- Loadsmart was birthed by two Latin-American industry outsiders looking to transform the freight ecosystem. Unsatisfied with the status quo, and eager to drive efficiency in a massive market, Ricardo and Felipe envisioned a company that could transform freight. They believed that by inserting technology, they could reimagine the entire truckload shipment lifecycle. With an innovative approach and a bit of luck, they came up with a solution uniquely differentiated from any other freight brokerage service
- The $2T logistics industry, historically sluggish on adapting to new technology, was finally starting to show signs of being receptive to digitization. The truck industry is the number one mover of goods across the US, but fragmentation and lack of real-time data was contributing to significant value loss. Across the industry, TMS systems were mostly all analog, but digitization began en masse just as Loadsmart was getting off the ground. Off all major segments across logistics, freight has outperformed, largely due to the rise of e-commerce
- Market-Making for freight was a risky bet that has ultimately paid off. Taking on spread risk allowed Loadsmart’s distribution model to expand at a faster pace than its competition. With a focus on enterprise, and avoidance of shipper subsidization, the Loadsmart team’s focus can be summed up as: “if you can’t automate, you’re not nimble, and you’re inefficient”. The strategy has paid off, resulting in hundreds of thousands of carriers on the platform, and consistent product expansion over the years, serving various needs across the freight value chain
Like many unicorn startup origin stories, the story of Loadsmart is a tale of immigrant hustle, determination, complimentary minds, and a bit of luck. After successful careers in banking and law, the two ambitious co-founders - Ricardo Salgado and Felipe Capella - decided to embark on an entrepreneurial journey with limited experience in the trucking industry, but a vision for making a much-needed impact.
Co-Founder Ricardo Salgado, a Colombian by birth, moved to the USA initially to hone his skills as an Engineer at Georgia Tech. After graduation, he embarked on a 13-year career as an investment banker for Goldman Sachs, where he excelled in various divisions across the NYC, London, and Sao Paulo offices, and eventually rose through the ranks to become a Managing Director within Principal Investing. During this period, as he worked across various logistics and trucking transactions, Ricardo realized that the trucking space was primed for a technology revolution.
Co-Founder Felipe Capella, was born in Brazil, aspired to become a lawyer from a young age, and embarked on a career in law at age 17. By the age of 25, Felipe got his first taste of entrepreneurship, when he started his own practice. Later, Felipe enrolled at UPenn for a Masters in Law, (where he was voted funniest person, best cook, and most likely to appear on the cover of Times!) and eventually embarked on a professional career in M&A at Sullivan & Cromwell. After his stint at M&A, Felipe joined the IFC, focusing on investments in infrastructure, roads, and transportation, where was exposed to inefficiencies within logistics networks. It was during this time that Felipe and Ricardo crossed paths in NYC, and decided to leave behind the world of corporate work and join forces as co-founders.
The Early Days
Loadsmart was birthed to drastically improve the fractured process of freight transportation booking. The focus on building an instant booking platform took the industry by storm. Bootstrapped by Ricardo for the first 6 months of its first year, and combined with the fact that both founders had no true freight logistics experience, and a general lack of entrepreneurial chops, the early days of the company could be described in two words - expeditious and precipitous. In the early days, the Loadsmart team was composed almost entirely of tech employees focused on using freight capacity data to provide matching services. As the team of developed its digital brokerage service, they realized they needed to hire freight experts as they navigated an industry known to resist innovation.”
Loadsmart took on the entire $2T logistics industry, with the initial focus on trucking freight. Since the trucking industry became the go-to means of transporting domestic freight decades ago, there have been huge inefficiencies in how containers moved about - with an estimated $30-50B in value loss per year across the industry. Fragmentation of the freight industry has created a lack of real-time data, leading to a multitude of industry headaches such as port delays and capacity constraints to name a few. And despite the operational hiccups created by the COVID-19 pandemic, the trucking industry is still growing at a healthy pace.
- In 2021, the industry registered $876B in gross freight revenues (primary shipments only) from trucking, representing 80.8% of the nation’s freight bill for the year.
- Approximately 11B tons of freight was moved in 2021, representing about 70% of all domestic shipping tonnage shipped.
- 40M trucks were registered and used for business purposes (excluding government and farm) in 2020, representing 24% of all trucks registered in the US.
- 4M Class 8 trucks were in operation in 2021, up 2.3% from 2020.
- According to the US Department of Transportation, as of June 2022, the number of for-hire carriers on file with the Federal Motor Carrier Safety Administration totaled 1,102,799, private carriers totaled 718,594, there were 153,191 carriers identified as both for-hire and private carriers and other* interstate motor carriers totaled 37,718.
Source: American Trucking Association
The Analog Roadblock
Ricardo and Felipe sincerely believed that by creating a digital platform with the ability to integrate with all parties across the value chain - shippers, operators, brokers, and carriers - that they could lead the industry in developing a more efficient and sustainable supply chain. However, this required digitization of millions of carriers and legacy transportation systems (TMS).
Across the industry at the time, every TMS was analog, and because of that, Loadsmart suffered early on from the lack of technology integration. They needed shippers on board, but for shippers to be on board, they needed TMS integrations, but since every TMS was analog it seemed they appeared to be thwarted before they began. But because of their novel approach to freight matching and a conservative approach to building the product, the team was able to find a lane and dominate it.
Despite the slow start, Loadsmart timed the TMS transition to digital perfectly: it began en masse in 2018 and was accelerated as a result of the COVID-19 pandemic.
Source: United World Transportation
Loadsmart recognized that the large and growing market of logistics was ready for disruption. These factors include:
- A historical lack of digitization and adoption of technology solutions across the industry
- Stable growth of the logistics sector, with outperformance relative to rail, marine shipping, and postal services
- An increased need for efficient freight booking with the rise of e-commerce and more congested supply chains
The competition in the space for Loadsmart varies in their respective offerings - large incumbents such as the CH Robinson’s of the world lack the tech forward approach to freight, but also benefit from name brand recognition, which shippers and operators alike can trust.
On the other hand, digital competitors like Convoy are also tackling the issue - but, in contrast to Loadsmart, have relied for growth (up to a point) on negative gross margins — charging the shipper less than what they pay the truck itself. Loadsmart took a different approach, and focused on organic acquisition of customers, while maintaining fiscal conservatism. The early days saw most investments funneled into technology rather than sales and marketing, and resisting the temptation to move freight at a loss. 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.
“We believed from early on,” Hunter Yaw said, “that if we were going to rely for growth on our willingness to charge customers knowingly less than we would have to pay to move a load, the only way to turn that business model around is eventually to raise rates.” -WSJ
Hunter Yaw Co-Founder, Logrock
Amongst a landscape of a mostly analog approach for freight booking, what made Loadsmart stand out among the rest was its novel product offering for efficient freight pricing. Ricardo and Felipe took a Market Maker approach to freight booking by using bid & ask aggregation - something that had never been done before. Most experts would have told you that “freight brokers are not supposed to take the risk” - but the Loadsmart team vehemently disagreed and took a calculated risk - which resulted in a huge distribution model.
A market maker is an individual or broker-dealer that operates on a stock exchange, buying and selling shares for their own account. Market makers earn a profit both from collecting the spread between the bid and ask prices of a security - in Loadsmart’s case, a shipment - and also from holding inventory of shares (shipments) throughout the trading day.
On top of that, the differentiation could also be seen in the Loadsmart’s approach to growth, in which the team was extremely pragmatic. Loadsmart never believed in the theory of growing very fast by subsidizing shippers, or that you’ll build enough volume that network effects would appear magically, in comparison to their competitors. Living the ethos “If you can’t automate, you’re not nimble and you’re inefficient”, the Loadsmart team focused on providing spot rates, calculated by a pricing algorithm, rather than a person on the phone with a pen and pad in hand, which was industry tradition.
With this strategy in hand, Ricardo led the push on enterprise sales, landing Anheuser-Busch as an early adopter, which had truly open daily spot bids, and allowed the Loadsmart team and algorithm to see live freight movements digitally. After that early success, coupled with the product team figuring out TMS integrations with major players in the space, the pace of growth accelerated as Loadsmart integrated with Oracle, allowing big-name clients to slowly come on board, including Coca Cola, Walmart, Home Depot, and Target.
Through customer feedback, consistent product iteration, and staying ahead of freight market trends, Loadsmart today has a unique product suite offering:
- Full-service digital freight booking service platform that connects shippers with trucking companies and other transport providers - spanning land, rail, and ports.
- Smart Tracking - Providing real-time location of shipments from pickup through delivery, across the entire value chain.
- Smart Scheduling - Improving on-time service by automatically selecting and confirming the best available appointment time, eliminating the need for phone and email tags.
Loadsmart’s AI algorithms now work to ensure that all logistics carriers within its network of 680K trucks are full, while simultaneously minimizing empty miles by matching loads with available transport lanes. Customers that need goods shipped across the US can use the platform to request quotes that consider 400 different parameters - namely loading times, the overall size of a load, customer elasticities, Loadsmart’s internal operational capacity, shifts in conversion and shipper momentum, and future market movements. They also offer reliable contracts, which provide target rates for specific freight lanes, with a 100% acceptance guarantee - for Loadsmart, the closer the target, the higher their margin, which innately incentivizes them to prioritize precision above all else.
Growth and Traction
Building on their momentum and the support of their investors, Loadsmart’s product offering has expanded significantly over the years.
- Truck load instant pricing and booking was rolled out between 2017 and 2018, followed by server to server autonomous trucking via API and TMS integration in 2019
- As of January of this year, the Loadsmart freight matching load board has grown to approximately 100,000 active carrier users. Loadsmart has also partnered with TruckerPath, North America’s most comprehensive and fastest growing mobile app for truckers, giving 1 million drivers access to the Loadsmart platform
- In 2019, the Loadsmart team expanded the offering to drayage and transload services, another underserved market in the freight space, and in 2020 embarked on multimodal freight - LTL, partial, and rail services
- During 2021, as ESG concerns started to break into the forefront of the industry, route optimization became the focus, which provides cost-effective and environmentally sustainable modes for shipments based on custom requirements set by their customers, supporting larger company CO2 emission reduction targets
In terms of fundraising, Loadsmart has raised 6 rounds of venturing financing, crossing into the Unicorn threshold in January 2022.
- $3M Seed round in 2014 at an $8M valuation, with participation from New Ground Ventures
- $21.6M Series A in 2018 at a $50M valuation, with participation from Maersk Growth
- $21M Series B in 2019 at a $171M valuation, with participation from Maersk Growth, Connor Capital, Chromo Invest, Ports America, and Cloud Toronto
- $90M Series C in 2020 at a $240M valuation, with participation from BlackRock Innovation Capital, Alumni Ventures, FJ Labs, Bramalea Partners, The Home Depot, and Perry Capital Partners
- $200M Series D at a $1.3B valuation, with participation from SoftBank Latin America, SquareOne Capital, Janus Henderson Investors, and Trog Hawley Capital
Today, despite rapidly changing market dynamics, a gloomy global macro-economic outlook, and a downward spiraling of freight rates, Loadsmart is laser-focused on maintaining sustainable growth and profitability. Their focus on providing optimal services and core products for customers gives them a compelling competitive edge as they batten down the hatches to navigate the rough road of growth ahead.
“Ultimately, success or failure of a business comes down to the people who live and die by the success or failure of it - and that is Felipe and Ricardo.”
Hunter Yaw Co-Founder, Logrock
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