With the recent market turbulence of regional bank collapses, I’ve been asked if Prologis Ventures is reconsidering or recalibrating the types of businesses in which we’re investing. The answer is no. We continue to focus on supply chain and logistics, along with related industrial use in energy, proptech, construction and analytics.

Over the past seven years, we’ve seen VC investment in logistics technology grow dramatically, transforming the way goods are moved, processed and delivered. In 2016 (when Ventures was founded) only about $10 billion dollars was invested in supply chain technology1. Since then, we’ve seen more than 17 times that amount invested2. I predict this number will only continue to grow, driven by these industry trends:

1. Using AI to capture actionable insights and make data-driven decisions

Many factors, including geopolitical challenges, the pandemic, increased consumer expectations, and inventory challenges have shifted supply chain management to the top of the C-Suite agenda. The pandemic separated winners and losers like never before as CEOs and CFOs had to report on their performance to shareholders and explain supply chain underperformance. The increased complexity of building the needed efficient, sustainable and resilient supply chain is forcing companies to leverage actionable data insights to drive decision making to remain competitive. Companies are focusing on data and tools such as machine learning and artificial intelligence to enhance decision-making and improve their supply chain efficiency and profitability.

For example, Logiwa, a cloud-based WMS software solution, automates order fulfillment and inventory management for quality-controlled logistics. There’s also Altana, a supply chain risk and intelligence platform helping some of the largest multinationals and governments identify potential supplier, security and inventory risks across their supply chain networks. FreightWaves provides benchmarking, analytics, monitoring and forecasting of the global logistics industry. Their SONAR platform includes trucking, rail, maritime, air, and warehousing data to help businesses make data driven decisions through freight forecasting.

Data is a critical component of keeping on top of inventory levels and changing customer needs. Those companies that seek out and invest in cutting-edge technologies to swiftly gather, analyze and leverage data will stay ahead of the competition.

2. Creative solutions for labor shortages

Businesses are facing unprecedented challenges trying to find enough workers to fill open jobs3. The U.S. has 5.7 million unemployed people – but 10 million unfilled jobs. Similarly in Europe 3.1 % of jobs were vacant in the fourth quarter of 20224. Even despite a slowing economy, employers have a hard time finding and keeping skilled workers. Workstep, a company that helps warehouse operators recruit and retain their frontline workforce, is using data to empower companies’ decision making and positively shape the worker experience. With access to this technology, companies are identifying actionable insight focused on retention and using data to keep warehouse workers engaged, which reduce turnover rate by up to 36%5.

Automation is growing and predicted to exist across one-quarter of warehouses by 2027.6 Robotics are delivering results and paving the way for further innovation and investment. Companies are incorporating autonomous robots to take on dull, physically demanding and dangerous jobs. Locus Robotics, for example, creates robots that are dramatically improving warehouse functions like put away and restocking, picking and packing, and pallet-moving, increasing productivity 2 – 3X as humans are freed up to do more critical tasks. In a recent implementation, DHL was able to increase their picking from 60 to 70 units per hour to over 180 with 25 less people7

3. Tech that supports net zero commitments

Lastly, sustainable logistics solutions are in high demand and ripe for investment. This should come as no surprise given more than one-third of the world’s largest companies have committed to net zero emissions goals, Prologis included8.

The demand for sustainable warehouses is predicted to grow rapidly in 2023. Investing in future-proof facilities can help companies proactively manage operational risks, including changing regulations, community resistance and volatile fossil fuel-based energy pricing.

We are incubating those next-generation green solutions, in part, because reducing our customers’ operational emissions is part of how we will reach Prologis’ net zero goal. Ventures is proud to help drive our strategy with our investments across renewable energy, sustainable construction materials such as steel and concrete and the creation of our Mobility business. Last fall, Essentials Mobility celebrated the launch of its first two truck charging infrastructure locations in Southern California.

We’re just getting started

Some of the best companies were formed during challenging times (think Google, Facebook, Salesforce formed during the dot.com crash and Uber, Airbnb, and Slack coming out of the Great Recession). So, while the cost of capital has gone up, we’re looking to partner with stand-out companies throughout this complex cycle. Together, we’ll find ways to create transformational change in a logistics space that’s proven to be mission critical.

[1] "Supply Chain Tech Report." Pitchbook.Com. PitchBook, September 30, 2022. https://pitchbook.com/news/reports/q2-2022-supply-chain-tech-report.

[2] "Supply Chain Tech Report." Pitchbook.Com. PitchBook, September 30, 2022. https://pitchbook.com/news/reports/q2-2022-supply-chain-tech-report.

[3] Ferguson, Stephanie. "Understanding America’s Labor Shortage." USChamber.Com. U.S. Chamber of Commerce, May 2, 2023. https://www.uschamber.com/workforce/understanding-americas-labor-shortage.

[4] "Job Vacancy Statistics." Eurostat. Eurostat, March 1, 2023. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Job_vacancy_statistics.

[6] Scriven, Reuben. "26% of Warehouses to Be Automated by 2027." Interact Analysis. May 4, 2023. 

[7]"Carhartt Improved Productivity with DHL & Locus." Locus Robotics. August 29, 2022. Video, https://www.youtube.com/watch?v=NyTzrxC093M.

[8] "Nearly All Companies Will Miss Net Zero Goals Without At Least Doubling Rate of Carbon Emissions Reductions by 2030, Accenture Report Finds." Accenture.Com. November 1, 2022. https://newsroom.accenture.com/news/nearly-all-companies-will-miss-net-zero-goals-without-at-least-doubling-rate-of-carbon-emissions-reductions-by-2030-accenture-report-finds.htm#:~:text=1%2C%202022%20%E2%80%93%20While%20more%20than,Accenture%20(NYSE%3A%20ACN).

Will O'Donnell Headshot

Will O'Donnell

Managing Partner, Prologis Ventures

William O'Donnell is Managing Partner, Prologis Ventures.  In this role he helps to identify emerging technological advances that could have a positive impact on Prologis' core operations or customers’ success. Previously he was a Senior Vice President, Strategic Initiatives responsible for strategic initiatives, including joint ventures and large portfolio corporate acquisitions.  Will has led some of the company’s more complicated transactions, including the restructuring of six of Prologis' private equity funds representing over 4.5 billion in assets, privatization of G. Acción; establishment of the $1 billion China Development venture; and AMB's investments and ventures in India, China, Mexico, Singapore and Korea.

Will is a member of the Urban Land Institute and is a frequent lecturer on real estate at USC's Lusk Center and the Paul Merage School of Business at UC Irvine. He holds a Bachelor of Arts in English and Spanish from Duke University.

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