As e-commerce and on-demand services capture increasingly larger shares of consumer spending, the methods of how things move around the world are getting their moment in the sun.
Long a backwater of technology adoption, thanks to the fragmented nature of the shipping and logistics business, the advent of low-cost sensors, cheap smart phones and increasingly robust wireless networks are transforming the “unsexy” business into a sector where investors are cutting big checks at massive valuations.
Now NEXT Trucking Partners is looking to join the fray. The company has created an online marketplace for that links up shippers and carriers and raised $21 million led by the marquee Silicon Valley firm Sequoia Capital. And it’s no wonder that there’s so much interest, given that the market reached $818 billion in 2015 and reaching $1.5 trillion by 2023.
Founded by serial entrepreneur Lydia Yan and her husband Elton Chung, NEXT Trucking was born from Yan’s own needs to find a solution for the trucking problem her warehouse business in the U.S. faced.
Yan, who’s moved between China and the U.S. over the years, started her entrepreneurial journey in Shanghai as the founder of 9luxe.com — one of China’s first fashion flash sale companies. The company was profitable in its first six months, but faced such stiff competition that Yan decided to shut it down.
Moving to the U.S., Yan worked in the family business operating a string of warehouses in California. “I was more fascinated by the technology aspect,” of the business, Yan tells me.
The business that Yan was running was a brokerage and warehousing business for electronics goods getting shipped from Asia.
“We talked to a lot of drivers and there was no technology,” Yan says. “Truckers spend hours and hours negotiating what loads they want to take.”
So Yan and her husband built a marketplace to make things more efficient. The issue was that the industry is so fragmented. Big operators only account for roughly 16% of the market, Yan says. The other 84% is run by small truckers who are trying to determine how they travel and what loads they want to take.
“Our ultimate goal is to control the fleet management,” says Yan.
There’s no fee for the truckers to list their services on the NEXT trucking marketplace, instead, Yan says that the company will charge shippers for the ability to book quality carriers, with real time tracking and real time proof of delivery.
It’s a model that’s already brought NEXT Trucking to profitability. The company focuses on ports and freight trucking rather than long-haul trips and charges somewhere between 20% and 25% as a commission.
Yan says that the company will use the money to expand to different states and for technology development.
“Instead of letting the rapid decline of qualified carriers continue to and potentially destabilize our supply chain, and economy in general, we need to overhaul the way the industry works and empower the truckers,” said Lidia Yan, chief executive of NEXT Trucking in a statement. “We couldn’t watch this happen from the side of the road, so NEXT Trucking developed the first online marketplace that mitigates the negatives by building a strong, transparent community.”
The company already works with customers like Pioneer, Hisense, Jinko Solar, Jakks Pacific and steamship lines, including Mistui OSK Lines, according to a statement.
“Logistics is at the very core of our economy, yet it faces some real challenges. NEXT Trucking has created a marketplace powered by sophisticated technology that resolves many of the critical imbalances that exist between the shipper’s needs and driver’s availability,” Omar Hamoui, partner at Sequoia, and the newest director on the NEXT Trucking board said in a statement. “The team has tripled revenue year over year, and earned extremely high satisfaction and retention numbers on both sides of their marketplace.”