Cargon: Flexport for Central Asia
Flexport has revolutionized how companies ship goods. Niko Turabelidze is doing the same for his region.
This interview was transcribed and edited by Timothy Motte.
Biography:
Niko Turabelidze is the co-founder of Cargon, a Georgia-based freight-forwarding startup. Cargon connects companies exporting/importing goods with relevant carriers and accompanies them throughout the process. It has recently expanded into financial services.
Cargon has raised over 3$M from investors like Sturgeon Capital, Hustle Fund and Flexport. In 2023, the company’s gross revenue reached $8.7M. This year, it projects that number to jump to $18M.
Cargon has offices in Georgia, Kazakhstan, Azerbaijan, Armenia and Uzbekistan.
Freight forwarding startups exist elsewhere (Flexport in the US, Nowports in LATAM…) Why did no one build one in your region (Caucasus + Central Asia)?
In our region, some set out on building “Uber for freight”. Companies focused on connecting shippers with carriers and stopped there. But shipping is much more complicated and demanding. You can’t connect the company with the right trucking provider and call it a day.
Cargon took a more comprehensive approach, accompanying the shipper throughout the entire process and offering them end-to-end supply chain management services.
When companies ship loads worth a lot of money, they want operational visibility and a human touchpoint throughout the process. This business runs on trust. Cargon provides that, by being hyper-available and granular.
Cargon goes further, building tech to provide shippers with order tracking, insurance, customs clearance, e-docs and soon, trade financing. We provide customers with a reliable support team from the moment the product is shipped to the moment it arrives.
RO insights: freight-forwarding's need for tech
Freight-forwarding is an industry in dire need of digitalization. As the Realistic Optimist explained previously:
“
Hidden behind an unnecessarily complicated term, freight forwarders’ job is quite straightforward: get their clients’ products from one place to another, taking care of the elaborate maneuvers required to do so. The market for doing so is worth around $182B and enjoys a comfortable 5% CAGR.
Despite the mosaic of time-consuming tasks freight forwarders take on, their industry has remained shockingly antiquated. Messy spreadsheets and endless email exchanges reign. Wall Street’s seeming disdain for the asset-heavy shipping industry translated into the sector’s dominance by “family businesses”. This lessened incentives for heavy tech investment and stellar operational efficiency.
The fact that each “node” in the labyrinth might develop unbeatable local expertise (customs clearing in the port of Nairobi for example) makes freight forwarding a disparate industry. Antitrust regulators can sleep on both ears. Its fragmentation is such that 60% of freight forwarding is controlled by players outside of the top 20.
However, recent supply chain shocks including the pandemic, the sticky Suez Canal situation, and Russia’s invasion of Ukraine have all vehemently exposed the industry’s failings. Incumbents, who had so far rested on their laurels, are getting severely shaken up by new competitors, who are better adapted to new realities. Unsurprisingly, these new competitors are using more tech.
“
Excerpt from Nowports: building LATAM’s logistics OS, from the Realistic Optimist
Who are the “middlemen” you’re replacing?
The carrier market (companies that transport goods) is fragmented. When you order an international shipment, a local agent will call their local connection who knows a truck company, who will then forward your request to the trucking company they know in the next country, etc…
It’s complicated, inefficient and shady. It’s also expensive as every agent involved takes their own cut.
The power of Cargon rests in aggregating the database of relevant carriers. By batching those carriers together and presenting them with a ready-list of loads, we commend competitive prices for shippers (as carriers compete for the shipper’s business).
Flexport, the world’s leading freight forwarding startup, is an investor in Cargon. What role do they serve?