Two-year-old startup NEXT Trucking has secured $21 million in a Series B round of financing, led by Sequoia Capital, as it seeks to stand out in a crowded field of competitors looking to match available truck capacity with freight.
“We closed the round in early December with Sequoia Capital, and they are one of the best [venture capital firms] in the country,” Lidia Yan, CEO of NEXT Trucking, tells FreightWaves. Yan notes that the financing round was oversubscribed, which FreightWaves has found is a common occurrence for trucking-related startups in recent years, especially those based on technology.
Yan says the funding will be used to beef up NEXT Trucking’s technology team and add more sales and trucking talent.
“We believe people from the trucking industry understand the trucking industry, which is based on relationships,” Yan says, as to why the company is focusing on trucking industry personnel.
Yan co-founded the company with her husband, Elton Chung, who has a background in logistics and founded a 3PL company. Chung works more on the sales and operations side of the business while Yan focuses on the technology aspects.
The company is attacking the problems of truckers and shippers with what it says is a “trucker-centric online marketplace.” Its technology connects drivers with shippers based on inputs the drivers themselves provide to the free marketplace app. NEXT Trucking says that this helps small trucking companies and owner-operators who may not have the time to browse through traditional load boards looking for a load or time spent dealing with a broker.
Drivers simply input their information, such as current availability or a city where they will be in the near future with available capacity, and the algorithms will match them with shippers looking to move freight based on routes, pricing, driver behavior and other intelligent matching algorithms.
Truckers dictate what they want and post their availability on the marketplace before connecting with shippers, as opposed to shippers providing load information to brokers who call several truckers to find the cheapest option, the company explains. NEXT Trucking was founded on the belief that more could be done to help drivers.
“There is a lot of back and forth with drivers [and brokers] who have their own rates and behavior and can spend 2 hours [in negotiations], which is very inefficient,” Yan says. “A lot of resources are wasted in waiting and then turning down a load.”
In its short time in operation, some significant shippers have signed on, including Pioneer, Hisense, Jinko Solar, Jakks Pacific and steamship lines, including Mistui OSK Lines, by focusing on the California home-based carriers and lanes to other states.
Yan says that while NEXT Trucking offers services in the continental U.S., about 60% of its carriers/owner-operators are based out of California. The new funding will help it broaden its base of carriers.
Shippers are vetted and are primarily “enterprise shippers,” Yan says, meaning they are spending more than $2 million in shipping, and offering truckload freight. The company’s Shipment Dashboard for shippers includes timelines, route information and cost summaries, locations and status of shipments. Additional benefits include the ability to maximize cash flow with paperless billing and move goods at a more competitive price.
Drivers are also vetted, and NEXT Trucking looks at driver histories, safety records, and insurance coverage. A minimum of $100,000 in cargo insurance is required, although NEXT Trucking offers supplementary insurance coverage for drivers’ whose coverage does not cover the shipper’s requirement.
The company offers 48-hour Quick Pay (for a 3% fee) and fuel advance options as well as fleet management tools to help drivers/small carriers “make sure [they] have enough tools to compete,” explains Yan. Standard payment is 15 days, she says, but a new “Premier” program will soon launch. Members of Premier will get free access to Quick Pay in exchange for committing a certain percentage of their overall available capacity.
Yan also says that contracts include detention fees of $50 per hour up to four hours, or $200 per day.
Sequoia partner Omar Hamoui has joined the NEXT Trucking Board of Directors as part of the investment.
“Logistics is at the very core of our economy, yet it faces some real challenges. NEXT Trucking has created a marketplace powered by sophisticated technology that resolves many of the critical imbalances that exist between the shipper’s needs and driver’s availability,” said Hamoui, in a statement. “The team has tripled revenue year over year and earned extremely high satisfaction and retention numbers on both sides of their marketplace.”
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