As the supply chain crisis continues to create logjams at warehouses and ports around the world, Chicago's logistics tech sector, made up of companies building software and hardware used to improve operations, is poised for growth.
That's according to a new report from World Business Chicago, the city's public-private economic development group, that details the increased amount of capital flowing to Chicago's logistics tech firms and the size of the industry locally.
The report, published Tuesday, found that funding for Chicago's logistics tech startups increased more than 800% from 2019 to 2021. Logistics tech firms last year raised $1.38 billion in growth capital, which includes venture funding, corporate VC and private equity, compared to $150 million in 2019.
There are 34,000 employees working in logistics tech in Chicago, according to the report, which is the third highest in the country behind New York and San Francisco. World Business Chicago says there are more than 100 logistics tech firms in the city.
Some of Chicago's top logistics tech players include Uber Freight, Uber's logistics division that's headquartered in Chicago. Last year it moved into an office in the Old Post Office and plans to employ 2,000 workers.
The city is also home to locally grown upstarts like Project44 and FourKites, which have both raised hundreds of millions in venture funding. Project44, which provides software to shippers and third-party logistics companies to help them track their shipments, is valued at more than $2.4 billion, and joins other Chicago "unicorn" logistics tech firms like ShipBob and Loadsmart that are also valued at more than $1 billion.
When looking at venture capital raised, only Chicago's health-tech sector has grown faster than its logistics tech industry, according to World Business Chicago.
The city's growth as a software hub for the logistics industry make sense given Chicago's history as a major player in the transportation and logistics sector. The city's transportation, distribution and logistics (TD&L) industry is among the largest in the nation, with the most TD&L firms in the U.S. and the nation’s second-largest workforce. Chicago's logistics industry overall employs 260,000 people, and is home to more than 16,000 logistics firms, according to World Business Chicago.
But even with one of the top logistics industries in the country, Chicago's logistics tech firms still receive less funding than other markets, the report found. Bay Area logistics startups raised more than $9 billion last year, followed by Detroit ($4.7 billion), Philadelphia ($4.1 billion), New York ($1.8 billion) and San Diego ($1.5 billion).
