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."
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(END) Dow Jones Newswires