Reefknot eyes AI, digital logistics in growth drive

Singapore

TEMASEK-BACKED logistics venture capital firm Reefknot Investments is focusing its US$50 million fund on artificial intelligence (AI) and deep tech, digital logistics and trade finance, said managing director Marc Dragon.

Those areas are critical for logistics and supply chain businesses "to optimise and stay profitable" as customers increasingly demand better service levels, and are how Reefknot hopes to drive change in the industry, Mr Dragon told The Business Times.

Reefknot, a joint venture between Temasek and Kuehne + Nagel, in September launched a US$50 million fund focusing on early-stage logistics and supply chain startups.

Mr Dragon observed that the logistics industry has begun to see companies like China-based Hema offering same-day or even by-the-hour delivery services. That puts pressure on other players to also fulfil orders in a short time frame.

But older supply chain methods cannot keep up with the rapidly changing pace of the needs of consumers, and new AI technology can be used to supplement or replace existing models.

One major area of development is the use of AI and deep tech to help companies predict demand and optimise routes, which can improve the efficiency of working capital by pushing the right products to the right consumers at the right time. These predictive techniques, Mr Dragon said, can increase demand forecast accuracy by 10 to 20 per cent, and in some cases, reaching more than an 80 per cent accuracy rate.

On the digital logistics front, the focus is on helping a traditionally asset-heavy industry to better use spare trucking or warehouse capacities and to bring the products to consumers as fast as possible.

Those innovations are also affecting the way trade financing occurs.

"With increased visibility through data and technology, we see the trade and finance industry converging. The finance industry can now leverage on information along the supply chain to provide earlier financing throughout the whole chain," Mr Dragon said.

Reefknot recently signed a Memorandum of Understanding with experts from the supply chain and logistics industry to drive new business models and transformations in the industry through a think-tank called the Centre of Excellence for Global Emerging Supply Chain Technologies.

"In order to drive the industry forward sustainably, there is a need to understand the relevance and impact of potentially disruptive models and technologies to the supply chain and logistics industry. The think-tank helps to get industry experts together to think about the sector and ask what's relevant here now and in the future," Mr Dragon said.