a surge in transaction as well as an increased demand in CargoWise as part of our global rollouts. In addition to that, we've seen a number of our larger customers co-funding normal R&D of CargoWise in order to address their specific needs.
As a business team, we concentrate specifically on new customer acquisitions. But we realized there was an opportunity to amp up our revenue opportunities by addressing these needs of the customers to extend our product through their ideas and dollars. CargoWise is the market-leading platform for global logistics execution. We're well-placed to strengthen our position in the near and the long term. But what better way to bring this to light than to hear from a couple of our global customers? Aramex, who's rewritten the playbook and a Big Bang approach of their global implementation of CargoWise, as well as DHL Global Forwarding, our largest global implementation to date of CargoWise.
Mohammed Sleeq, thank you for spending time with me today.
Thank you, Arjen. You can call me Sleeq if you want.
Oh, thank you, Sleeq.
Sleeq, if you would, just give us a little bit of introduction to Aramex and what differentiates Aramex in the market.
Aramex is a comprehensive logistics and a transportation solutions provider. The company quickly grew into a global brand operating in 65 countries. And we have almost 15,000 employees across the world. The services that we offer are express services, international, cross-border, and domestic included, freight forwarding, warehouse management, and e-commerce services and supply chain.
Aramex is focused on being a digital innovator. Can you tell me a little bit what drove you to look for a logistics execution platform and specifically CargoWise?
So we kicked off a large enterprise transformation program two years ago in multiple areas of the business to include customer experience, transforming the last-mile processes. Big data analytics, again, is a big part of our transformation journey.
And of course, the core modernization of our core landscape. So we had to look for the best solutions out there or platforms out there that can enable the business and transform our business processes. And of course, the SaaS solution versus the build vs buy component is very important for us. So we've chosen CargoWise as a SaaS solution for the industry best practices and the global consistency because this solution has been vetted and tested with a lot of freight forwarders in the market, including the network of partners and agents that we work with in the world. So I think CargoWise was the obvious choice. And we obviously made that decision simply because of the best practices that CargoWise offers and the out-of-the-box solutions and integrations that come with CargoWise.
We really wanted to hit the market with a solution that can deliver value on day one of the implementation. We really didn't want to reinvent the wheel and rewrite a freight forwarding engine for us because historically, we used to deliver most of our solutions or core operating systems in-house. Today, we're really reshaping this strategy and looking at components and solution components and technologies that can deliver value without the need for us to reinvent the wheel. It was the obvious choice given the market that we are in today.
How important was your customer experience, your shippers, your companies in making the decision? What benefits and value add will CargoWise add to your customers?
The freight forwarding industry is seeing a massive transformation. Of course, the industry is really looking at new ways to transform the customer experience.
Our vision really is to move and interact with customers in more self-service kind of ways. Obviously, CargoWise will come in and support and back up this strategy and make sure that we deliver on our promise and our commitment to our customers. Specifically, when we look at the freight forwarding product, I think the vision and the dream for us is for customers to be able to move a container, let's say, from one location to the other without the need for interacting with anyone at Aramex, right? With an investment like CargoWise, we will be able to achieve that vision and make sure that we offer the best customer experience in that regard.
Sleeq, there's been quite a bit of media around the Big Bang approach to rolling out CargoWise vs the gradual rollout.
Can I ask you about your desire to take this approach and what key factors you were looking for with success with this?
We really wanted to challenge ourselves with a Big Bang approach. Obviously, the implementation included a community of around 2,000 users in around 62 countries. We're very proud about this achievement, but we really wanted to really challenge the status quo and reap the benefits of the implementation very early on and as quickly as we can because we have a very aggressive target for the implementation and for the transformation of the organization. So with the Big Bang approach, we were able to achieve things faster and get to the efficiencies that we wanted to get very early on in the program.
Can you talk specifically about the COVID-19 challenges in executing this global rollout?
I have not seen a time where Aramex as an organization has been more resilient, and we've never seen a time where we've been embracing more and more technology, empowering customers in this pandemic, and also delivering a future for the organization that is by far more agile and resilient as we look at the future. I think the transportation industry is looking for new ways to transform, and the disruption in this age of disruption, we need to act fast. And the agility is really a testament to our commitment to serving our customers moving forward.
Looking back on the implementation, any lessons learned you can share with us?
Of course. Well, I think knowledge sharing and bringing the team all up to speed and governing the program in a way that keeps everyone informed about where we are, I think that's extremely important.
We've governed the program in ways that are extremely meticulous, and we made sure that everyone is brought up to speed to the same level of alignment. We kept the team super aligned on a common understanding of why this is very important for the organization. If the team believes in one common goal, I think everything is doable, and again, we're very, very happy about this implementation.
CargoWise is a broad product. Can you tell me a little bit about what modules specifically Aramex is using today and what you might grow into in the future?
Of course. When you look at the landscape, we are a one-stop-shop solution. So we have air freight, sea freight, and land freight and customs clearance. We're also using it for billing and the order-to-cash cycle specifically. We wanted to obviously implement a solution that can scale for the growth of the organization.
So we have very ambitious growth targets. So with the implementation of CargoWise, we were able to, the solution was able to cut across all of these products all in one go. So it wasn't only a Big Bang across countries. It was a Big Bang across all the products of freight within Aramex as well.
You've just recently gone live with CargoWise. I know things are fresh. But what benefits are we looking to achieve, and have we realized anything yet?
Well, it's only been 25 days since the implementation of the program. We just closed the month of October. Again, it was a challenge, but we're happy about this milestone. We believe with the CargoWise investment, we'll be able to optimize our operations and make sure that we deliver value for our customers from an experience standpoint.
So I would summarize this with basically improving the employee experience, the user of the CargoWise today, which is around 2,000 people, improve the customer experience as we go along and develop these online platforms that can deliver value for our customers, and of course, drive operational efficiency on the ground.
COVID-19, so this is the new norm. Can you share your thoughts as far as how you think this is reshaping our industry today and in the future, specifically with Aramex and the greater industry?
A lot of customers, specifically the big retailers, have been accelerating their digital transformation journey and offering their omnichannel strategy to their consumers. So we've seen a massive surge in the number of shipments that we handle. The cost of running business became higher and higher.
But I think this is a potential for us as an opportunity to look at new ways to manage and maneuver the movement of goods across markets and the intercontinental movements and even the cross-border movement across continents and across the same continent as well. And I think it accelerated the demand for the third-party logistics. So the industry, I think, is enjoying a lot of, I would say, growth. But I think the prioritization on digitization and accelerating our digital transformation journey became more and more evident as part of the COVID-19 pandemic.
Sleeq, I can't thank you enough for today, for your time, and for your business as a CargoWise supporter. Thank you very much.
Thank you for having me as part of this conference. It's great to be here.
It's been a hell of a journey with CargoWise in the initial stages as well as throughout the implementation. So thank you for your support. And I hope I can see you soon.
We just heard from Aramex on their Big Bang approach to implementing CargoWise. Now let's go to DHL Global Forwarding, and they'll share their experience with us on the largest global implementation of CargoWise to date. Tim, the biggest question is, what drove you to market, and why was CargoWise the right solution for DHL?
Well, maybe I should talk a bit about DHL first. So I'm responsible for DHL Global Forwarding, which is a part of the entire DHL family. And within our division, we have been a company which acquired some 20 years ago large forwarders and brought them together. We integrated them.
But we never really integrated on our IT systems that we had, so we rolled out IT within the roadmap, and based on that program, we then had discussions to see what is the core application, which is the transport management system. So what's the best technical solution out there? Because we also felt we don't need to do everything for ourselves or by ourselves. And the other reason was, what drives our customers? What do we need to do in the future to be better? And I think in that case, we then also decided to go out with in the beginning and also to get the organization familiarized with the system. So if you come from a legacy system, which is out of the 1970s and 1980s, and then go to something brand new, you have to bring the organization there. They have to see it.
They have to touch it. They have to get a feel for it. So in the beginning, we used these support functions very strongly. But then as we developed and as we got better in the understanding of the system, we also started to do more classroom training and classroom trainings with the organization because we also felt that we need to understand the system better. And especially if your groups get larger and if you have countries where the organization gets more complex, it's better to have people in a room and really explain how things work.
Can you ta lk how DHL worked with CargoWise partners to implement CargoWise across your global operations?
In the beginning of the program or the project, we worked together with partners of CargoWise who supported us and also in smaller regions, smaller countries where we didn't have reach in the beginning.
But over time, it got less and less because we really believe, since this is our core system, we need to understand. We better know how our core system works. We better know. We want to understand what the application can do and so on. So we took the knowledge that we built up over the last years and made sure that we have it in-house. And that's where we use those partners less now and probably even less in the future.
So Tim, what does the future hold in store for our industry? And what role do you see CargoWise playing and serving it?
Well, I think the industry itself will go through a transformation that digitalization is going to be more and more important. Our customers are really interested in understanding if the data which comes with their shipment is as correct as the shipment arriving on time.
And they also want to, I think, see the industry use the data in a much more different way than we are doing it today. And you can only get that kind of a service if you have, again, a system in place which gives you the basics to do these kinds of things. And there again, I see CargoWise as one of the solutions in the market where you can do these kinds of things.
Tim, that's all the questions I have for you today. Thank you for your insights and your time. DHL and Aramex, thank you. That's an example of our runway of revenue growth, long but increasingly fast.
Thanks for the opportunity to be with you and share a little bit how CargoWise partners in general and Zinnovate a bit more specifically help CargoWise customers to get the most out of the systems because that is really the key here. It's a two-step to success, getting the best system in place but also getting to the best usage. Here in Zinnovate, we have three C's as the guiding light for that: Competence, Collaboration, and Chemistry. Of course, the necessity, the starting point, the founding block is the deep competence our consultants have. And then collaboration, it is really a collaboration game. First of all, we need to put a team in place, particularly with the larger customers, that we can support them on all geographies and on all aspects of CargoWise. And of course, the collaboration between our consultant team and the customer is key to the success.
The final C there, chemistry, is that this boils down actually to a very personal level in the relationship between our team members and the customer's team members. Unless there is this cultural fit and personal chemistry, we will not get to what is our mantra here in Sydney to help the customers make the whole more than the sum of the part, and that goes across systems. That goes across processes, and that goes across the organization, i.e., team members. In terms of the uniqueness and competitive advantages of CargoWise, there are a number of key aspects of that. First of all, it is the overall functionality richness. Secondly, I would say it is the global aspect. There are local providers that have strong functionality in a local market, but for global forwarders, that is, of course, not enough.
Then there is an aspect which has been improved even further with the acquisitions WiseTech have done in adjacent industries. So out of the box of CargoWise, you will have connectivity to customs, to carriers, etc., which you in competing systems may have to pick and choose among a number of other vendors to get that full level of functionality. Then I think also WiseTech has been able to address the classical dilemma. How do you create a superior standard software that would meet the needs of the market and yet at the same time be able to address the customization needs each individual customer has? I would like to define success in terms of deployment. There are basically two aspects of success all my customers are looking at. It's getting higher faster.
Getting higher means, of course, how can we get as close as possible to the full potential power that CargoWise delivers in terms of automation, in terms of going paperless, in terms of connectivity with parties? And secondly, of course, how quickly can we get there to realize those benefits? And the second aspect is important for a couple of reasons. Primarily, of course, the faster you get there, the faster you get your return. But also, the faster you get there, the shorter time will you spend in an in-between situation, a coexistence between your legacy system and your target situation where you're running CargoWise full out globally in the single-file setup. There are a couple of trends in the industry that I would like to point out. I'm thinking primarily of three trends. One is industry players increasingly moving to become full-house logistics providers.
So you can see traditionally players in the carrier side, in the express side, in the freight forwarding side, realizing that their customers have needs in all areas across the logistics portfolio. And that's where you see the expansion into new territory. That has also, of course, a very important consequence for software providers. Traditionally, software providers have been very specialized in those different disciplines of logistics, very much silo-based. But as increasingly logistics giants are moving into full-house scenarios, they need support across all those disciplines. So that's a strong industry trend. Then, of course, the overriding trend of going digital that has sped up enormously due to the pandemic. There, I believe, we also can see some disruptive change.
I think you need to go about innovation to meet those needs of these trends a little bit differently, whether that is a continuous improvement, the fine-tuning, or whether it actually is disruptive change. Going from paper-based processes to completely digital is a disruptive change. And I think a good strategy there is what I see with CEVA Logistics setting up their CargoWise global deployment project from the get-go to be completely paperless. That is something I think is very hard to do as a gradual fine-tuning. It's almost like if you have an addiction, you need to make a radical change. So from paper addiction to paper-free, I think a strategy is to go full out in one big bang, if you may, also in that respect. Finally, of course, the booming E-commerce industry. It is here to stay. It's not just a pandemic effect.
It has been dramatically sped up by lockdowns. But it's here to stay, and it addresses a classical dilemma in the logistics industry, the imperfect last-mile delivery, so that's where we will also see a number of system feature approaches, process approaches, and new business concepts to address that classical industry dilemma, so thanks for the opportunity to share a little bit from a CargoWise partner perspective and from us here at Singeste, how we go about the task of helping the industry reach higher faster. Thank you.
At WiseTech, we've done about 40 acquisitions since IPO. Most of the businesses have been founder-led businesses. They've achieved good scale within their own market or their market niche, and the businesses generally fall into two categories: foothold acquisitions and adjacencies. The foothold acquisitions mainly border compliance with some accounting acquisitions as well.
They provide us with entry into a new market, a strong customer base, and also the IP and, importantly, intellectual capital within those businesses for us to use within the wider group. To give an example of the intellectual capital, just think about the approximately 20 foothold businesses we've acquired, assumed about two specialists in each business, and about 10 years of tenure for each of those specialists. That's 400 years of customer specialism we have across those foothold businesses. That's being conservative. Also, that excludes the five to 600 other valuable team members that we acquire with the acquisitions. From an adjacency perspective, the businesses that come into the group have normally achieved good growth within their domestic markets. We're not acquiring businesses for short-term financial returns and short-term growth targets. We already have CargoWise One, which grows strongly organically and delivers high EBITDA margins.
This is the engine of our growth at the moment. We are buying businesses for their strategic value to help us enter into new markets and extend the functionality of our existing product. Because the acquisition strategy is different from other companies, so is our integration approach. We're not trying to quickly bolt together 40 or so independent entities with different people, businesses, markets, and objectives into one and call this done. Our approach is to create a common vision, ensure businesses, teams, and individuals understand how their contribution can help and move towards our vision, accept and leverage the diversity within our group, but also highlight the similarities. We're looking to share solutions to problems we have faced and overcome.
And in doing so, we aim to align people, team objectives, approaches, and culture over time to create a smooth transition resulting in more effective and longer-lasting change, a high-quality output. There are a number of elements to the integration process at WiseTech. The first one is business integration. This is normally a short-term process that takes three to six months and comprises finance, information services, people and culture, and legal. Business integration is virtually complete for almost all of the businesses we've acquired so far. Secondly, there's product. The first element is our interface, product interface that we do for the foothold businesses. We interface the system through an API that supports data interchange between CargoWise One and the acquired systems. This allows more efficient access and use of the product by our customers.
This phase is used by some but falls far short of the full solution we're looking for. This is a standardized process, and almost all of the foothold businesses have completed this. Integration for adjacencies allows customers to effectively use the acquired businesses application. A number of businesses have functional integrations with ongoing development, such as CargoSphere and CargoGuide, while others are in pilots. These integrations include Pierbridge, SaaS Transportation, and SmartFreight, and they have wider commercialization we expect next year. For the foothold businesses, the main solution we're looking for is a native rewrite. This involves writing the functionality into the CargoWise One platform and takes more time, and we expect to deliver longer-term value. Target dates are included in the FY20 results presentation, which illustrates some of the path to covering 90% of the global manufactured trade flows.
When we talk about the commercial model, we're referring to various approaches which we've developed over time to make the business what it is today. Examples include the license model, our focus on recurring revenue rather than one-time licenses, and having lower focus on services, which is why we see, in some cases, businesses that come into the group, revenue declines in the first few years. We focus on what we sell, selling standard products rather than customized versions, which take a long time to implement and are harder to support. One example here is Microlistics, where we've launched the Microlistics Express. This is a standard configuration of the broader product, which is able to be swiftly and efficiently deployed at client sites, making it highly scalable.
We also focus on how we sell, selling on value, not price, our use of content, which has proven particularly valuable during COVID, who we sell to, and the support for sales. From a productivity perspective, we use various different tools at WiseTech. Productivity is the core of what we do. While we often talk about these in the development context, they can really be applied widely across the organization. Examples include prioritizing quality over speed, slower today, faster forever, focus on test-first and automated testing, our approach to development and our use of PAVE to manage workflow, our use of content. From a cultural perspective, we have multiple touchpoints with the acquired businesses. We supplement these interactions with content-based educations, and we provide a shared vision and strategy for each of the businesses. There are five key steps to this approach. We start aligned. We start early.
We work in a scalable way and create an efficient process. We understand the differences but leverage the similarities, and we focus on doing the most important things first. From an alignment perspective, we really look for common cultural alignment when we're doing the deal in the first place, and we also use the earnouts, which help align the objectives of the vendors with our strategic objectives. This has been a key driver enabling us to run so many complex processes at the same time. We start early. The integration starts during the acquisition process. This is one of the major improvements we've made in the process over the last few years. We've brought forward as much of the work as we possibly can into the acquisition process, making the initial integration process much smoother. We work in a scalable way and create an efficient process.
We use our excellent resources from all around the business. We make use of functional specialists from all areas to help integrate the business. We place trust in local management who know their team, their businesses, and their customers. We also lead with content. We have briefing materials and how-to guides, welcome guides, development guides and where necessary, these are translated into different languages. We use PAVE widely as possible for monitoring progress. We understand the differences but leverage the similarities. Every business is different. It's geography, culture, language, customer base, and the regulations of the market or the industry segment but equally, they have many similarities. We apply and present a common vision and growth focus. We help them with their core challenges that they're facing, which are similar to the ones that we've already solved. We also focus on doing the most important things first.
We don't try to do everything at once. Businesses are full of people, and people need time to adapt to change. Some things are non-negotiable, such as compliance, reporting, and security. But other things, such as development, take longer. Where we cannot achieve both quality and speed together, we prioritize quality. Slower today, faster forever. As you've seen, there are a number of different phases of integration. Some are more relevant to some businesses and less or not relevant to others. It's multifaceted. However, to give you a sense of our progress at a high level, aside from the most recent acquisitions, all business integration is virtually complete, and any remaining activities are general performance improvement, business-as-usual activities, or purposely deferred. Productivity, the most obvious indicator of productivity, is the use and adoption of PAVE. This is widely used across the businesses.
All foothold businesses where the product and development teams are fully integrated use PAVE with the CargoWise One teams. The adjacencies also use PAVE widely, and they've been installed in a number of our businesses, including Trinium, Pierbridge, Containerchain, and Microlistics. One significant event, of course, to address has been COVID this year. This was the trigger for us to renegotiate and/or close out 22 of the earnouts. It was a challenging process, but it was met with typically constructive dialogue, which was to be expected from the high-caliber individuals throughout our group. The MDs and former owners believed in what we were trying to do and the benefit to the group, and they were positive about the prospects for growth and the confidence in equity rather than cash.
This, in turn, has provided us the opportunity to accelerate many of the integration actions and align the businesses more closely and quickly. Vlad will touch on this more in the next session. Our process is evolving and improving. The process we have today is built on the experience of the early acquisitions, and I expect the process to continue to be refined based on the experience we're going through at the moment. Product development for the foothold businesses is a prime example of a process which has matured significantly from the initial IPO acquisitions in Germany and Italy. We already had some development experience from South Africa, but as we started to add multiple countries, the team had to find a way to do this at scale. They spent time developing onboarding content for developers. They developed how-to guides for interface development and testing.
Our Sydney support team adjusted working hours to work with European teams as they did with us. We also developed monitoring of remote teams' input and output to ensure we were getting the highest quality output. For me, the greatest challenge of doing so many at once is meeting the expectations of ambitious, talented, and passionate individuals within the acquired businesses and balancing local needs and demands across a broad range of businesses. Across the business, we have a group of talented and engaged people who understand the WiseTech Global vision and are excited to be part of the global strategy and growth trajectory.
Good morning. My name is Vlad Bilanovsky, and I'm the Chief Execution Officer for WiseTech. As the CXO, my focus is to translate WiseTech's growth strategy into action across the business and work with our global teams to deliver key strategic initiatives.
This includes corporate development, which involves constantly monitoring and reviewing potential strategic partnerships and acquisition opportunities. When I took over as CXO in April, my first goal was to review our acquired businesses and facilitate their integration to the context of the COVID-19 operating environment. Within three months, Maree and I have restructured the earnouts of the majority of our acquired companies to enable acceleration of their integration into our core operations. Since our IPO in 2016, we've grown from around 520 employees to 2,000, 14 offices to 55, and seven countries to 30. We've expanded organically and through acquisitions. We now have the scale, resources, and the talent in place to fulfill our global growth aspirations, as well as the opportunity to deliver efficiencies, productivity improvements, and cost savings.
We will do this through shared functions across global operations and the removal of duplication, centralizing physical operations and development hubs in critical jurisdictions, aligning our product and development teams by co-locating development and product teams across the world, aligning our product portfolio with the CargoWise product suite, consolidating software product delivery into three regional data centers to provide better security and compliance management for our customers, and right-sizing our global operations. Let's start with our administrative functions. There is a huge opportunity across our business to share support services and remove duplication. From an acquisition integration perspective, we can generate efficiencies by integrating our acquired businesses with our existing WiseTech infrastructure and removing the duplication of support services that can be offered through our head office. We aim to centralize our HR, finance, legal, marketing, and sales functions.
To appreciate the magnitude of the opportunity, you should think of each of our 40 acquisitions all having their own administrative and other functions, which can be consolidated into the WiseTech head office functions. In addition, many of our acquired businesses have resources dedicated to the provisioning of consulting services. This is very different from CargoWise's high-margin global model, which utilizes a single standardized global architecture with online self-help training and channel partners to assist with non-recurring on-site services and consulting. There is, therefore, further upside opportunity for us by transitioning many of these consulting services to our channel partners as part of the integration process and, thereby, reduce their associated costs. This then brings us to centralization of our physical spaces.
We are operating in the industry that is rapidly growing and evolving, which is resulting in changes in the way the industry operates and in how we interact with customers. We have reviewed our business, core teams, and processes with a focus on best positioning the business for long-term strategic success. To facilitate our global growth and coverage, we are focused on building our three key regional hubs in Sydney, Chicago, and Hamburg. This will ensure we are strategically located in each of our major geographical markets. Sydney is our head office and our largest office with more than 500 people and serves as a gateway for Asia-Pacific. Most of our global functions will be consolidated in Sydney and supported by our two other regional hubs and our satellite offices in key geographical locations. We are establishing a centralized administration function in Sydney that supports other regions.
We are also continuing to build our regional hubs in Hamburg and Chicago. Hamburg in Germany will take over from the U.K. as our European regional center. This brings us closer to our key customers and major logistics organizations in the European Union and helps us build our specific E.U. privacy management requirements under GDPR. Hamburg is already our largest office in the EMEA region with more than 100 people. Chicago, as you know, is well established and provides us with a strong geographical foothold in the Americas. We are a product-first company, which means the caliber of our innovation is core to what differentiates our product from our competitors. We win business from top logistics companies globally because we deliver a superior product offering. More than 50% of our staff, so around 1,000 people, are part of the WiseTech product and development team.
Our strategic acquisitions have enabled us to add some of the best product and technology experts in the respective markets to the WiseTech team. Our focus is on integrating this talent with our existing core development team to accelerate CargoWise development with restricted development and compliance updates on legacy products. We currently have development teams in 40 disparate locations. There is a huge opportunity for us to improve productivity and the caliber of our development and innovation by consolidating product teams in the same location, co-locating development teams with product teams, centralizing product and development on CargoWise under central team direction, adopting WiseTech productivity and visibility tools across the board, and developing team extensions in one of three major global development centers with the exceptions of teams that have country-specific compliance requirements, such as customs and accounting, which will continue with geographic-specific locations.
By co-locating and consolidating our product teams and development teams, we can continue to improve their development capability and increase their productivity. For example, our acquired local customs teams can help take our E-commerce Solution across borders to provide an International E-commerce Solution. Historically, most of our product development has been undertaken in Sydney. However, in recent years, we have seen an opportunity to extend our development capacity by establishing a development center in Nanjing, China. Our success in China has given us confidence to open a new development center in Bangalore, India, where we see a huge IT talent pool. We have strong local leadership in place, and we are well underway in building out the team. Several of our acquired companies already have teams in India. The consolidation of those teams in one center will not only bring greater innovation, productivity, and scalability, but also reduce cost.
There is also significant upside opportunity in integrating our acquisition product offerings with CargoWise platform to enable us to provide a consistent product experience and pricing model to our customers across all jurisdictions. Many of the businesses we have acquired operate in industry niches that product offerings complement each other. There is an opportunity to globalize these products on CargoWise platform and, in some cases, split the product work between acquired teams based on specific strengths and experience. Our rates management business is a good example. CargoGuide's freight management tools focus on air freight rates, and CargoSphere is a world-leading ocean rates management provider. We are bringing both development teams together with our CargoWise team on our global rates management solution.
We are undertaking similar initiatives with parcel management and e-commerce fulfillment, bringing Pierbridge in the U.S. and SmartFreight, which has a footprint in Europe and Oceania, together to join forces to deliver a global solution for our customers. For both of these examples, we expect to highly automate the process via direct connections to carriers and to further consolidate interface development and mapping in Bangalore moving forward. As part of our product alignment process, it is important that we ensure that the customers of our acquired businesses also transition across to CargoWise, as it provides them with a powerful productivity tool and greater confidence to expand abroad. We are putting in place processes and allocating resources based on our experience and knowledge to ensure a seamless conversion that not only retains the existing customer base but facilitates its revenue-generating capacity.
Let's turn now to our data centers and the important issue of data security. One of our key areas of focus is on consolidating our software product delivery to three regional data centers in Sydney, Chicago, and Hamburg. Our priorities are security, compliance, and cost effectiveness. We are migrating data center operations of acquired businesses into the WiseTech data centers, where we have a centralized security architecture and are able to more effectively manage cybersecurity risk. This will enable us to reduce costs by consolidating legacy hosting technologies. It will also enable us to implement scalable backup systems to ensure that we have effective cyber protection, ransomware protection, and contingency solutions in place. Importantly, it will provide us with a greater oversight and tighter management of regulatory compliance in each jurisdiction, with the ability to apply greater security controls, assurances, and detection methods.
Last but not least, I'd like to talk about the opportunity to right-size our global operations. We are now in a hybrid working model pioneered through the COVID-19 pandemic, which incorporates work-from-home flexibility with the face-to-face interaction that office working provides. This working model affects the way we use our office space and allows us to reassess the requirements of our people and the best way to provide a seamless offering to our customers. We are currently reviewing all aspects of our global offices, in particular the opportunities that exist to consolidate and right-size our office space around the world and take advantage of the opportunities that co-locating and technologically enabled collaboration has delivered this year. While this consolidation and the renegotiation and exiting of leases will take time, the process has commenced, with discussions already taking place with landlords.
We anticipate that financial savings from reduced lease spaces will emerge in FY21. Importantly, as part of this process, we want to provide ourselves with the flexibility to reduce or increase space as needed. We are also reviewing our procurement process and various supply contracts with a view to consolidating local agreements under global umbrella agreements to further drive operational efficiencies, reduce administration tasks, and negotiate more favorable commercial terms by leveraging the larger supply contract size. To wrap up my session today, I would reiterate that we have enormous opportunity to generate operational efficiencies and cost savings in our business. Our initiatives are well underway. Our present focus is mostly on realigning our acquired businesses into the core. As we announced in our full year results, we anticipate AUD 10 million net cost out for this financial year and a run rate of AUD 20 million - AUD 30 million reduction in FY22.
We are confident and committed to achieving these numbers. These initiatives position WiseTech to deliver accelerated value creation, return on investment, capability, and growth. To give you some color around the quantification of the savings and the impact of our margin and profitability, I will hand over to Andrew.
Thank you, Vlad, and good morning, everybody. You've heard us talk today about WiseTech's total addressable market, what differentiates CargoWise from competitor offerings, and our strategy to increase market penetration. I'd like to spend some time now talking about how all this plays into WiseTech's commercial model and, more specifically, how it's designed to drive revenue growth and increase profitability. Let's start with WiseTech's revenue generation. In short, we generate revenue growth from three sources.
Firstly, from existing customers who increase their usage via increased transactions and users on the CargoWise platform as they continue to roll out and grow, adopt new products and features, and increase their demand for co-funded product enhancements. Secondly, from new customers that sign up to the CargoWise platform. And last but not least, from our strategic acquisitions. Given our core offering, CargoWise is a SaaS cloud-hosted product. 72% of WiseTech's revenue is generated from on-demand licensing. This typically involves customers paying monthly in arrears based on usage without any upfront license fee. This means we don't require customers to enter long-term contracts. Customers can configure their platform to suit their specific needs and add further modules, users, locations, and transactions as they become more familiar with our product without the need for any customization, site visits, coding changes, or additional sales contracts.
This enables us to streamline the sales and onboarding process, reduce dependency on direct sales, lower our customer acquisition costs, and drive customer adoption of the product, while at the same time continuously releasing new features and enhancements which generate further revenue growth opportunities. We use a Seat + Transaction License or STL model, which we introduced in 2014 to coincide with the launch of CargoWise. All new CargoWise customers are signed up to our STL model. In FY20, STL fees accounted for 94% of all CargoWise revenue. Prior to 2014, we used Module User License or MUL model, under which we charged a fee per user, per module, per month. We've been phasing out MUL billing by converting customers onto our STL model, with this transition effectively completed in FY20.
Under our STL model, customers pay a small fee for each user and a fee for each transaction, which is generally aligned to the point of value creation for a customer. The inclusion of a fee per transaction is an important and deliberate differentiator that provides greater revenue upside potential for our business. So let's take a closer look at how we derive that upside. The variables that drive our revenue growth under the STL model reflect the customer's journey from local solution to full global rollout and the productivity benefits and efficiency gains that our software delivers. This results in a win-win model for WiseTech and its customers. We typically see customers start regionally and expand globally, enabling WiseTech's revenue to grow as their customers expand their usage.
From a productivity perspective, even though fewer users may be required to handle the workflow due to the efficiencies that our software delivers, because we charge on a transaction basis, our revenues grow as customers' transaction volumes grow. This brings us to one of the most important features of our STL model, the network effect, with an existing CargoWise customer base and the broader supply chain market. Many of our STL customers represent significant embedded growth potential as strong internal network effects drive organic adoption and increase usage over time with minimal spending on sales and marketing required by WiseTech. We leverage the strong internal network within these customers so that they effectively act as CargoWise champions, promoting our software benefits both internally to other functional teams within their organization and externally to other global supply chain participants. The same network principle comes into play with customer counterparties.
The interconnectedness and collaboration required through the global supply chain means participants benefit from utilizing common logistics service provider software. This facilitates our growth as existing CargoWise customers encourage other logistics providers to adopt our platform as a way to reduce costs while increasing efficiency, productivity, accuracy, speed, and visibility of information between organizations and across the entire global supply chain. The networking effect is further enhanced by industry consolidation. You heard Richard talk today about the fragmentation in the logistics provider sector and the structural changes which are gaining pace as a result of the COVID-19 pandemic. We're ideally placed to benefit from this industry consolidation, given our strategic focus on the top 25 freight forwarders and top 200 global logistics providers.
If you look at the freight forwarding sector as an example, while it's expected to continue to grow, consolidation has meant that CargoWise has been the beneficiary of a bigger share gain as our customers acquire other smaller players in the market. If you look at DSV as an example, its early global rollout and company-wide use of CargoWise has facilitated a successful integration of two major transformative acquisitions in the past five years, enabling it to realize synergy benefits from their integration. This is a testament to the scale and efficiency benefits that customers can realize using the CargoWise platform. It enables them to seamlessly integrate acquisitions, putting them in the driver's seat for further consolidation opportunities that arise as the industry continues to undergo structural change. I'd like to pause here and talk about value versus price as a driver of customer behavior and decision-making.
We've spoken extensively about the productivity gains, cost reductions, and efficiencies that CargoWise is designed to deliver to our customers. It enables them to manage highly complex, time-critical operations that are core to their business activities. Hence, our software becomes embedded in our customers' operational processes, and we're able to achieve high levels of customer stickiness with low levels of price sensitivity. This is an important competitive differentiator because it means once a customer has signed up, we don't have to continually participate in competitive tender processes for additional services and functionalities. As a result, our customer attrition rate is very low, at less than 1% per annum for the past eight years, resulting in a significant lifetime value for each of our CargoWise customers and users. Another important feature of our on-demand billing is that it provides WiseTech a high degree of revenue visibility.
97% of CargoWise revenue is recurring, and 89% of group revenue is recurring, providing us with stable, long-term, and relatively predictable revenue streams. Prior to our adoption of on-demand licensing, we utilized a one-time license model, which involved customers paying an upfront license fee plus annual recurring maintenance fees. While WiseTech ceased offering one-time licenses to new customers in 2012, many of our acquisition assets are one-time license models. In FY 2020, 17% of our group revenue was derived from one-time license maintenance fees, which constitute recurring revenue. Another 11% of our revenue was derived from one-time licenses and support services, which is non-recurring. As part of our acquisition integration program, we're transitioning these businesses to our long-term growth STL model and expect revenue from these businesses to be flat or reduce as the transition takes place.
In parallel with this transition, we're removing the duplication of functions and streamlining processes and teams that are part of our acquired businesses to align them with the WiseTech business model. It should be noted that our acquired businesses generally have higher product and services support costs and lower leverage due to their smaller size and one-time license model, which means they typically have lower gross profit margins and EBITDA margins than CargoWise. For each business we acquire, we expect the dilutive impact of their existing margins to reduce over time as they integrate with or convert onto the WiseTech platform. We anticipate that our integration process will deliver net cost savings of AUD 10 million in FY21 after the impact of one-time costs and achieve a cost-saving run rate for FY22 of AUD 20-AUD 30 million.
If you look at our FY21 guidance, this contributes to the three to five points of EBITDA margin expansion versus FY20 on top of our already strong CargoWise EBITDA margin, which was 48% in FY20. I might pause here to highlight the fact that we're a global company with customers operating in 160 countries. 75% of our FY20 group revenue was generated in currencies other than Australian dollars. When you think about the foreign exchange position in our business, you should also consider natural hedges. We have both revenue and expenses denominated in local currencies, including recent acquisitions. FY20 revenues included a AUD 12.1 million FX benefit, which was broadly in line with the AUD 10 million benefit we reported in FY19. In FY21, we've included in our guidance AUD 20 million of revenue and AUD 9 million of EBITDA FX headwind vs FY20.
We do have hedging positions in place to cover part of our U.S. dollar and euro revenue exposure, and when you look at our guidance for FY21, you should review the FX sensitivity analysis we included in our FY20 results presentation and have provided again today in this presentation. In addition to our focus on top-line revenue growth, our commercial model is also designed to ensure profitability is enhanced via an efficient operating structure. There are three major categories of operating expense in our business: general and administration, sales and marketing, and product design and development. Our G&A costs represent 20% of revenues in FY20 and include our M&A costs and the impact of acquired businesses, which have their own G&A costs. CargoWise itself, however, is intentionally designed to be a very efficient operating cost model.
Our single, standardized global architecture with online self-help training and channel partners to assist with integration means we avoid the costs associated with non-recurring on-site services, implementations, and consulting. A similar efficient approach is taken to sales and marketing. Our STL model means a significant portion of our revenue growth is usage-driven, allowing us to generate significant growth without additional sales expenditure. This differs to a common competitor approach, which requires more sales interaction and negotiation, site visits, and additional license sales to expand customers' usage. In terms of new customer acquisitions, whilst we do have a global sales team in our regional headquarters, our STL model and our ability to leverage the interconnectedness and network promotional effects means that the sales cycle is shortened, and we improve the efficiency of our direct sales activity.
As you heard earlier, our sales process typically doesn't require on-site visits for CargoWise product demonstrations. Instead, we use virtual demonstrations conducted by our business development analysts. On-site visits, if required, are typically reserved for larger global-sized customers. This low-touch sales process has helped maintain our sales and marketing expenditure at 13% of revenue in FY20, a comparatively low level than our SaaS peers. As I mentioned earlier, we're focused on removing duplication, with significant cost savings earmarked to be delivered in both FY21 and FY22 as this process takes place. While our commercial model is designed to enable low maintenance, marketing, and sales costs, there is strong ongoing investment in product design and development. We're a technology company, and the asset we build is software.
Our competitive positioning and growth are heavily reliant on our ability to continue to innovate and provide technology solutions for the pain points in the constantly evolving global logistics and supply chain sectors. Our R&D investment is high and a key driver of our long-term recurring revenue growth. In FY20, 37% of our revenue was reinvested in R&D, which is at the top end of other SaaS peer investment levels. Our commercial model is based on the premise that by continuing to increase R&D investment, our operating leverage will deliver long-term recurring revenue growth. Over the past five years, we've invested AUD 438 million in R&D, and our revenue has grown from AUD 103.3 million in FY16 to AUD 429.4 million in FY20, a CAGR of 43%. In accordance with the requirements of the applicable Australian accounting and international financial reporting standards, we capitalize our investment in new internally developed software components.
For example, our investment in R&D related to the build-out of global customs capability, including native customs builds in Asia, Europe, and Latin America, international logistics, and international e-commerce capabilities are capitalized. Capitalized R&D accounts for between 40% and 50% of our total R&D investment each year, and the remainder, which relates to bug fixes, maintenance, and research, is expensed. This approach is consistent with other ASX-listed technology peers but is different to the treatment of R&D under U.S. GAAP, which generally leads to lower average capitalization rates, an important difference when you compare WiseTech to its U.S. counterparts. Before I wrap up, I'd like to talk briefly about our strong operating cash flows and the financial firepower we have to fund future growth initiatives. Over the past five years, WiseTech has delivered AUD 451 million of operating cash flow, as well as AUD 398 million of EBITDA.
The ability of the business to generate such strong operating cash flows is a testament to the strength of the underlying commercial model and is indicative of the quality of our earnings. Our closing cash balance at the end of FY20 was AUD 224 million, and together with our undrawn AUD 190 million debt facility and AUD 200 million accordion, provides us with significant liquidity and the ability to continue to fund our long-term strategic growth. The key takeout I'd like to leave you with today is that WiseTech's commercial model is built on a solid financial foundation. We have a strong balance sheet, robust cash flows, ample financial headroom to fund future growth initiatives, and an efficient low-cost operating structure designed to enhance profitability and drive future revenue growth.
Our product, CargoWise, is a win-win offering that aligns WiseTech's growth to customer productivity gains and usage expansion, resulting in extremely low customer attrition rates of less than 1%. We have a product pipeline and R&D program that we believe will ensure we have a competitive edge and enable us to maintain our existing product leadership position. We're well placed to capitalize on the structural changes in the sector as customers shift from aged, legacy, in-house proprietary applications and have plenty of upside opportunities to continue to grow our revenues and improve margins and profitability through the centralization of key functions and the continued focus on the CargoWise product suite. Our focus is on continuing to differentiate our offering from competitors through relentless product innovation, which means we're not competing merely on price but rather with value-add-based expertise, which brings us to our people.
Our culture is not by accident.
Our creativity is by design. Our people define us. Our future growth and innovation are driven by the talent, motivation, and enthusiasm of our highly diverse global team made up of over 2,000 extraordinary innovators from around the world, with vast collective experience, an abundance of talent, and motivation fueled by purpose.
WiseTech is unlike anywhere else I've ever worked before.
Everybody has got a great deal of enthusiasm. They have a great belief in the product. And I think that belief in the product is what comes through in the way that they work.
WiseTech people are a unique bunch. We are honest. We are smart. And we like to challenge the status quo.
A lot of passion for the work they do. We take initiatives to improve things because we understand our vision and our goal.
There's freedom for creativity. There's freedom for innovation.
You're really given the freedom to say, "Well, here's what you're here to do. Go and do it and go and figure that out the best way that you can."
I think the diversity of the people, the backgrounds, the skill levels, just the general atmosphere. Everybody's moving together and help each other. Openness, honesty, integrity. The huge, vast range of experiences that's to be learned from and benefit from.
It is good to come to a place where people enjoy what they do and enjoy the people that they're working with.
Strategies can be defined and planned and constructed, but it is culture that connects our people and fuels our passion to drive WiseTech forward.
Hi, my name is Angelina McMenamin, and I'm Head of Talent Acquisition at WiseTech.
Over the last six years, our team has pioneered a talent acquisition system that allows us to bring together a unique set of behavioral, psychometric, and work-based testing protocols to identify a diverse mix of the most talented and driven people to drive our innovation engine. Our culture allows our teams to maximize their productivity, efficiency, and effectiveness by attracting highly talented and motivated people into cohesive teams with shared goals. We know that there are successful traits that we can select for. We've built a recruitment platform to effectively identify the most appropriate talent to build and deliver products that surprise and delight our customers and empower their success. We've researched this structure in partnership with a senior organizational psychologist at the University of Technology in Sydney. We've identified clear attributes that allow us to select not just the capability but the application of that talent to an outcome.
We apply this across our organization, whether within our development teams, our industry experts, or our commercial operations. The people we look for love to build things. They love to create things, and at WiseTech, we love to empower and enable them to do what they are passionate about and what they do best: building the operating system for global logistics.
To wrap up today's investor session, the key take-outs I'd like to leave with you is that our vision is unwavering. We are building a world-leading organization with a clear goal to empower and enable the world's supply chains. Our Slower Today, Faster Forever, and Productivity at the Centre of Everything mantras have enabled us to create a unique customer value proposition. This culture and the platforms it has spawned have been 25 years in the making and cannot be easily replicated.
There has never been a greater need for the end-to-end digitized, globally integrated logistics technology that CargoWise provides, and the momentum we are gaining in signing up global rollouts is a testament to this. Our opportunity for growth and continued market penetration is enormous, and I can genuinely say that there has never been a more exciting time to be part of the WiseTech team and the WiseTech journey. I look forward to touching base with you again at our half-year results in February, and thank you for your interest in WiseTech.