CHAPTER 7: TECNOLATINAS PROFILES
CargoX, The future of the logistics market in Brazil
Estimated Valuation: US$ 35M
CEO: Federico Vega
HQ: Sao Paulo
Offices: Sao Paulo
Often dubbed as the Uber for transportation, Cargo X is, without a doubt, one of Latin America’s most innovative companies. Based in Sao Paulo, this startup aims at connecting drivers with cargo, in order to make sure no truck ever travels empty.
Backed, among others, by Goldman Sachs, the company has already raised more than $15 million in founding in 3 different rounds, and has managed to recruit Uber’s co-founder Oscar Salazar as an investor and director. Other investors include Valor Capital Group, Agility, and Lumia Capital, as well as Hans Hickler, DHL Express US’s former CEO.
Bringing in smart money to the company has been one of CargoX’s founder, Argentine-born Federico Vega’s priorities. And it makes sense, as the startup was conceived with an ambitious plan in mind. One that could potentially reshape the entire logistics landscape in Brazil and other emerging markets.
Founded in 2015, CargoX is actually a spin-off of Sontra, a company also started by Vega in 2013 that allows businesses that need to carry freight to publish their needs online, in order to be found by local transportation companies and independent truckers who can deliver the merchandise to its destination. Although both products are based on the same principle, CargoX automatizes this function by relying on big data and artificial intelligence. This way, the application matches the right truck with the right cargo, and plot routes that make sure trucks never travel empty.
While it may not seem evident, Brazil has an excess of between 300,000 and 350,000 freight vehicles, and this means trucks travel empty about 40% of the time. This huge inefficiency means bad business for truck drivers, and for the environment. This company has set itself to resolve this, giving independent truckers an opportunity to find clients in a much easier way, by simply downloading a mobile application and letting it find work for them.
CargoX works both with independent truckers, who can build their whole business around the opportunities found for the by the app, with cargo companies, and with truck drivers who only have a few hours of spare time a day; as well as for those who cover portions of their routes empty, while they travel from their cargo destination back to the warehouse.
Besides providing an opportunity for the transportation sector, CargoX has been positioning itself as a major ally for manufacturers, retailers, and companies that need their goods delivered. By letting them to get as much cargo capacity as they need at every opportunity, this app allows them to scale up or down their logistics capacity at will, and save lots of money. And so this startup is resolving some very real needs for two different sectors.
Today, over 150,000 trucks are working with the company, turning it into Brazil´s largest freighters fleet, without actually owning any truck, hence keeping costs down, and lowering risk. CargoX’s business model is quite simple. In the same way as other startups offering products based on the sharing economy, it collects payments from people and businesses that need transportation services, discounts its fee, and pay the truckers who handle the deliveries.
For the future, however, the company foresees a different model. At least partially. With Salazar’s input, CargoX is experimenting with self driving technology, applying it to trucks that, one day, could make up most of the company’s fleet. In the meantime, with the help of its partners, the engineers at this startup are mapping most of Brazil’s routes, and recording loads of information about them, including which are safest, and which are prone to robbery, a very real problem in the country, where highway pirates are known to steal cargo from unsuspected truckers at many of the country’s. At the same time, they are gathering information about pickup and drop off points all over the country.
With its latest investment, $10 million raised in a series B round in July, 2016, the company intends to bring its efforts to other international markets, mainly in the developing world. This will allow it to start mapping other countries’ roads as well, setting the basis to develop self-driving technology in several regions at once.
This information will be invaluable over the upcoming years, because even if the company doesn’t take the path of building self-driving fleets of its own, it will most certainly be able to provide other freight businesses with the information they require to optimize the efficiency of their own operations, and to handle their own autonomous convoys in a nearby future.
In the long run, CargoX aims at becoming the world’s top freight broker. And even when this seems like an ambitious goal, its capacity to deliver some groundbreaking innovation in this field in the short period of time it has been active, the great reception it had from the industry, and the support it has garnered from some major funds and experts in the logistics field, make it a very good candidate for success.
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