How 3 Startups are Innovating the Supply Chain – From Shipping to Compliance

Sarah Jones
·5 min read

Emerging technologies and new ways of working are aiming to make supply chain operations more efficient and ecological.

At the United States Fashion Industry Association’s Apparel Importers Trade and Transportation Conference, speakers from three different startups shared their firms’ visions for transforming the industry with solutions ranging from greening transportation to artificial intelligence-supported supply chain information gathering.

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Sustainable sailing

Two speakers shared how their companies are taking different strategies to give ocean freight a low-carbon update. Although maritime shipping has a lower footprint than transportation such as air freight, it still accounts for around 3 percent of overall global emissions, according to OECD. Adding to the impact, the majority of goods travel by boat.

U.S.-based startup Fleetzero is using battery-powered ships as an alternative to traditional fuel. The company was founded by two marine engineers that were previously in the U.S. Navy. Initially, the co-founders didn’t believe that batteries would work due to the weight of batteries that would be required to power massive vessels holding around 20,000 twenty-foot equivalent units (TEUs), however they found the concept works with a smaller ship that fits approximately 5,000 containers.

The batteries sit in a 20-foot container, and they take up about 7-8 percent of the ship’s total volume. Samantha Galltin, vice president commercial operations at Fleetzero, noted that similarly to electric cars that gain under-hood cargo room, running a ship on batteries frees up space elsewhere. Manufactured in Alabama, the batteries are also built with fire suppression capabilities for safety. Per Galltin, the batteries are more cost-effective than alternative fuels such as methanol and ammonia, and they are inexpensive to manufacture. “We are the green solution without the green premium,” she said.

Fleetzero, which is backed by investors including Bill Gates, took its first round of funding and created the Pacific Joule, a renovated ship designed to run on batteries as a proof of concept for the technology. Currently, the vessel is operating hybrid until enough batteries can be built. “It was to show the market, to show the world that you can have an electric ship that can actually transport goods,” Galltin said. The technology can be used for trans-Pacific routes as well as trips to destinations like Hawaii and Alaska.

Looking ahead, Fleetzero plans to build its first electric ship from scratch, which it expects to sail within two years.

Another ocean freight solution, Vela, is also looking to a low-carbon propellant: wind. Based in France, Vela’s technology takes inspiration from sailboat racing; one of the co-founders is a sailor and active participant in maritime races. Vela’s boats are trimarans, a triangular shape that Michael Fernandez-Ferri, co-founder and managing director of Vela, said has proven to be the fastest in competition. It takes about 10 to 15 days for goods to travel from Europe to the U.S. on Vela’s boats.

“What we can achieve with such a vessel is a transportation service that is faster than conventional sea freight…that is cheaper than air freight, and that is obviously better than both in the carbon footprint,” said Fernandez-Ferri, who is a propulsion engineer.

The ship holds about 500 pallets of cargo in the hull, a capacity equivalent to roughly 30 standard containers. The docking and loading process can be completed in a single day, compared to the often multi-day loading process for container ships. Shipments are protected by their position below deck, and the cargo compartments have temperature controls and ventilation.

Today, Vela can transport goods across the Atlantic, and it intends to expand this to the Pacific in the future. The company plans to have five boats completed by 2028.

“Sailing transportation…used to be slow and unpredictable,” Fernandez-Ferri said. “With modern technologies on sailing and weather routing, it can be fast and reliable.”

Artificially intelligent assistant

Another area of technological innovation in supply chains is artificial intelligence and machine learning. Todd Smith, founder and CEO of KYG Trade, noted that generalized tools like ChatGPT are not reliable sources for topics like classifying goods or researching regulatory information.

KYG, which stands for “Know Your Goods,” was initially founded to simplify information gathering for compliance, creating a “product genome.” The company has built out a data hub, or “trade corpus” on tariffs, regulations and more. KYG’s AI assistant is trained to analyze product data and destination information, and to ask users questions. In one test that sought to qualify goods for a free trade agreement, the AI found a discrepancy in the documents that was initially missed by the humans.

The platform has expanded into forced labor compliance by partnering with supply chain mapping solutions. Component manufacturers’ information is pulled from the bill of materials and then checked for risks. The AI assistant can then ask about any potential threats. “Unlike mapping based on bill of lading data, which a lot of the companies are doing and inferring relationships that are based on empirical [data], what has happened in the past, we’re literally able to do the math at the SKU level,” Smith said. He added that this information is needed since Customs and Border Protection detains and investigates goods at this granular level.

Rather than replacing human workers, AI is a tool to help trade compliance professionals do more. “[AI is] going to enable us to do higher level reasoning, analytical research, get results, and it’s literally going to help us do that a lot faster than we’re doing it today,” Smith said.