On October 22nd E2open, a networking platform mostly known for working with manufacturers and suppliers, announced its intent to buy INTTRA, a networking platform originally devised by steamship lines to connect with BCOs (beneficial cargo owners), forwarders and NVOs. The acquisition still must go through the regulatory process but is expected to be completed by year’s end.
At first blush, the E2open acquisition seems a little surprising.
For one, E2Open isn’t a household name in logistics – although that could well change with a bevy of recent acquisitions – and INTTRA has been on a roll since being acquired by a VC company, ABS Capital, back in 2010.
During the last few years INTTRA itself has made a number of strategic acquisitions and has broadened its business model from being a “portal” for ocean shippers and service providers to being a nuanced network capable of providing a wide range of solutions for supply chain management. It’s worth remembering that six containership lines [Maersk Line, Mediterranean Shipping Company, CMA CGM, Hapag Lloyd, Hamburg Sud and United Arab Shipping Company] founded INTTRA with an emphasis on executable management, basically booking and managing cargo slots on ships.
In this regard, there are similarities between INTTRA and E2open. E2open started out as what was called “cloud based software solutions” or a SaaS (Software as a Service) company targeting manufacturers. After being acquired by a private equity company, Insight Venture Partners, in 2015, the now private company went on a buying binge. By adding companies, E2open evolved into a much larger, more comprehensive service provider moving into the logistics space and naturally bumping into INTTRA which itself was sliding into the logistics space. from the executable management side – basically booking ocean slots and managing the logistics. For example, in 2017 INTTRA acquired Avantida, a European tech company providing management for empty containers.
In an interview with the AJOT, John Fay, CEO of INTTRA, was asked why the acquisition is happening now and he provided insight on the timing and courtship leading up to the pending deal. Fay said that they’d “known them [E2open] as a partner…for quite some time” but that the deal “really came together over the last couple of months.” The reasoning behind the proposed transaction was partly because ABS Capital, the equity company that owns a majority of INTTRA (the minority shares resting with the ocean carriers), “was getting near the end of their investment cycle” and from a strategic perspective the sale was a good fit for ABS, the ocean carriers and of course, E2open and their owner, Insight Venture Partners.
It had been a good run for INTTRA under the ABS banner. According to Fay, INTTRA’s volumes had grown 40% since 2015 and outpaced the market by four times. As Fay put it, “I think that really represents customers wanting to access our network to connect to their suppliers.”
Although the terms of the deal could not be disclosed (U.S. anti-trust review period is 30-45 days placing the deal around the year’s end), collectively there’s some obvious financial clout derived by the transaction, as E2Open is around a $200 million company and INTTRA approximately a $60 million entity. The $260 million total revenues instantaneously puts the combined group in the upper echelon of logistics service providers. But that’s not the real story of the transaction’s significance.
As Fay explained, the “transaction was driven by changes in the industry…we are the number one platform in ocean [shipping] with 26% of ocean [movements]. And E2open’s primary business is supply chain management.”
From a holistic perspective INTTRA brings to the table “the largest network of ocean carriers and their BCOs [beneficial cargo owners]” while the E2open platform’s users “generates the need for logistics,” Fay observes.
Fay’s comment lends insight to what might make the INTTRA acquisition by E2open a revolutionary altering of the logistics landscape. It’s rather like lasers and bar codes. Bar coding had been around for years just as lasers had been. When the two relatively mature technologies were combined everything from cash registers to inventory handling was forever altered.
In the case of the E2open and INTTRA tie-up, the sheer breadth of the new network along with the considerable technological resources now at hand (E2Open has accumulated a nice portfolio of technology service companies Cloud Logistics, Amber Road, Entomo and Birch Worldwide just in 2018) opens the door to an entirely new form of supply chain management.
According to Fay, INTTRA will operate as a “separate business line focused on the ocean side.” Fay was also quick to point out that in the highly competitive logistics service market INTTRA will continue to operate as a kind of open neutral network – the platform currently has 150 alliance partners. Ultimately, Fay believes that the integration of the data from across the network to the customer will be “kind of a single source truth” that will be a “differentiator” for INTTRA’s clients.