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‘Road freight’s Uber’, cargo-matching provider Convoy, has secured $260m in Series E funding, as well as a $150m credit line from JP Morgan, meaning it is now valued at $3.8bn.
The high valuation affirms the high expectations for tech to curtail inefficiencies in road transport. Here, there are many opportunities for streamlining, due to the industry’s fragmented character, the company says.
“The pandemic highlighted how important trucking is and how volatile and inefficient this industry can be,” said Convoy CEO Dan Lewis. “We know that we can do better by using modern technology and algorithms to help orchestrate freight logistics, improve service, reduce waste, and help drivers.”
Convoy claims to be able to reduce empty miles from 35% to 19% across its area of operations in North America, applying algorithmic matching to ensure trucks perform useful work on the backhaul. It estimates that a 45% reduction in CO2 emissions from empty truck miles could be available if the principle was adopted on a global scale.
Convoy’s investors are a who’s-who of tech moguls, including Bill Gates, Marc Benioff, and Jeff Bezos.
Key to the service offering for tech firms like Convoy is the ability to level the playing field between larger and smaller carriers. One method for mobilising smaller freight operators is through factoring, where a financier pays up to 85% of the trucker’s invoice immediately, which essentially guarantees them a better-ordered working environment which the previous paradigm has not hitherto offered them. Factoring gives customers access to finance which guarantees prompt payments.
Zeus Labs is an analogous tech firm operating in the UK. Co-founder Clemente Theotokis told The Loadstar factoring enabled better market access for small players.
“The small trucking companies and owner-operators can’t wait 90 days to get paid,” he said. “We are able to pay hauliers within a week of the job being completed, which really helps the smaller hauliers with their cash flows.
“It’s very similar to a normal loan, but due to the smaller nature of the company, any interest rates they are paying would be higher than what a large tech company like Zeus can get. So this makes it cheaper for all parties.”
“Even now, some of the largest companies are using manual processes, spreadsheets, phone calls, emails, faxes – even post. There are many different segments of execution sourcing and management of shipments that is still very manual – being able to break that down and automate those processes is what we are doing at Zeus.”