logistics

GoFreight raises $28M to become the “Shopify of freight forwarding” • ZebethMedia

By zebethcontrolPosted on November 14, 2022Posted in Asia, Freight Forwarding, GoFreight, logistics, Startups, taiwanNo Comments

Unicorn Flexport is revolutionizing the world of logistics, serving as a freight forwarder with software that enables customers to manage their shipments. But there are still thousands of smaller freight forwarders, many running on outdated ERP software or spreadsheets. A startup called GoFreight wants to help them compete by providing the “Shopify of freight forwarding,” with backend software that makes their operations run more smoothly, and a frontend that lets them set up a storefront and provide quotes in a few minutes. The Los Angeles and Taipei-based startup has raised $23 million in Series A funding, co-led by Flex Capital and Headline. The round included participation from LFX Venture Partners, Palm Drive Capital and returning investors Mucker Capital, Cornerstone Ventures and Red Building Capital. GoFreight, which currently has about 1,000 customers, helps manage transportation of goods through ocean, air and land routes. It also lets them set up online storefronts with a few clicks. Potential customers can connect to freight forwarders by sending them an inquiry through storefront and getting a quotation within a few minutes, instead of the 24 to 48 hours usually necessary. Once a freight forwarding job is underway, shipments can be tracked with an EDI-integrated, real-time tool, so freight forwarders and customers know exactly where their shipment containers are. Tracking software also integrates with accounting tools on GoFreight’s platform, so users know how the performance of shipments is impacting their earnings. Co-founder and CEO Trenton Chen earned his Masters and PhD in the United States before returning to Taiwan to join TSMC. At that time, AppWorks and other startup programs were getting a lot of attention, and Chen decided he wanted to become an entrepreneur. He left TSMC (“it was a tough decision, because no one agreed with that,” he told ZebethMedia), and gave himself six months to find a viable idea. During that time, one of his co-founders was living in Los Angeles, working as an importer for a family business. “When I was in the States, I knew a lot of people in this industry as well. So many of our good friends asked us to go there and see how bad the software is. So in the last month of my six month period, I decided to give it an opportunity, bought a ticket for three months to go to LA and spend time with the first 10 freight forwarders, learning how they do business with software. We founded GoFreight after the first week we were there,” Chen said. Even though Chen says the global freight forwarding market is worth about $280 billion dollars, almost all the software it runs on is outdated. GoFreight’s goal is to empower traditional freight forwarders to stay competitive with the same quality of technology that Flexport has. “A freight forwarding business is about how to ship cargo from point A to point B. Software can really help, but that’s not their main business. The service itself is the main business and software cannot help minimize the shipping costs or get it there faster. But it can certainly help provide additional valuable information to customers, importers and exporters,” Chen said, adding, “We try to empower incumbents to compete with Flexport. That’s an approach to make this entire industry better and faster.” Chen says GoFreight differentiates from other freight forwarding software startups because most of them are trying to create new ERP system, or integrate with existing ones. This is challenging to do because many freight forwarders use ERP systems that are out of date, and it’s a fragmented market. Some don’t even use ERP systems; instead, they work off of spreadsheets or pen-and-paper systems. On the backend, GoFreight’s software has sales, operating and accounting tools, so when customers have an inquiry, freight forwarders can enter it into their system and then come back with a quotation. Once a job is confirmed, GoFreight manages bookings, real-time shipments and any necessary electronic filings. They can also generate and send invoices through GoFreight. “Very importantly, we’re trying to become the Shopify of the space, so in one-click they can open an online store, and their importers can use the online web portal to send an inquiry and it just pops up in the system, automatically with pricing and they can book their tickets online,” said Chen. “So the front end application is so important and we provide visibility solutions as well.” A major challenge that GoFreight wants to solve is the process of generating quotes, which can take a couple days since freight forwarding orders are complex. For example, if a customer wants to ship three containers from Shanghai to Los Angeles, freight forwarders need to check with overseas agents who are also freight forwarders. They also need to arrange trucking and warehouses. Another thing to consider is spot rates versus contract rates, since spot rates can be much lower. Most of this work is done through emails, phone calls and text messages, but a centralized customer-facing app means freight forwarders can complete the entire process, including checking with overseas agents, through GoFreight’s integrations, which Chen says reduces the process from two days to about 10 or 20 seconds. GoFreight is currently working with partners to build a network that connects customers with freight forwarders, and freight forwarders with carriers. GoFreight also provides a digital payment solution, since most payments were done by paper checks. This means freight forwarders can issue a link to customers, and once they click on that they are taken to GoFreight’s website, where they can decide what invoices to pay with credit cards or bank accounts. Then that information goes back into GoFreight’s ERP system. Analytics provided by GoFreight can help freight forwarders make more money, Chen said. For example, if they book a 40-foot container, GoFreight will record how much they paid for it and how much customers were charged. The system analyzes performance for top customers and overseas agents, uncovering hidden fees so freight forwarders have a better understanding of the real cost

Loop lassos ex-Uber talent and money to finally fix freight invoicing • ZebethMedia

By zebethcontrolPosted on November 3, 2022Posted in Fintech, Founders Fund, logistics, Loop, payments, Startups, UberNo Comments

Matt McKinney was a data science manager at Uber, helping launch Uber Freight, along with software engineer Shaosu Liu. One of the main problems the pair saw there was that while they were able to grow the top line, they found it difficult to grow the bottom line because they were “losing a bunch of money” to bad debt and late payments. When digging in to understand why, the duo realized that “there’s so much complexity in a single freight bill.” For example, they found out that 20% of all freight invoices have an error. They also discovered it takes 50 days on average to process and pay a single invoice. “A lot of people in this business aren’t like Uber — they don’t have 250 engineers working on problems to figure this out,” McKinney explains. “So Joe’s Trucking in Cincinnati, Ohio, for example, probably has very similar billing and payment problems as Uber Freight.” In speaking to about three dozen shippers, carriers and brokers in the industry, McKinney and Liu kept hearing the same thing: “It’s hard for us to get paid and it’s hard for us to pay.” “So as an entrepreneur, when you hear that pain described so vividly verbatim 35 different times, you kind of, you know that the pain is your opportunity to build a product that doesn’t exist in the market,” he told ZebethMedia in an interview. So the pair spent nights and weekends building a prototype for Loop, a startup that sits at the intersection of logistics and payments, before leaving Uber in May of 2021 to focus full time on the business. Soon after, they raised a $6 million seed round co-led by Susa Ventures and 8VC. And then earlier this year, they raised a $24 million Series A round led by Founders Fund. Both financings were not previously publicly announced. During their exploratory phase, three of the 35 companies — unnamed large enterprises — they talked to told them if they built a tool to help solve the problem that they would help test out the prototype and be its first customers. Since then, the company has developed open APIs that it says “ingest data and streamline shipment document capture.” More specifically, the company said it uses natural language processing (NLP) and computer vision to digitize workflows and reconcile payments and that its technology “accommodates the lack of standardization and is able to extract data from a variety of document types and data sources to validate invoice accuracy, so that invoices and payments can be cleared in close to real-time,” or even to real time, depending on when the user wants to release their funds. Loop goes as far as to claim that its tech can reduce the lag time between the time an invoice is received and paid from 50 days to 3 days, as well as reduce invoice errors to “near 0%.” The startup’s target customers are shippers that manufacture or distribute goods (think Walmart, Pepsi, Coca-Cola and Nike). They also can work with brokers, or 3PLs, who broker a transaction between a truck driver and shipper. Loop launched its product offering in March and in its first month, did $25 million in booked total payment volume. Today, it’s doing over $1 billion in total payment volume. Image Credits: Loop One of the tailwinds that helped Loop, believes McKinney, is the COVID pandemic-driven secular shift of paper to electronic methods of payments. Also, geopolitical issues and the pandemic exposing vulnerabilities in the global supply chain have led to a surge in freight costs, which means that shippers “are looking for every way to cut costs,” he said. Loop’s aim is to help these companies minimize cost and be more efficient. And, McKinney claims, it can bring payments down Loop makes money by taking a percentage of total payments volume. It’s a fixed percentage based on tier, and as a company advances tiers, the percentage they pay goes down. A consumption-based revenue model was important to the pair, McKinney told ZebethMedia. “We want to align incentives so that if you’re getting value out of the product, you’re going to be using it more,” he said. “And that’s how we should get paid.” The company today has 35 employees, with engineers hailing from Uber, Google, Meta and Flexport. In fact, one senior software engineer from Flexport cold emailed Loop about a job. When he told Flexport founder and then-CEO Ryan Peterson that he was leaving for Loop, Peterson reached out. “He said, ‘You just stole one of our No. 1 engineers,’” McKinney said. “I want to know what you’re doing and I want to invest.” And so he did. Also showing no hard feelings in backing the company are Uber co-founders Garrett Camp, through his venture firm, Expa, and Ryan Graves, through his family office, Saltwater Capital. And more than 10 of Loop’s 35 employees came from Uber. Other investors include FourMore Capital, Lineage Ventures, Nichole Wischoff, 9Yards Capital, McVest Co, Mark Pincus and OEL Ventures. “We’re simplifying logistics payments but we’re also generating data and that data, and the quality of the data, is what differentiates us from a lot of the competition as well,” McKinney said. Founders Fund principal John Luttig, who led the Loop investment, told ZebethMedia via email that his firm was drawn to the startup because it is using a tech-first approach to eliminate friction for all parties in the supply chain “while competitors are simply throwing more people at the problem.” “As the domestic logistics renaissance continues and more companies look to reshore U.S. manufacturing, Loop’s technology will only become more valuable,” he added.