Chart of the Week: WiseTech’s formidable entrenchment in markets
WTC has a few moat sources. This week’s chart looks at where it gains a competitive advantage.
Mentioned: WiseTech Global Ltd (WTC)
This week’s Chart of the Week comes from Morningstar’s Equity Analyst stock pitch for WiseTech.
In May, Morningstar’s equity analyst Roy Van Keulen upgraded WiseTech’s WTC moat to ‘Wide’. This means that he has high confidence that WiseTech will deliver excess returns for 10 years and are likely to persist at least 20 years.

WiseTech has successfully leveraged its global freight forwarding dominance to integrate many customs & compliance acquisitions into its core CargoWise product suite. CargoWise is now the globally dominant customs & compliance solution. The next expansion is to integrate landside logistics acquisitions into the product. While success of this expansion is less certain with Richard White no longer the CEO, we still view WiseTech’s opportunity as large and highly winnable.
We believe switching costs in CargoWise are the strongest contributor to WiseTech’s moat. CargoWise’s switching costs are most clearly evidenced by its annual gross retention rates, which have stood over 99% per year since 2013, despite WiseTech pushing through notoriously steep price increases over this period. The score warrants close inspection because it is exceedingly rare for software companies to have such near-perfect retention scores.
For comparison, WiseTech’s closest peers are estimated to have 95% customer retention rates. Although such scores are still very impressive, implying a mere 5% annual churn, CargoWise’s churn is at least five times better, at under 1% annual churn.
This assumes the difficulty level for retaining customers scales linearly between 95% to 100%, while in reality, the closer a company gets to 100%, the more difficult each incremental percentage point of retention becomes.
WiseTech and its customers outpace the competition
We believe WiseTech’s CargoWise software helps its customers meaningfully outperform their competitors and thereby reduces business failure risk to close to zero. We see this evidenced in several revealing metrics.
The most striking among these is that every long-term CargoWise customer that is publicly listed has seen its share price outperform every one of its publicly listed peers over the past decade by a wide margin, with the average CargoWise customer delivering around 10 times the share price performance of the average peer.
We believe this is because, by digitising and automating processes, CargoWise makes its users materially more efficient (and effective) at their jobs. Anecdotally, we believe it is typical for freight forwarders using CargoWise to process twice the number of jobs per day, compared with the industry average.
But having twice the efficiency should result in half the staff, all else being equal. After all, as WiseTech’s CargoWise customers become proficient on the platform, they should be able to reduce staff and therefore have seat churn.
You’re able to find a deeper look at other sources of moat for WiseTech in the second half of this article by Roy.
You’re able to find previous editions of Chart of the Week here.