Last week, Liftit, the Colombia-based freight tech startup automating last-mile logistics in Latin America, announced that it had closed a $22.5 million Series B round led by Cambridge Capital, with participation from IFC, monashees, Jaguar Ventures, NXTP Ventures and others.
Liftit estimates that the “short distance trucking market” in Latin America is worth $100 billion and growing thanks to accelerating e-commerce penetration of Latin American retail. Liftit, founded in 2017, operates in 18 cities in Colombia, Brazil, Mexico, Chile and Ecuador and currently has about 320 employees.
Liftit raised a $14.3 million Series A in February 2019; the new funding is the company’s first U.S.-led investment round.
“The Series B will go toward continuing to operate in our existing locations, expansion to new cities, developing the platform and executive hires,” said Brian York, chief executive officer at Liftit. York also said Liftit would expand to new cities where there are opportunities to serve existing customers, highlighting a recent expansion to Rio de Janeiro to service Danone’s freight.
Freight tech in Latin America
Cambridge Capital managing partner Benjamin Gordon said the freight tech space in Latin America was much less crowded than in the United States, and that Liftit was emerging as a category leader in last-mile logistics automation. In Gordon’s view, there’s a mismatch between the size of the total addressable market for logistics technology in Latin America, which is comparable to that of the United States, and the amount of capital invested in freight tech startups, which is much smaller.
“What really made Liftit stand out to us, beyond the team, vision and overall financial performance, was the growth they achieved with existing customers over time, and what those customers had to say about Liftit’s technology,” said Matt Smalley, principal at Cambridge Capital and board member at Liftit.
Some segments of the freight tech space in the United States are already reaching maturity, particularly those dealing with the automation of third-party logistics services. Last year, Uber went public, and both Convoy and Flexport raised late-stage capital at multibillion-dollar valuations. The Liftit deal shows that freight tech startups in Latin America with significant traction are still in early stages.
“At Cambridge Capital, our premise is that logistics is global, and automation opportunities are global,” Gordon said. “In the U.S., we see dozens of outstanding companies applying expertise to automate truck brokerage, last mile, trucking and financial services. In Latin America, we see a smaller number of companies vying for comparable opportunities. As a result, Liftit stands out not only as a winner, but also as a leader in a less crowded market. We think Liftit can become No. 1 in Latin American logistics technology, with particular strength in automating last-mile truck deliveries throughout the region.”
The combination of a faster-growth market, lower labor costs, and a more favorable competitive environment make the opportunity that much more attractive, Gordon explained. Acquisitive technology conglomerates like Trimble, Descartes, and Roper Industries have made some headway into Europe, but have not yet been able to penetrate Latin America. Part of Cambridge’s thesis is that the LatAm freight tech companies that would be suitable partners for large North American players have not yet reached sufficient scale and are still being built.
Last-mile operations in Latin American cities
The fundamental problems of last-mile logistics are the same in Latin America as in the United States, York explained. Those include visibility — knowing who has your shipment and where it is — as well as network density and asset utilization. A fragmented carrier base and low technology adoption have made it difficult to efficiently allocate capacity to last-mile markets, increasing costs for everyone.
But parts of the transportation and logistics industry in Latin America look different, too. Freight brokerages control two-thirds of the trucking market, York estimated, which is far more than in the United States. The 3PLs that monopolize trucking capacity have far more leverage over shippers and use it to keep transportation markets opaque, controlling information about supply, demand and price. Low-quality physical infrastructure is an additional challenge, and acute congestion plagues most cities. Routing and mapping data, even in major cities, tends to be less mature than in the United States.
Liftit begins with a new shipper by integrating with the customer’s transportation management system and ingesting data around volumes, network shape and the amount of last-mile capacity needed.
“Our product aggregates and analyzes this data, which allows Liftit to execute on more efficient truck delivery operations, like making sure truck drivers are at high productivity and the truck is being used as efficiently as possible, which results in the quickest routes possible and lower cost per delivery,” York said.
Lifit’s technology uses artificial intelligence and machine learning to match the right carrier to the right job and to optimize routing and scheduling.
To solve the asset utilization problem, York said Liftit focuses on planned truck deliveries, where shippers sign long-term contracts for a certain number of trucks per day or per month. Liftit aggregates owner-operator capacity into a network of “Lifters” and runs them as a virtual dedicated fleet in tight networks where the average length of haul is about 10 kilometers or 6 miles. By concentrating on planned rather than on-demand deliveries, York said, Liftit can normalize its carriers’ utilization and revenues.
“For a shipper to be able use Liftit’s technology and Lifter [driver] network across multiple countries, and for that shipper to be able to automate their last-mile delivery process, communicate with customers in real-time, track everything from a centralized dashboard, and save real money on delivery cost, it was a very powerful value proposition,” Smalley said.