VCs and others jump into the cargo tracking market

Published 27 November 2006

LoJack’s recent purchase of a minority stake in SC-Integrity just one example of an industry on the rise; with $50 billion at stake each year, shipping companies get value by both preventing theft and managing their supply chains

With more than $50 billion in goods stolen every year from ports, truckers, and retailers, is it any wonder that venture capital firms and other security-related firms are eager to jump into bed with the booming cargo tracking industry? RFID and GPS are the basic technologies involved, often combined with cargo seals, but the payoffs are in the software systems that track the tagged merchandise from manufacturer to retailer — giving shippers the security they need with the inventory management they only dreamed of five years ago. “The only thing that can hurt my business is a national outbreak of honesty,” said Dennis duNann, a startup veteran of four security-related companies, including his present venture, Bothell, Washington-based SC-Integrity.

SC-Integrity, readers may recall, recently sold a 40 percent company share to Westwood, Massachusetts-based LoJack for $3 million in cash. The deal gives LoJack the right to sell SC-Integrity products under the LoJack-in-Transit brand name, while SC-Integrity will gain valuable assistance in entering the global market, developing customer relations, and gaining valuable entry into the law enforcement market. “We were looking for a partner that would help us get to market in an efficient and effective manner,” said LoJack spokesman Paul McMahon. “And we think they are the guys.” Among SC-Integrity’s strengths, LoJack believes, is a tool that monitors anomalies in transportation routes — thereby identifying dishonest truckers who might be making an unauthorized stop to meet their compatriots and discharge their cargo. “In transit, if you really need to know every second of every journey where goods are, then satellite and cellular tracking makes a lot of sense,” said Lani Fritts of Sunnyvale, California-based Savi Networks. “That is where their focus is, tracking the conveyance of the truck itself to monitor progress.”

Venture capital firms have not been shy about jumping in either. Eagle River Investments, led by wireless pioneer Craig McCaw, has invested $11.5 million investment in Draper, Utah-based S5 Wireless. The company claims its RFID tags can be “embedded or attached to products, people, vehicles, equipment — nearly anything, and then be located by their owner.” International firms have their place as well. Dublin, Ireland-based FreightWatch claims its GPS cargo trackers recently led to the recovery of $1.5 million worth of cigarettes in Georgia — a claim that is likely to be more prominent in the years to come as the technology becomes standard across the board.

-read more in John Cook’s Seattle Post Intelligencer report