Why Yojee Ltd (ASX:YOJ) shares surged higher today

One of the best performers in morning trade has been the Yojee Ltd (ASX: YOJ) share price.

At the time of writing the logistics and supply chain management platform provider’s shares are up 13% to 13 cents.

Why are Yojee’s shares surging higher today?

This morning Yojee announced that it has signed a two-year agreement with Riverwood Pte Ltd to provide its logistics software.

Riverwood is a Singapore-based provider of customised logistics solutions which are integrated into its customers’ existing business processes and systems.

According to the release, Yojee’s software will be used off the shelf by Riverwood, and a partnership program is in place to further optimise and innovate between the two parties. Though any custom innovation beyond what has already been agreed between the parties will be paid.

In addition to this, Riverwood will offer its freight services as a partner to the Yojee freight network.

Is this worth getting excited about?

Management believes the agreement is significant due to the calibre of Riverwood and its presence in the Singaporean market.

Yojee will receive 20 U.S. cents for each transaction that is completed by Riverwood through Yojee’s logistics software. These include deliveries and partner transfers, though marginal discounts will be provided based on volume levels.

No details have been provided in respect to transaction estimates, but the company has pointed out that Riverwood has a number of key contracts in place and commencing soon. These include deals with DHL, FedEx, SingPost, TNT, and Amazon in Singapore for its 2-hour PrimeNow delivery service launch.

Should you invest?

While this is a promising announcement and the company is cashed-up after a recent oversubscribed share placement, I would suggest investors keep their powder dry for the time being and wait to see what kind of revenue this generates over the next six months.

Until then, I think tech shares such as Altium Limited (ASX: ALU) and WiseTech Global Ltd (ASX: WTC) could be better options.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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