WiseTech Global, a $25 billion firm, is at a pivotal moment following a year marked by scandal and intrigue. The company provides software solutions for the logistics industry, streamlining global supply chains. It offers a platform that facilitates the management of freight forwarding and customs compliance. Two major business decisions now loom large: the integration of its largest-ever acquisition and a fundamental change to its pricing model.
In May, WiseTech acquired US supply chain software provider e2open for $3.2 billion, its biggest acquisition to date, financed by $3 billion in debt. Simultaneously, the company is rolling out a new volume-based pricing model for its CargoWise freight forwarding software, transitioning from per-seat licenses. While 95 per cent of customers by number have moved to the new value packs, the rollout has been met with resistance. Some customers have reported bill increases of up to 50 per cent, prompting calls for freight associations to intervene.
Analysts see the pricing change as a potentially defining moment, with Goldman Sachs noting that success in driving industry-wide cost recovery would materially improve WiseTech’s pricing power. However, failure could result in customer churn. The integration of e2open, which will account for half of the group’s revenue, also presents a major challenge. Some fund managers have expressed concerns about e2open’s cash earnings and the complexities of integrating the two companies.
The coming year will be a true test of WiseTech’s market position. The company must successfully integrate e2open and convince its customers to accept the new pricing structure. The outcome of these decisions will determine whether WiseTech cements its dominance or opens the door for increased competition.
