When the El Sol Academy received a shipment of ping-pong tables, rock climbing gear and multifunction playing desks, it might not have seemed out of the ordinary. After all, schools add or replace equipment all the time.
But El Sol, a charter preschool in Santa Ana, California, whose student body comes largely from underprivileged families, was the beneficiary of a gift from the Merage Institute in collaboration with Israeli company Ladingo.
El Sol had been a key participant in a pilot program testing Ladingo’s shipping software. And now, Ladingo wanted to give something back.
The fact that Ladingo shipped particularly large items to El Sol was not coincidental; it’s Ladingo’s raison d’etre.
While retail e-commerce is constantly growing – from $3.5 trillion in 2019 to an estimated $6.5 trillion by 2022, according to the Statista – only small items like clothes, vitamins and consumer electronics can be delivered internationally by air. A 52-inch television or a refrigerator will have to go by sea.
“Once you get to a certain size, it gets too expensive to ship by air,” explains Ruth Reiner, Ladingo’s chief marketing officer.
You have to rent an entire container to send a large item to an overseas destination. If no other items share the container space, the shipping can cost more than the item itself.
Moreover, even if items could be combined, movers need a system to determine what goes where, so that a heavy desk wouldn’t get loaded on top of a box of breakable china.
This leads to a situation where we cannot order a sofa online from overseas, but rather need to buy it locally from a retailer who imports it for resale – usually at a hefty markup.
Combine shipments, optimize packing
Ladingo’s answer to this problem is specialized shipping software for ecommerce retailers and shipping companies.
The Ladingo system is transparent to buyers: you’ll simply go on your favorite website and order the item. The site will display the total price including shipping and customs.
On the back end, Ladingo is working to combine shipments and optimize packing, so that “buying a fridge overseas will be as simple as buying an iPhone case from Amazon,” Reiner says.
That’s easier said than done.
“We have to optimize containers with maybe 100 different items for 100 different buyers, in real time,” Reiner points out. “That doesn’t exist today. You have at most maybe a dozen or half dozen importers in a single container. You have to determine what’s stackable, what’s not stackable, and how much each product will cost.”
Ladingo’s online calculator generates real-time price quotes.
The most complicated part of the process, Reiner says, is the customs and tax implications, what’s known as the Harmonized Tariff Code.
“Many times, 60% of the cost of shipping goes into dealing with customs clearance because it’s all done manually,” she says.“We automate the whole process so that the documents are ready for customs.”
Ladingo must certify that each freight forwarder knows how to use the software. This time-consuming process limits the ability of the company to scale as rapidly as a pure software service.
Today, Ladingo facilitates shipments from the United States to Israel, China to the US and – in a route that doesn’t go by sea but can still benefit from Ladingo’s approach – the US to Canada.
The company hopes to open lines between the US and Europe and the US and Mexico next.
ZIM is lead investor
When an item arrives at its destination, it’s unpacked by the freight forwarder, cleared through customs, sent to a local warehouse and finally delivered to the home of the buyer.
Ladingo software tracks every item’s journey to the warehouse and determines which local shipper to use. (It doesn’t hurt that Rafi Binya, the former CEO of FedEx in Israel, is on Ladingo’s advisory board.)
Ladingo can help companies compete in an increasingly cut-throat ecommerce ecosystem. By packing more into containers, shippers can generate greater profits and get a toehold in new markets.
Ladingo’s lead investor, Israeli-founded global shipping giant ZIM,headed up a $1 million seed round in the Hod Hasharon-based startup.
For consumers, Reiner says,“Our method can help lower the price of products by as much as 30% to 50%.”
But before you get your hopes up, Ladingo is not for Craigslist sellers; only retailers can use the system. So, for now, you can’t ship a sofa from your home in Teaneck to Tel Aviv or Toronto.
Solving a pain point
The name Ladingo is a play on the shipping term “bill of lading,” which is a list of the goods provided by a carrier (or its agent) to acknowledge receipt of cargo.
Ladingo was founded by Reiner, CEO Hagar Valiano Rips and CTO Guy Levi. The team initially intended to focus on logistics and ecommerce. But when Valiano Rips wanted to buy a bicycle from an overseas website for her husband,the new concept was born.
“Hagar realized that shipping was four times the cost of the bike,” Reiner recalls.
“The shippers didn’t know how to do it differently. They had to price the one product for at least half a container because they didn’t know if they’d get enough products to fill it. We discovered that every shop had the same problem. No one wanted to take the risk. That was the moment we realized this is one of the greatest pain points in this industry. We knew we had to solve it.”
The connection between Ladingo and the El Sol Academy in Santa Ana came about because Reiner is a fellow at the Paul and Lilly Merage Institute.
“They select about 20 entrepreneurs a year to help Israeli companies understand how to do business in the US,” Reiner says. “They’re also big philanthropists and had a personal relationship with El Sol. We met the students at the school and fell in love.”
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