We are very excited today to announce that we have a new addition to our portfolio of marketplace-driven, shared economy companies such as Turo (formerly RelayRides), Instacart, and Washio with our lead investment in Cargomatic’s Series A round.
Cargomatic is the leading platform for connecting local shippers and local truckers in real-time. The local trucking industry is extremely fragmented and lends itself well to a technology-enabled marketplace; both with respect to aggregating a highly fragmented supply market and applying technology to an otherwise paper and pencil industry. It is also a huge market, currently estimated to be $77B in the US alone. Did you know that trucks move over 10 billion tons of freight domestically in the US every year? That’s close to 69% of all freight tonnage transported in the US including rail, maritime, and air. That’s an astounding amount of stuff – America would be crippled without trucks. And it’s getting even bigger. As with other transportation sectors, local trucking correlates well with the macro market and industry revenues are expected to increase as consumer spending and industrial production increases.
Despite being a massive industry, the market remains extremely fragmented with no dominant players in the industry. Local markets are primarily served by independent carriers operating fleets of 1-5 trucks. These small carriers account for 80% of market revenue. Even the largest carriers have no more than 500 vehicles in their fleet. These large carriers often do not own their whole fleet, but rather contract out to independent owner-operators. By aggregating a large number of local truck operators, Cargomatic has built up a virtual fleet larger than any other local provider. By offering an on-demand platform that offers price transparency, speed to delivery, and a better end-to-end experience for both shippers and carriers, Cargomatic is increasing the efficiency of supply and demand matching between them.
Traditionally, shippers spent hours calling through their Rolodex of carriers to find trucks with open capacity, while carriers struggle to market their availability. The Cargomatic platform is offered as a web and mobile app (Android and iOS) and has 4 key innovations to address these market inefficiencies: 1) Real-time platform to connect shippers and carriers, with automatic dispatch, 2) Real-time tracking and tracing to optimize routing, 3) Online documentation to simplify paperwork for each pickup, and 4) Payments processing. An exciting by-product of all this is a much greener transportation ecosystem that reduces the number of empty trucks driving around with less than full loads and reduces the miles driven by trucks by matching the closest truck to the next job.
The team behind Cargomatic is a killer combination of both tech know-how and deep domain expertise in the trucking industry. We believe that Jonathan, Brett, and the whole team at Cargomatic are poised to become the next big thing in B2B transportation logistics.