From healthcare to manufacturing, traditional industries have been undergoing digital transformation over the past decade. But some industries have been left behind. According to Fabian Fussek, CEO and co-founder of Kaiko Systems, maritime transport is “the last frontier of digitalization”.
Kaico System is a Berlin-based startup trying to digitize the operations of merchant ships. about 90% Fussek, a former Deloitte consultant, noted that 100 percent of the world’s traded goods are shipped by sea, but an industry that plays such a critical role in the global economy still relies heavily on pens, paper and Excel. Manual processes mean that maintenance and inspections of ships are costly, inefficient and prone to human error, he added.
Fussek co-founded Kaiko Systems in 2020 with Eddy del Valle, the former CTO of freight forwarding unicorn Sennder, which provides front-line workers and inspectors with smartphone-based tools to collect operational data on ships. In turn, Kaiko’s built-in AI can validate the data in time and flag issues to the onshore team. For example, when the system finds a newly implemented component that causes a ship to fail, it can identify all other ships that may have the same vulnerability.
While Fussek declined to share the company’s financial results, the CEO said the markup was “very positive” and the startup was “on a strong path to profitability.” To date, the company has carried out more than 10,000 inspections on some 250 vessels worldwide. Some of its more reputable clients include Columbia Ship Management (one of the largest private shipping companies in the world), Marlow Navigation, USC Barnkrug, CTM and Spirit of Asia.
Early traction helped the startup close a €2 million seed round backed by industry giants. Investors include Columbia Ship Management’s parent company Schoeller Holdings, Vineta Ventures, Series A Capital, Flagship founder and industry veteran Clasen Rickmers, managing partner of Spirit Asia, and managing director and chief executive of shipping company Hanseatic Lloyd Executive Justus Kniffka .
As for why shipping has been slow to digitize, Fussek believes the industry’s margins have been too thin until recently.Average cost of shipping a standard large container $10,000 in 2021, but from 2015 to 2020, the number basically trended below $2,000. The founders explained that the surge in costs was partly due to increased global consumption, port closures due to COVID-19, and supply chain disruptions during the pandemic.
“The shipping companies are finally making a long overdue investment in digitalisation,” Fussek said. In addition to having extra cash to spend on productivity, COVID-induced travel disruptions have also made digitization more urgent, as inspectors cannot easily get from ship to ship in person.
With the new capital injection, Kaiko Systems plans to expand its team, improve its software solutions and expand into new markets beyond its current footprint in Germany, Greece and East Asia. Fussek believes that due to the high degree of standardization in ocean shipping, it will not be particularly challenging to expand across geographies. The company has 10 employees worldwide and plans to double its headcount in the coming months.
