Money is lending credibility to a new crop of Uber-like trucking startups, with two large investment firms recently spending millions of dollars to fund the startups Transfix and CargoX.
Transfix, a provider of on-demand trucking, raised $22 million in Series B funding led by an investment from New Enterprise Associations, a global venture capital firm. The funding will go toward investment in technology as well as expanding its product offerings.
Transfix features an online marketplace for trucking and logistics, matching shipments with available trucks. The company is focused on the full truckload market and aims to reduce empty miles driven by truckers using algorithms that match freight with available capacity.
“Transfix has differentiated themselves in a space, which is expected to grow more than 20% in the next decade, by using a tech-first approach to the full truckload market,” said Scott Sandell, managing general partner, NEA. “Seventy percent of the trucking industry relies on brokers to help match customers to carriers, and Transfix’s technology brings much-needed innovation to the market, as well as efficiency not previously available.”
Goldman Sachs has made a similar investment in the on-demand trucking realm, with $10 million raised in Series B funding for the Brazilian startup, CargoX, according to TechCrunch.
CargoX is aimed at the Brazilian trucking industry, which is in need of the technology to better connect truckers to shippers. But with Goldman Sachs funding, it is examining whether the company model could be used in more markets, according to CargoX CEO Frederico Vega. The company aims to reduce the amount of time trucks are running empty, Vega told TechCrunch.
The company is even looking ahead at autonomous vehicles, as its service is currently mapping out and collecting data on Brazil’s roads. This will allow it to better understand the fastest and safest routes depending on the time of day, which could make shipping more efficient and reliable.
These startups join others in the increasingly crowded freight matching, on-demand trucking market, along with companies such as Trucker Path, Convoy, uShip and Cargomatic. With the prevalence of smartphones, which provide not only instant communication but instant location data, these companies are all trying to fill cargo space in more efficient ways. According to analysis from Frost & Sullivan, smartphone-based freight brokering in North America will grow from around $125 million in 2015 to as much as $26.4 billion in 2025.
"Smartphone-based freight brokering is creating new and powerful ways of connecting shippers to carriers, driving a greater degree of transparency, facilitating on-demand logistics, and benefiting both the less-than-truckload and full-truck load markets,” said Wallace Lau, team leader and industry principal at Frost & Sullivan.