Nanalyze comparing trucking start-ups and on demand trucking around the world in August last year, looked at two Chinese start-ups who eventually merged to become a mammoth $3bn road transport company. That rarest of ventures that hits the elusive billion dollar valuation prior to going public first rolled into the industry’s horizon with Guiyang Huochebang Technology Co. Ltd in 2008.
With the increasing trend for road freightgrowth year on year, this on demand trucking serviceachieved a $156 million Series B investment, led by one of China’s tech goliaths, Baidu. The transport industry’s latest newcomer disclosed funding from December 2016 was a staggering $271 million. Huochebang succeeded in gettingthat rare $1 billion valuation, in all likelihood down to a general acknowledgement that on demand transport, coupled with the right technologies could meet the growing demand for capacity.
As an online delivery service, their platform connects drivers to cargo awaiting dispatch quickly and takes advantage of an untapped capacity for third party delivery services. Their automated TMS systems help to map out more fuel-efficient routes and ensures drivers don’t run out of gas. Working with around 3.7 million trucks, this would be a logistical nightmare without automatic processing and sharing of data.
There are anestimated 7 million freight trucks in China, mostly individual owner-operators, who find it hard to improve the efficiency in isolation, so connecting with a company that gives them that makes a difference in their performance. Connecting with on-demand trucking companiesis powering up profits for owner-drivers of trucks around the world
The Guizhou startup is diversifying, adding a financial services arm to its business model; this builds trucker credit history by tracking their movements for loan purposes. Building out its offering to truck drivers, Huochebang has partnered with Alibaba’s cloud unit and Zhong An Online Property and Casualty Insurance, China’s first internet-only insurer.
Another Chinese unicorn valued around $1 billion, Yunmanman employs a similar model and has backing from an equally impressive list of funders, including one of the top VC firms, Sequoia Capital. The three-year-old company has raised $165 million, including a $110 million Series D last December. The company is reportedly using the fresh cash to dabble in artificial intelligence and big data to strengthen the love connection between cargo and truck drivers, as well as to improve road condition analytics, according to China Money Network.
Since the agreement to merge Huochebang and Yunmanman app services, the venture has attained the enviable status of being a £2bn company. Wang Gang, as a backer of Yunmanman’s, became chief executive officer of the new entity. He has some expertise in the disruptive on-demand transport economy, as an angel investor in ride-hailingleader, Didi Chuxing, he understands the potential for digital solutions to significantly change services by cutting costs while building revenues.
The move towards online TMS systems is a global trend born out of necessity to compete and find business efficiencies. Rivigo has invested over $100m in India’s online trucking systems. Convoy, Uber and others like Transfix are over-hauling the road freight scene in America. The road ahead is clear for businesses seeking to build their fleets, harness the capacity of 3PLand for individual owner-driverslooking to have greater control over their working day and increase their earnings.
Modular apps and ready-made solutions that can offer flexible online solutions to suit business conditions for a cross-section of transport and logistics service providersmean that companies can transform their efficiency through relatively small initial investments in technologies and scale up as required.