FROM XBOX TO INDUSTRY’S X FACTOR
Houston company brings video game technology to warehouse industry — at a lower cost
Asmall local company is tackling one of the most vexing problems for the warehousing and transportation industries: measuring the dimensions and weight of a piece of freight, quickly and at a low cost. It says it has found the solution — in video games.
Cargo Spectre, founded about five years ago, has adapted video game technology for a system of scales, cameras and 3D scanners to measure and record within seconds the weight and dimensions — height, width, depth — of freight, including pallets loaded with goods and heavy machinery. This product, known as a dimensioner system, can make and record measurements in the fraction of the time it would take to take such measurements by hand, at one-tenth of the cost of similar devices marketed by competitors, according to company co-founder and CEO Jason
Joachim.
The Cargo Spectre system takes about three seconds to complete measurements and record the data, which is uploaded to the cloud and instantly available to employees and clients. “This system has worked well for larger customers that have facilities all over the world,” Joachim said.
Cargo Spectre’s beginnings reach back to 2015, when Joachim and his brother, Jeremy, now Cargo Spectre’s chief technology officer, were working for their family’s business, World Trade Distribution, which offers freight, cargo and warehouse services at its container freight station in Houston. The company’s freight-processing system desperately needed updating, Jason Joachim said, and they set out to find an affordable solution for weighing and measuring cargo electronically.
At that time, he said, electronic-dimensioning systems cost upwards of $130,000, a hefty price tag for a medium-sized company. With his brother, a software designer, and a few video game enthusiast friends Jason Joachim sought to develop a low-cost solution to the dimensioning challenge.
Rather than developing the technology from scratch — a very expensive proposition — Joachim and his team began searching for off-the-shelf equipment they could adapt. They found it in Xbox Kinect sensors, an add-on for the Xbox 360 video gaming console produced by Microsoft.
The sensors contained a 3D camera, which could be adapted for scanning an irregularly shaped pieces of freight and computing its precise dimen
sion. Selling for about $300 when new, Kinect provided an inexpensive platform on which to build a new dimensioning system. The team then wrote the software that records, calculates and transmits the data in a matter of seconds.
After putting the system into operation at World Trade Distribution, the development team formed Cargo Spectre in 2016. The name grew out of the early efforts to develop the technology employing the Kinect.
“The first time we saw ourselves underneath the sensors in 3D space we looked like ghosts or specters,” Joachim said.
Growing markets
Since its founding, the company has grown rapidly, with sales increasing by about 75 percent per year. There are now more than 100 Cargo Spectre systems in operation with customers spread across four continents Joachim said. Last year, Cargo Spectre had about $1.2 million in annual sales, he said.
Cargo Spectre targets small and mid-sized transportation and warehouse companies, like World Trade Distribution, that need low-cost dimensioning solutions to compete. “With our system,” Joachim said, “we’d like to believe that we’ve enabled them to have the same market advantage that a huge, publicly traded company would have,” he said.
Cargo Spectre operates on a hybrid hardware/software business model. The company sells the equipment, which costs about $5,000 installed. This price compares with about $50,000 for a dimensioner systems offered by its closest competitor, Joachim said.
Customers also pay a $600per-month fee for the use of Cargo Spectre’s proprietary
“We’re all gamers. We fashioned this (business) after Xbox Live …” Jason Joachim, co-founder and CEO of Cargo Spectre
software, which can be integrated into customers’ software, allowing the data to flow seamlessly into record-keeping and management systems.
Although its headquarters are in Houston, sales of its products are weaker here than in other U.S. markets, Joachim said. The company has only about 10 devices operating in the Houston area, compared to more than 200 in Miami, 100 in Los Angeles and 100 in New Jersey.
Joachim cited several possibilities for the lagging sales here, beginning with Houston’s location on the Gulf Coast. Unlike ports on the East and West coasts, ships traveling in and out of the Port of Houston do not make as many direct voyages to big international trading markets in Europe and Asia, meaning less freight that enters the country here and needs to be processed.
“We don’t face Asia or Europe,” Joachim said. “The way freight comes into Houston is somewhat different from the way that freight comes into the rest of the country.”
Ships coming from Asia and Europe usually stop in other ports and drop off cargo, before coming into Houston, Joachim said. That, however, is changing with an increase in direct trade between the Port of Houston and port cities in China, Joachim said.
Precision equals money
Precisely measuring the dimensions of an object being shipped is important to determining the price paid for shipping. Cargo Spectre’s customers comprise freight forwarders, which transport goods between two destinations; common carriers, which transport goods on regular routes at set rates; and freight brokers, which are contracted by shippers to be liaisons between the shipper and a motor carrier to facilitate the movement of cargo. All these types of businesses are affected by cargo rates.
Cargo transport rates are paid based on the dim-weight of a piece of cargo, that is the amount of space a package occupies in relation to its actual weight.
Joachim said this is where precise dimensioning of pieces of cargo becomes important, especially when the product to be shipped is irregularly shaped. For example, a freight forwarder measuring such a piece of cargo by hand could underestimate that piece’s dim-weight, causing the freight forwarder to receive less money than it should.
While the inexpensive Xbox Kinect helped Cargo Spectre keep its hardware prices low in the company’s early days, that arrangement came to a halt when Microsoft canceled production of Xbox Kinect in 2019. But what looked like a setback turned into another opportunity for the company.
Microsoft employed the same scanner technology for gaming to create the Azure Kinect, which uses artificial intelligence sensors that have broad commercial applications far beyond video games. As a result, the Azure Kinect proved an advance for the Cargo Spectre system Joachim said.
“We have seen tremendous gains in accuracy, stability, speed and AI capability,” Joachim said. “Microsoft has been very responsive to our needs with this new sensor versus one built for gaming.”
Cost vs. precision
Cargo Spectre’s low-cost approach is not shared by some of its larger, more established rivals. For example, Cubiscan, of Farmington, Utah, offers a wide variety of large-scale dimensioning equipment, most of which are sold for many times what Cargo Spectre’s dimensioners cost.
The company doesn’t release pricing information for its products, said Dean Simmons, director of sales and marketing for Cubiscan.
Simmons said Cubiscan, one of the top two competitors in the dimensioning market, produces a variety of proprietary systems, designed to fit its customers’ various needs. “We’ve got 34 years of product development,” he said.
In contrast to Cargo Spectre’s non-proprietary dimensioner, which uses off-the-shelf camera-based technology, Cubiscan offers products that employ laser, ultrasound and infrared technology, as well as camera-based dimensioners. Camera-based scanners are less precise than some of the more high-tech equipment that Cubiscan sells.
‘Software as a service’
In the future, Joachim said he anticipates that the company will move more in the direction of a “software as a service” business model, with less emphasis on hardware sales, and a greater focus on providing the software products that support the operation of the dimensioners.
From the company’s formative stages, he said, the founders viewed their business model as like that of the video game industry, in which the customer buys the game console and then pays periodically for a continuing service to play online games against other players.
“We’re all gamers,” he said. “We fashioned this (business) after Xbox Live, where if you don’t pay us you get shut off.”