Launch HN: CommodityAI (YC W24) – Shipment management for commodity traders

[KyleManuel]

Hi HN! We’re Daniel, Philip, and Kyle, cofounders of CommodityAI (https://commodityai.io). We make commodity shipments easy to manage.

Commodities are the center of global trade. The food you eat and the coffee you drink all start with agricultural producers. A trader organizes a shipment of it to a receiver near you, who then manufactures and distributes it to your local supermarket or coffee shop.

That sounds simple enough, but any shipment involving commodities involves around 200 processes, at least 50 documents, and extensive coordination through emails and phone calls. The amount of paper and processes is staggering. Errors can be catastrophically costly, ending up with lawsuits over millions of dollars.

Commodity trading companies allocate 40% of their workforce to logistics and operations. It’s a relationship-focused business. These aren't trading firms with Bloomberg terminals doing spot trading with algorithms all day. They are trading actual physical commodities. Many of these deals are agreed on via text message.

Now imagine you're managing thousands of shipments a month. Nearly every trader we’ve talked to can recall a time in the past 6 months where a document or process error resulted in the firm losing hundreds of thousands of dollars.

This led us to explore how we could tailor AI, automation, and collaboration tools to automate the handling of shipment workflows for more efficient operations and accurate documentation. Our team has the background to solve this problem—an ex-sugar trader with 8 years of experience and two engineers with a combined 14 years of experience from logistics and software companies.

There are a few layers to solving the pain points of these customers:

(1) Data Preprocessing: we give them a way to clean up and organize their existing data, which is usually a mess. We help them process documents, classify them, extract relevant fields, organize them by shipments, and search for them.

(2) We use AI and automation to leverage OCR, Multi-Modal Transformers, and indexing methods across 150+ different commodity and logistics document types to automate business processes.

(3) Actions and Workflows: Once the data is processed, we enable users to take actions or kickoff workflows with them, such as entering data into ERPs, using AI agents to compose emails, update freight matrices, track their shipments and predict delays, and more. All of these things are things the user does manually currently and are prone to error, so we automate them to save time and money. An ops team currently spends 60% of their day on these tasks. With our initial product, we are already saving them 2 hours a day.

Our customers so far include one of the largest U.S. agricultural traders, who use our platform to process over a million documents and automate internal workflows, like creating vessel nominations and updating shipment statuses. They also use us to find critical documents quickly. Importers and exporters randomly get audited to make sure the commodity they declared matches what was actually delivered (quality, weight, polarization). These audits can happen years after the shipment, and searching for the relevant documents is a needle/haystack situation. Sometimes they have been unable to find them, and you can imagine how well that goes over with the auditors. We make this easy.

We can’t give HN readers direct access to the product because it can only be used if you have commodity data and that data is sensitive. But here’s a video showing how it works: https://www.youtube.com/watch?v=slOGliSR6IM#t=26s

There probably aren’t too many commodity traders checking HN every day, but we figure some of you have worked as traders or know traders from previous work experience, and we’d love to hear whatever you think about this!

[alexpetralia]

My opinion is that this is not really a tech problem, this is a business problem. Will the traders at Cargill, Vitol, Exxon, Trafigura, Glencore buy it? Do they want to take the time to "learn" another tool? Does it "just work", without any "let me get back to my product people"? Also, of course, every commodity market is completely different and has a whole web of intricate details in logistics, regulation, product, people, etc.

I'd guess that only an established (or former) trader already using the tool with a deep network of contacts could convince other traders to use it. And then of course there is the whole other problem of enterprise sales and penetrating big financial companies (legal, compliance, procurement, infosec, etc.). So maybe you start with small traders? But my understanding of commodities trading was that is kind of like high frequency trading - there are only large, very established players.

[KyleManuel]

Yes you have some really good points. There are a lot of business problems to overcome here!

Our CEO Philip is exactly that, a commodities trader with 8 years experience and a wide network for us to tap into.

As for every commodity market being different with its own intricate details, you are right. We are taking an approach to start in agriculture (sugar, coffee, cocoa) because these have similar supply chains. However, we are building configurable tools from the foundation to support more complex customizations to allow companies to easily tailor the solutions to their needs.

We have also had some calls recently with commodity producers who have shown a lot of interest in the platform so far, because they many of them manage their own logistics teams internally, which opens up an additional market outside of just the big trading players.

I really appreciate your feedback, thank you.

[btown]

From what I'm reading above, the pitch is more "I can keep using my existing systems, but use this tool as a layer on top to help me with my data entry and anomaly detection, and our clients/external parties don't need to know that we have these superpowers."

It's a great way to break into a market, but there's also less lock-in and forced virality relative to a system that you encourage suppliers/partners/counterparties to use. Which can be compensated for by word of mouth and ease of onboarding! But this can be a double-edged sword, particularly when investors are evaluating whether you're (planning to be) necessary or expendable to the industry.

[Svdc]

This is exactly one of the main issues if not the biggest issue of B2B products.

>> Will the traders at Cargill, Vitol, Exxon, Trafigura, Glencore buy it? Do they want to take the time to "learn" another tool?

I worked for this company that was built on a consortium of the biggest players, and adoption requires a lot of effort. Not only on the relationships you have to build, either by the account management team or by a product person, and trust also plays a big role - a lot of babysitting and support is required.

But trust me when i say that if they find that "yet another tool" provides the time-savings and the cost savings they are after, then they will use it. It will take take, which for most companies is not an option, but patience is key.

My experience also tells me that what one company is after does not mean it is translated easily to another. A Trader in one company might be very open to new tools and new business processes, others not so much. I would also say that if a specific role has so many nuances from company to company, that will also be true from commodity to commodity.

On another note, we had in the past product specialist to help on the product development side, and they had come from very robust backgrounds from logistics operations. But what they knew was very specific to how the companies they worked before operated and that didn't resonate sometimes for other clients.

Its a difficult industry to penetrate, smaller to medium sized companies are more likely to adopt disrupt technologies, while bigger ones tend to take longer.

[c_o_n_v_e_x]

>Will the traders at Cargill, Vitol, Exxon, Trafigura, Glencore buy it? Do they want to take the time to "learn" another tool?

Traders like money. Anything that would enable them to keep more of what they "kill" at bonus time would be popular.

[Svdc]

I was doing AI implementations for a company in Oil and Refined products. And I can tell you that AI can massively improve the processes and and streamline their operations. In fact, it can easily transform any data entry to structure data without the needless sw development of API integrations and gateways.

My first point as a contribution is, traders are lazy and operators are control freaks. In a way traders only care about doing deals so any trade entry in a system us prone to errors and misalignment, such as the ETRM system's reference data. And Operators are control freaks in a way that if they find our that your AI missed a single entry they will mistrust it forever. They rather spend more time copy pasting that to trust your AI. But any automation is welcome they still want to have control (which some in contrast will argue that that control is a nuisance and a waste of time).

Oh well, though customers is what they are.

I am really happy to know that there are others trying to solve the same problems in a world of ineffectiveness.

[KyleManuel]

Yes, we have noticed traders just want to make more deals, and operators require their information to be accurate.

We are trying to develop super sleek and intuitive tools built to help traders update their ERP systems using LLMs and generative AI to better format their data.

We hope to prove that operators can actually get more accurate data into their systems faster because we provide tools for data entry that make it a breeze to get accurate data.

Additionally, we're trying to help our customers expand their businesses as well. As operations are generally their bottleneck, traders may not expand into business sectors because they are turned off by the overhead required to manage the operations.

[thinking_banana]

I'm not super familiar with the overall-commodity trading platform. But one of the more empowering businesses in the grains business has been "Bushel" - https://bushelpowered.com Is it possible to have a trading platform focused on "grains business" only ? Or does that deviate from your core value proposition?

[KyleManuel]

I certainly think it is possible to have an even more focused platform.

We are starting with our network in soft commodities and I think it's possible to get pretty far just focusing on a smaller subset of commodities. Our long term goals and aspirations definitely include additional commodity industries as well.

We are building flexible tools from the foundation to support multiple industries.

[ofisboy]

Hey guys,

Congratulations with the launch.

I’m an ex-tcf banker turned software developer (mainly frontend). I’ve worked 10 years in trade finance world as a relationship manager and credit analyst and i know from first hand how pain in the ass it is to deal with the archaic methods in the tcf world.

I’m keen on learning if you already have ideas around improving the financing side of things. In the end, finance is big part of the commodity business. Also it would be a huge benefit if you can improve the processes around fraud prevention. Not an easy task and not necessarily a tech problem, but definitely a historically huge problem in commodity trade.

Also any ideas around making this more like an open api where banks, warehouses, logistics companies and traders can integrate and stay in sync with each other?

Just wanted to mention these few big pain points from my experience.

I hope your platform can address some of these issues.

Best of luck

[KyleManuel]

This could be a really exciting roadmap for the long run. We actually believe there is enough of a market just selling solutions and tools to traders and producers that we haven't really thought about an "open API" sort of solution.

We have had ad-hoc conversations about the possibility, but I do think it could be an impactful solution if done correctly.

Thanks for the feedback and suggestions.

[distantsounds]

Curious what your AI is telling you now that a major US port is out of commission.

[danielmarkbruce]

Out of interest, why not start a commodity trading house instead?

[KyleManuel]

We have had this thought was well. It's tough to go into a vertical with software because you end up with tools that make it easier to get an edge, and then why not just trade yourself?

Generally, we just enjoy building software and it suits our personalities better. But we do believe that it is a good benchmark for our product to think, "could we use our tools to have a better edge in the market if we were a trade house."

Great question!

[all2]

> (1) Data Preprocessing: we give them a way to clean up and organize their existing data, which is usually a mess. We help them process documents, classify them, extract relevant fields, organize them by shipments, and search for them.

To this point, I work with folks who are experts at accessing, organizing, tagging, and triaging data. If you'd like to set up a call, I'd be more than willing to facilitate.

[9dev]

Ah, that’s interesting. My company, Matchory, focuses on market research and supplier discovery by analyzing bills of lading and crawled web content, then building a huge database from that. By now, we have a few hundred million BOLs and roughly 14 million companies in store. If you’re interested in having a talk about any kind of collaboration, contact me. Email in bio.

[thomukas]

Have you benchmarked against what some of the SaaS in the freight management category ? For instance Cargowise has a few modules to digitise and reconcile invoices, bills of lading etc .. besides the competition angle I’d also advise you look at it from an integration angle as lots of traders already tools etc

[KyleManuel]

Yes we have taken a look at existing freight management tools. We are trying to go even more specific and manage specifically raw commodities and their shipment processes. There are enough specific criteria that go along with managing these supply chains that we believe we can provide compelling tools out of the box for our customers.

[surfmike]

You might want to try doing something like https://www.xeneta.com/ too, giving shipping price data

[KyleManuel]

We are looking into how to best provide route planning into our product. I'm certain we will need to have accurate pricing information available. Thanks for the link!

[kaltsturm]

Congrats and keep up the good work! Can you describe your tech stack and challenges you faced in your first 6 months - we love to learn from your experiences.

[KyleManuel]

Hey there!

We have worked extensively with many of the latest LLM models and tried many different techniques to solve the various problems for our customers.

We use a combination of tools from Google and OpenAI to leverage LLMs. We use React and Heroku to support the web application.

The biggest challenge so far has been getting good field extraction and the ability to accurately search millions of documents using NLP. We've iterated our tools several times and finally reached a good solution that adequately solves the biggest needs of our customers.

We've built a RAG and iterated several times in order to try and get the best configurations for our customers.

[secondcoming]

Just curious as to how well AI and OCR can handle locale issues in documents? E.g. is 1.000 is 1000 in German. There was also the famous Xerox scan bug.

[Svdc]

We just had that same bug when we used a conventional ML engine to OCR a document. Thats very common on quantities. The new LLMs allow for prompt engineering, so we were able to solve it.

[sidcool]

This is pretty cool. I have no idea of this industry, but good to see YC and founders tackling something off the beaten path.

[KyleManuel]

Thanks! We are excited too. I've worked in construction software for many years, and really enjoyed the space. I am excited to jump into this domain and learn a lot about the industry.

[Bostonian]

Could your software be useful to institutional commodity futures traders who do not participate in physical markets?

[KyleManuel]

I don't anticipate supporting only folks who trade paper with no ownership of the physical commodities.

There are teams who trade physical and do risk management with futures, and we may have some overlap there. But anyone who only traders futures isn't in our immediate customer profile.

[lyime]

Interesting product. Do you also providing shipment/container milestones and visibility?

[danielmarkbruce]

What commodities are you focused on? Like, softs, energy, metals etc

[KyleManuel]

Our first few customers are agriculture based. Sugar, Coffee, Cocoa and more things like this that have similar distribution supply chains.

We believe we have the tools and expertise to expand to energy and metal in the future. They are much different, but we believe with the tools we have developed, they can be repurposed quickly to support a wide range of commodities.

[jn31415]

Do you happen to be hiring for customer service positions?

[westonplatter0]

cool to see innovation reducing Wall Street data entry friction.

[PreInternet01]

Well, my only experience with commodity trading is that blocking any emails that come from a previously-unknown sender and contain the substring 'commodit' cuts back spam significantly...

But, good luck with that, I guess?