Freight Tech Firm Loadsmart Raises $90 Million in New Funding Round
November 20 2020 - 6:29AM
Dow Jones News
By Jennifer Smith
Digital freight-booking service Loadsmart Inc. closed a $90
million funding round, as technology-focused efforts to boost
efficiency in logistics operations draw increased attention during
the coronavirus pandemic.
The Series C funding round was led by BlackRock Inc.'s
Innovation Capital arm, and includes investments from Chromo Invest
and the venture arms of transportation company TFI International
Inc. and container shipping giant A.P. Moeller-Maersk A/S,
Loadsmart said Friday. Maersk, which participated in previous
Loadsmart funding rounds, is expanding its inland transport and
logistics presence as it seeks to reach deeper into customer supply
chains.
New York-based Loadsmart will use the funding to hire more
engineers and business developers to accelerate digital integration
of its network of trucking companies and to deepen service
offerings in other modes, including rail transport.
The company has raised $146.4 million since it was founded in
2014, including this round. Loadsmart officials said the latest
funding round values the business at more than $400 million.
Loadsmart's platform connects shippers with trucking companies
and other transport providers. It is among a growing field of
digitally focused ventures that aim to simplify the process of
booking freight shipments through automation and other
technology.
Loadsmart co-founder and Chief Executive Ricardo Salgado said
the company hopes to be "a one-stop shop" for companies shipping
across multiple modes of transportation, including ocean shipments
and less-than-truckload freight. About 70% of the company's current
business is booking truckload shipments, he said.
Loadsmart last year launched a port-trucking service, aimed at
speeding the flow of cargo through Ports America's ocean container
terminal in Newark, N.J., at the Port of New York and New Jersey.
The service is set to launch at the Port of Baltimore early next
year, after the coronavirus pandemic delayed earlier expansion
plans.
U.S.-based digital freight-matching startups drew $1.37 billion
in investor funding between 2011 and 2019, with about 70% coming in
2018 and 2019, according to research firm Armstrong &
Associates Inc. Digital freight brokers account for just over 2% of
the broader domestic transportation management market, which
includes brokerage and other logistics services and generated $83
billion in revenue last year, the firm estimated.
Such technology-focused ventures, including Convoy Inc. and Uber
Technologies Inc.'s freight arm, have pushed competitors to step up
digital investments.
But even the largest upstarts have struggled to become
profitable. In 2019, three of the most prominent digital brokerage
platforms -- Convoy, Transfix Inc. and Uber Freight -- had combined
gross revenue of $1.4 billion with an overall net loss, Armstrong
& Associates estimated. Uber last month sold a $500 million
stake in Uber Freight to investors in a funding round led by
Greenbriar Equity Group LP, providing an infusion of cash into the
fast-growing but money-losing brokerage business.
Mr. Salgado said Loadsmart expects to turn a profit by 2023, and
has "north of $100 million in annualized revenue." The company now
has about 300 employees.
The pandemic has accelerated "the shift from analog to digital,"
Mr. Salgado said, as big shippers push to automate operations such
as freight booking and "focus their limited head count on the
things that matter."
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
November 20, 2020 06:14 ET (11:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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