Minister joins innovators and investors to advance the future of freight

Transport Minister Richard Holden pledged to “further unleash” freight’s potential during a lively roundtable discussion hosted by Connected Places Catapult, shortly before the Department for Transport announced an open call for smaller companies to put themselves forward for the second round of the Freight Innovation Fund.

The event in London brought together many of the first cohort of nine small- to medium-sized enterprises (SMEs) – supported this year with £1.2 million of funding – to speak about their experiences of the accelerator programme, alongside client partners they have worked with and investors offering support.

The Minister opened proceedings by speaking of the “power of collaboration” demonstrated by the first cohort “as a driver for commercial success” and his delight at the “significant tranches of new capital raised, and new customers identified” among participants of round one. He spoke too about innovation being “critical to addressing big challenges for the freight and logistics sector, right across the country”.

Several of those seated at the table praised the Freight Innovation Fund and the efforts of those delivering the programme, while others raised important pointers they say need to be addressed by stakeholders in the freight sector to ensure that small businesses offering innovation can thrive.

Positive experience with ports

“Our product is designed for larger operations and we therefore sell to larger organisations; however, we often find the mentality within those organisations is ‘we are too small’,” remarked digital twin specialist Entopy’s founder Toby Mills. “This leaves us with a couple of options: either to turn away and work with smaller organisations – which reduces our proposition – or buddy up with larger companies.

“But as start-ups, our biggest differentiator is speed. Working with large system integrators can be slow, and smaller organisations can end up working to the pace of larger partners. If you want to drive innovation and growth in the country, there have to be ways of allowing organisations like ours to work directly with end users; which is exactly what Connected Places Catapult has allowed us to do, providing funding to reduce risk factors and enabling us to work with the Port of Dover.”

Toby’s firm worked alongside the port to trial a new tracking system as part of the Freight Innovation Fund. Port of Dover’s Strategy Manager, Timothy Van Vugt said the demonstration helped prove to his board the value of embracing the new technology. “Understandably, for a 400-year-old port, prioritising infrastructure investments over technology has been the norm. Yet the Freight Innovation Fund has acted as a powerful catalyst, illuminating the immense value of investing in technology, and enabling us to partner with leading private sector experts.”

Reducing the risk of embracing innovation

Another port to find benefit from working directly with an SME during round one was Portsmouth International Port, which teamed up with Estudio Cactus to trial new safety, security and environmental software to improve resource management. Getting involved in the programme “allowed us to de-risk taking a chance with a small SME,” said the port’s Head of Compliance, Chris Hatter, who is also chair of the Freight Innovation Cluster board. “Having the opportunity to talk to innovators and work with them in a collaborative way to develop solutions was really positive.”

He added that ports often operate on very fine margins, therefore “almost all of our investment is based on there being a return on a contract. To spend money on something we hope will work isn’t feasible, so this project would not have happened without the Fund.”

The roundtable was chaired by Connected Places Catapult’s Executive Director for SME Development & Academic Engagement, Alex Weedon and featured insights from Chief Business Officer Paul Wilson and Senior Project Manager Krithika Ramesh.

Alex asked SMEs in the room how the Freight Innovation Fund had helped them with their commercial growth. “It has been an incredibly important catalyst,” replied Skyports Drone Services’ Director Alex Brown, whose firm has been working on a trial of drone deliveries in Orkney with the Royal Mail. “We are now talking to numerous national postal services around the world. Once we worked with Royal Mail, it demonstrated strong credibility and is allowing us to expand our logistics focussed business.”

Innovation needs investment

Another recipient of funding was start-up company Electric Assisted Vehicles. “The Fund has been really good for us,” said Chief Executive, Adam Barmby. “Securing investment is incredibly difficult, but we need it to allow us to create products and innovations.” His colleague Nigel Gordon-Stewart added: “Innovation is only going to be driven by investment, as we all look to decarbonise operations as rapidly as possible.”

Steve added: “As a small company you don’t want to spend all your time raising funds; you want to spend time innovating and delivering commercial benefit for customers. Most funding options for early stage and growth businesses seems to be from outside the UK, so a new innovative private / public funding model is really needed.”

Venture capitalist investor Arnold du Toit from WeSprint told the event there is a plethora of different funding mechanisms that exist and urged SMEs to “use places like the Catapult and this fund to learn about the nuances between different types of finance, as it is not one model fits all. The programme gives support from people who are doing it for real, with skin in the game”.

Arnold spoke of the benefits of collaborating with other firms, when the “multiples of return can increase” and said new legal entities built up around a project can help companies involved to grow their own business and get some form of liquidity that doesn’t require investment.

Investor Duran Cesur of Atlas Ventures remarked that investors get excited about large markets, and suggested that aligning regulations with those of other countries could open up more market opportunities for technology companies in the UK. “Think global” he advised small firms. He also suggested that tax breaks could be used to encourage investment and faster technology adoption by corporate firms.

Collaboration is key

Supply chain firm Wincanton’s Innovation Programme Head Claire Charlton told the roundtable that new ideas could be furthered in the freight sector with greater collaboration between large organisations like hers, start-ups, suppliers, academia and Government. She also spoke up for the ‘Generation Logistics’ career platform which encourages more school leavers into freight.

Her colleague Carl Hanson, the firm’s Transport Managing Director, added that innovations that help haulage companies reduce empty space on board vehicles and make more efficient use of journeys will provide “masses of opportunities to help decarbonise” operations. “The sector needs to test and challenge its thinking. We are a testbed and can support more innovative companies.”

Logistics UK’s Deputy Director (Public Affairs) Ben Garratt remarked that the sector has a long history of embracing innovation, from containerisation to robotics and warehousing, and implementing technology to deliver efficiency gains. But he said that there is also a strong case to support projects that help deliver good public outcomes, such as decarbonisation and more efficient use of the country’s infrastructure.

For start-up company Lightricity, “the key challenge is finding that first customer” according to its founder Mathieu Bellanger. “Getting technology out of the laboratory, testing it and proving it works is important.” But he added: “The more innovation you have, the more challenging it can become to find an investor because of the level of risk associated with it.”

Connected Places Catapult’s Head of SME Development, Alisdair Ritchie said he was pleased with how the first year of the Freight Innovation Fund had created a successful ‘matchmaking’ service between small companies and investors. For him, the Fund is all about helping SMEs to partner and collaborate in a way that allows them to address “market issues in the real world, which they may not be able to do on their own. We have shown the programme works and the value that partners also get out of it.”

Applications are invited for the next round of the Freight Innovation Fund.