Transfix, a two-year-old, 26-person, New York-based transportation startup, convincingly argues that its mobile app and web platform are beginning to eat into the problem. Its tech matches customers needing interstate freight shipping with truck drivers needing to make deliveries, cutting out wasted travel.
The “fleet management system” also enables uses to track shipments, SMS drivers, receive alerts when a shipment will be delayed, and calculate drivers’ fuel taxes, among other things.
One of Transfix’s biggest competitors is C.H. Robinson, a publicly traded incumbent that’s focused on providing third-party logistics to the roughly 400,000 trucking companies in the US, 97 percent of which are family-owned operations with fewer than 20 trucks. The 110-year-old company is currently valued at $9.7 billion, but Transfix CEO Drew McElroy — an affable second-generation industry veteran who attended Georgetown before taking over his parents’ own small but successful brokerage business — fully expects that number to trend downward.
C.H. Robinson “basically has an army of college kids who see a job pop up on a screen, pick up the phone, and start calling these trucking companies from a stagnant database of numbers,” says McElroy. “From there,” he continues, “everything is done manually, from tracking a shipment to contacting drivers. It takes four hours to execute a shipment from soup-to-nuts, whereas in our world, we’ve automated so much of the process that it takes 15 minutes per shipment — and that number is dropping every day.”
Of course, Transfix isn’t alone is spying a giant industry in need of a serious tech makeover. The overall size of the U.S. trucking market is $700 billion. The total size of the freight brokerage market is $80 billion. As a result, we’re seeing more and more trucking-related startups receive funding, including CargoMatic and Trucker Path, which have so far raised$10.6 million and $21.5 million, respectively. (CargoMatic focuses on local shipping; Trucker Path is a more direct competitor to Transfix.)
Now Transfix has a new round of its own. This morning, it’s announcing $12 million in Series A funding led by Canvas Ventures, with participation from earlier investors Lerer Hippeau Ventures, Founder Collective, Corigin Ventures, and Bowery Capital. The round brings its total funding to $14 million, and it already has big plans for it.
Part of it will go toward increasing headcount; McElroy says Transfix should employ 75 people by this time next year.
Much of the capital will be invested in product improvements. On Transfix’s product roadmap, for example, are social networking tools, so if a driver wants to get a poker game started at a particular truck stop, he can alert nearby drivers — 6,000 of whom have now signed up for the platform.
Not last, Transfix, which expects to see one million dollars in revenue this month, will use part of that capital to get truckers paid within 24 hours of a completed shipment.
That’s no small enticement. According to McElroy, many drivers are still reliant on a process called “factoring,” where instead of waiting weeks or months to be paid by customers or brokers, drivers sell their invoices to shops called factors that pay them immediately — minus 3.5 percent to 5 percent what their owed for the convenience.
Says McElroy — who insists that Transfix takes a much smaller cut of transactions across the board: “It’s a mess. It’s even worse than I’m describing. It’s a very insidious business that, frankly, we’ll wind up destroying by accident if we do things correctly.”