Digital freight brokerage startup Loadsmart has raised $21.6 million in its Series A funding led by Maersk Growth, the investment wing of A.P. Moller – Maersk (CXE: MAERB.C.IX), the largest container shipping company in the world. At the core of Loadsmart’s business lies artificial intelligence algorithms that work with data to assist its customers in getting instant quotes for full truck loads (FTL).
Ricardo Salgado, co-founder and CEO of Loadsmart, weighed in on the startup’s intention to forge strategic alliances in the global supply chain scene, alluding to its investment from Maersk Growth. Apart from this, the company has also signed a strategic partnership with funds managed by Oaktree Capital Management, a $120 billion fund and the entity that controls Ports America – the largest port in the U.S. with a 30% share of the country’s container flow. This would let Loadsmart expand its territory to the oceans as well; a vertical that the startup had previously not ventured into.
“The industry is highly fragmented, and there is a data aggregation problem – meaning, the pain points can be solved if we aggregated all the data together, shared and optimized it,” said Salgado. “The biggest pain point, for instance, is that we have a shortage of drivers. We have a tight capacity side, and the demand is very strong. But we still have high empty miles on the road. At Loadsmart, we are able to aggregate all that data and make sense of it. We optimize it better and reduce some empty mileage and inefficiency.”
Most of the clients that Loadsmart comes across have been frustrated with the spot market, as they frequently end up banking on last minute rates. Armed with nationwide truck data, Loadsmart can provide instant pricing and capacity, letting businesses source FTLs at the touch of a button.
“Our ability to insert dynamic rates in static routing guides has allowed us to cut last minute emergency options by up to 50% in certain cases,” said Salgado. “We’ve also been able to reduce the spot execution process by up to 94% for some clients. Some of them used to take 5 hours to ascertain a spot load, and we literally do it in minutes.”
As the solution provides rich dividends for its clients, they end up being long-term subscribers to Loadsmart. Salgado mentioned that the startup enjoys a 100% retention of all its enterprise clients, who represent 95% of its business.
The trucking industry is highly fragmented, with 90% of carriers having six trucks or less in their fleet, posing a challenge for businesses to have visibility and transparency in the spot market. Loadsmart circumvents this problem through its APIs, which provides instant pricing and booking across the country.
“We are at our core a data company. We were the first to introduce truckload instant pricing and booking, and the market’s first server-to-server autonomous truckload booking via our API. This tech-first approach has allowed us to set in place a fully scalable and automated distribution model,” said Felipe Capella, co-founder and CPO of Loadsmart.
Post-Series A, the total funding raised by Loadsmart stands at $34.7 million, and the current investment would be channeled into scaling up the company’s operations team while doubling down on its product and engineering. “We have been a bit under the radar for the past few years, because we decided to invest everything we’ve got in engineering and data science, instead of hiring sales and business development people,” said Capella. “We now believe the product has reached a level where we are ready to grow and scale with speed.”
Loadsmart already lists Daimler Trucks North America (DTNA) as its client, helping the auto-major match its contracted freight carriers with its spot loads. Maersk’s partnership with Loadsmart would also mark the first time a shipping company joins hands with a trucking logistics company to further its over-the-road business. Sune Stilling, head of Maersk Growth, had mentioned in his statement that he sees a huge potential in Loadsmart and that Maersk believes this alliance could help it “create incredible synergies and eventually provide a full service to shippers.”