Cargo se­cu­rity firm gets a cash in­fu­sion

FreightWatch to use $9.7 mil­lion to ex­pand busi­ness of pro­tect­ing hauls from hi­jack­ers

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE - By Brian Gaar

Austin-based lo­gis­tics se­cu­rity provider FreightWatch In­ter­na­tional, which works to pro­tect cargo from hi­jack­ers, has raised $9.7 mil­lion from a group of in­vestors led by a Chicago-based pri­vate eq­uity firm.

FreightWatch of­fi­cials say they’ll use the money to grow their busi­ness, which in­volves gath­er­ing and pub­lish­ing in­tel­li­gence about cargo theft and de­vel­op­ing track­ing de­vices that al­low stolen wares — es­pe­cially high-value items such as com­put­ers and phar­ma­ceu­ti­cals — to be re­cov­ered quickly.

“We’re right on the cusp of, we think, some­thing pretty large here,” FreightWatch CEO Barry Conlon said.

Started in Ire­land in 1998 by a group in­clud­ing for­mer mem­bers of the Ir­ish mil­i­tary, FreightWatch In­ter­na­tional in­cor­po­rated in Austin in 2001. At the time, com­pany of­fi­cials said Austin was close to “one of our ma­jor global cus­tomers,” with­out nam­ing names.

To­day, FreightWatch has op­er­a­tions in more than 10 coun­tries on four con­ti­nents. The com­pany em­ploys 325 peo­ple glob­ally, with 125 in the U.S. and 20 in Austin, where one of its con­trol and mon­i­tor­ing cen­ters is lo­cated.

Us­ing track­ing technology, FreightWatch mon­i­tors move­ments of cus­tomers’ cargo through­out the world, Conlon said. Its new- est de­vices can be placed in­side pal­lets, al­low­ing the com­pany to track cargo, not ve­hi­cles. If a load of cargo de­vi­ates from its as­signed route, com­pany em­ploy­ees lo­cate it and con­tact au­thor­i­ties.

The com­pany’s lat­est tracker fits in­side a pill bot­tle and costs less than $200. For a pal­let that could be worth $1 mil­lion, “it’s the cheap­est form of in­surance you can re­ally get,” Conlon said.

Much of the new in­vest­ment money will fund re­search and devel­op­ment of smaller, smarter and cheaper de­vices, Conlon said. That in­cludes de­vices that can de­tect changes in light, tem­per­a­ture and hu­mid­ity. Those changes can let clients know if their cargo has been dam­aged dur­ing a hi­jack­ing.

“Ba­si­cally, we’re get­ting our cargo to talk to the client,” Conlon said.

An­other part of FreightWatch’s busi­ness is in­tel­li­gence gath­er­ing. The com­pany reg­u­larly pub­lishes re­ports and analy­ses about the hi­jack­ings and crim­i­nal pat­terns.

As part of its ven­ture cap­i­tal round, FreightWatch was ad­vised by Hous­ton-based Growth Cap­i­tal Part­ners. The lead in­vestor was pri­vate eq­uity firm Bridge In­vest­ments. An­other in­vestor is Egis Cap­i­tal Part­ners, whose ad­vi­sory board is led by for­mer Home­land Se­cu­rity Sec­re­tary Tom Ridge.

“You don’t hear much about cargo theft, but it is a huge prob­lem in the U.S. and world­wide, and it’s on the rise,” said Gene Lowen­thal, FreightWatch board mem­ber and vice pres­i­dent of Growth Cap­i­tal Part­ners.

“FreightWatch is at the fore­front of pro­vid­ing both ser­vices and technology geared to pro­tect­ing high-value shipped goods.”

Daniel Gold­berg, who co­founded Bridge In­vest­ments, said his firm had been look­ing at the “se­cu­rity ser­vices space” for some time and was ex­cited by FreightWatch’s op­er­a­tion.

There are other de­vice com­pa­nies that com­pete with FreightWatch, but Gold­berg said the level of over­all ser­vice FreightWatch pro­vides is what in­ter­ested his firm in the com­pany. “The mar­ket it­self is grow­ing, and FreightWatch is help­ing to de­velop the mar­ket,” he said.

Conlon de­clined to iden­tify his com­pany’s client ros­ter, but said hi­jack­ers’ biggest tar­gets are ship­pers of com- put­ers, lap­tops and cell phones (es­pe­cially smart phones), as well as phar­ma­ceu­ti­cals, al­co­hol and to­bacco.

Armed hi­jack­ings are more com­mon in coun­tries like Mex­ico and Brazil, but they’re rare in the U.S., Conlon said. Typ­i­cally, hi­jack­ing crews will fol­low a load from a ware­house and wait for the driver to leave cargo unat­tended, he said. Then they steal the truck, move the cargo to an­other ve­hi­cle and get away.

Be­cause hi­jack­ings in the U.S. rarely in­volve vi­o­lence, au­thor­i­ties don’t get in­volved, which is why it’s con­sid­ered a “silent crime,” Conlon said.

Up­ward of $10 bil­lion in cargo is stolen each year in North Amer­ica, he said.

“You just don’t see it,” he said. “It’s not as vis­i­ble as a bank rob­bery would be, be­cause that’s a vi­o­lent crime.”

larry Kolvo­ord AMER­I­CAN-STATES­MAN

FreightWatch CEO Barry Conlon says his com­pany mon­i­tors move­ments of cus­tomers’ cargo through­out the world. FreightWatch’s new­est track­ing de­vice is ‘the cheap­est form of in­surance you can re­ally get,’ he says.

Larry Kolvo­ord AMER­I­CAN-STATES­MAN

FreightWatch, a global com­pany with op­er­a­tions in more than 10 coun­tries on four con­ti­nents, is based in Austin, where one of its con­trol and mon­i­tor­ing cen­ters is lo­cated.

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