Cargo security firm gets a cash infusion
FreightWatch to use $9.7 million to expand business of protecting hauls from hijackers
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.”
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.
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.