Though the size of the U.S. trucking industry dwarfs the Latin American market, its numbers and the overall scenario that persists in the continent is comparable to its North American counterpart. A $120 billion industry with trucks that make over 150 million trips annually, the industry is as diverse as it gets. The fragmentation of truck ownership is a very relevant issue, with 90% of the carriers owning less than five trucks in their fleet.
Fragmentation has stymied visibility across the ecosystem, leading to reduced efficiency and an increase in fleet overhead costs, as one in every four trucks on the road racking up deadhead miles. Avancargo, a freight logistics startup from Argentina is addressing this issue by creating a digital platform that connects cargo with trucks.
“We are working on the spot market in Latin America, helping small carriers to connect with medium and large shippers. The problem with this region is that a lot of fleets are small, and they do not have the commercial scale to reach good shippers,” said Diego Bertezzolo, co-founder and CEO at Avancargo. “Our platform brings the carriers more commercial opportunities, and it is an easy way for the shippers to reduce their shipping costs by connecting with carriers without the regular middlemen.”
Bertezzolo insisted that Avancargo was not looking to reinvent the wheel, but rather trying to bring in much-needed liquidity to the market. The company has on-boarded 18,000 trucks in quick time, positioning itself as one of the largest freight logistics platforms in Latin America. “This is a market that works well with volume. With a high volume of users on offer on the supply side, we are looking to bring in more shippers to the demand side,” he said. The company uses machine learning models and data analytics to understand its audience and to improve its service.
Nonetheless, the startup does have its fair share of challenges. “On the carrier side, the main goal is to build an easy-to-use software, where the application should not have more than three steps for it to work. Though we knew this and spoke with a lot of customers before we were on the street with the first version, we still feel the need to do a more simpler version,” said Bertezzolo. “We are now building our second version and probably will keep working on it over the next five years.”
On the shipper side, the initial issue was to identify the segment to work with that could align well with their expertise and listed fleet strength. “We started working with the biggest shippers in Argentina, but soon realized that medium-sized companies were the best fit for our platform right now,” said Bertezzolo.
Avancargo actively strives to get feedback from its users, talking with nearly 100 carriers every day through social media, gathering insights on what it could do to better the experience. “We get both good and bad criticism every day, for the platform, ways of working, and ways of getting to shippers. Carriers are vital in the industry and listening to them is the only way to evolve the platform to the better,” said Pablo Mendonca, the CMO of Avancargo.
When questioned on its apparent success with on-boarding carriers, Bertezzolo stated that there was a strategy behind it, which involved the company building out a map of the entire trucking market in Argentina – through information gathered from all the trucking companies in the country. The startup is now raising its first round of funding with 60% of the proposed $360,000 closed. Once the seed round is fully secured, the plan is to expand out of its Argentinian boundaries, with it setting sights on Chile as its next market.