A freight forwarding technology company is celebrating a £131,000 cash injection after its revolutionary new online distribution platform for vendors and independent hauliers earned it a valuable government incentive, R&D tax specialist Catax can reveal.
Road and air freight distribution specialist, E-Gistics Ltd, has built the first digital platform to seamlessly network smaller, independent distribution companies together to lower costs and increase efficiencies for themselves and customers.
The UK freight industry is currently made up of over 300 UK-based pallet members, plus 3,000 freight forwarders but, until now, only the largest delivery firms with national and international operations have allowed pallet and parcel deliveries to be booked easily online.
E-Gistics spotted an opportunity to offer independent hauliers, pallet members and forwarders the chance to digitise the way deliveries carried out by combinations of independent firms can be priced and booked online, instead of relying on emails and phone calls.
No platform like this has been available to the industry in such a consolidated form before and this groundbreaking work met all the tests to qualify as research and development (R&D) under the Government’s R&D tax credit scheme. This rewards firms with either a reduction in their limited company’s corporation tax bill or a cash lump sum for any work that seeks to resolve a scientific or technological uncertainty, whether that’s a new process, product or service.
The distribution sector has been expanding rapidly in recent years, however, the software being used by new entrants to the market is typically still stand-alone, with little or no compatibility with other companies’ systems. The pandemic has brought renewed focus on how technology may be able to increase that rate of growth among smaller operators.
E-Gistics’ software now gives clients a transparent overview of their dispatches with pricing information for hundreds of combinations from hauliers, couriers and freight providers. This means quotes can be provided typically within six seconds, regardless of the road, sea or air freight provider. These innovations have resulted in some clients making savings of more than 19%.
The platform has already helped a furniture and household goods auction house distribute stock around the EU, using the E-Gistics’ platform’s dynamic pricing once a winning bidder was identified.
The company is also a great example of how R&D tax credits can be earned for work that has not been successful. The firm had planned to develop a delivery solution for medical prescriptions, which was particularly timely in light of the pandemic, but this project was not successful because the use of the word ‘drug’ on online orders meant payment gateways rejected the transactions. This was outside the company’s control and the project had to be suspended, but all the qualifying R&D expenses that went into it still qualified for relief.
Fraser Harper, CEO of E-Gistics Ltd, said:
“The freight forwarding sector has a digitisation requirement but some companies have been unsure how to go about it.
“In the end, it was probably inevitable that a third party software specialist would bring them all together and that’s what we’ve done.
“Digital freight is destined to become more like other areas of the transport sector where automation and digitisation have turned things on their head. Uber in the personal transport space is a prime example.
“We knew we were investing heavily in technology and tax incentives like these make it so much easier to continue to do that. The Government was clever to introduce this scheme. It encourages businesses to invest in technology and if companies don’t embrace digital, they don’t have a great future ahead of them.”
Richard Armstrong, Partnerships Director of specialist R&D tax consultancy Catax, commented:
“Fraser and the team are a great example of a SME that is using the R&D tax credit regime to support the future growth of their business.
“Technology is at the heart of what they do and their innovations promise to revolutionise the way the parcel delivery sector functions, not just in the UK but across Europe.
“It’s important to remember that R&D tax credits still apply to projects that don’t succeed. There really is no good reason not to innovate with such valuable incentives on the table.”
Richard Armstrong can be reached at Richard.Armstrong@catax.com.