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AI

Ground freight logistics startup Flock Freight closes $215M funding round

Digital freight logistics company Flock Freight today announced that it raised $215 million in series D funding led by Softbank Vision Fund 2, increasing the startup’s valuation to $1.3 billion. The round also included participation from Susquehanna Private Equity Investments, LLLP, Eden Global Partners, SignalFire, GLP Capital Partners, and GV (formerly Google Ventures), and will be used to support the development of Flock Freight’s technology and to expand the company’s talent and operations, according to CEO Oren Zaslansky.

Pandemic-related demand and disruptions have put an immense strain on the supply chain. DAT Solutions found that shippers’ requests for moving goods increased by 577% from April 2020 to April 2021, while postings of trucks available to move goods were down 17%. Meanwhile, ecommerce sales continue to experience outsized growth, with online penetration remaining approximately 35% above pre-pandemic levels, according to McKinsey.

Founded in 2015 by Zaslansky, Flock Freight hosts a marketplace that pools less-than-truckload (LTL) and partial-truckload (PTL) freight shipments so that they can be shipped via a full truckload service. For LTL, Flock Freight facilitates the travel of shipments on trucks to their intended destinations, eschewing the traditional hub-and-spoke freight transit model. In the case of PTL, the platform finds as many as ten trucks along a single route and pools them into a single truckload to maximize savings.

“I’ve been in the trucking and logistics industry for more than 20 years since I founded E&H Transport Network in 1996. I built E&H from the ground up, including the recruitment and onboarding of over 1,000 truck drivers,” Zaslansky told VentureBeat via email. “In 2001, I founded SolSource Logistics, a third-party logistics company serving international Fortune 1000 clients such as Whole Foods, Wegmans Grocery, and Sprouts Market. In serving a diverse customer base in the transportation industry, I identified an unmet need to reduce the significant waste and antiquated approach to transportation. Too often, assets are underutilized and freight moves through intermediary depots when otherwise technology could facilitate those solutions without the waste of brick and mortar.”

Flock Freight also offers instant “prebates” that lower contracted truckload rates when shippers have freight that measures 44 feet or less. With this program, Flock Freight automatically moves eligible freight with shared truckload shipping, ostensibly delivering same-quality truckload service at more palatable prices.

Flock Freight

“Flock Freight’s machine learning-based product, FlockDirect, pools less-than-truckload freight consisting of a few pallets together to create full truckloads. It optimizes routes by pooling freight heading in the same direction so that trucks only stop at each drop-off, avoiding traditional terminals,” Zaslansky explained. “To create shared truckloads, Flock’s pooling algorithms sift through an enormous number of possible shipment permutations to find only those which are feasible to execute and economically advantageous for all parties. A ‘combinatorics explosion’ takes place when Flock Freight takes the hundreds of partial size freight shipments it receives per day and uses its complex algorithm to pool them together onto single trucks — combining three to five partial loads and taking into account numerous variables such as destination, timing, product type (food vs. chemicals), and more. For 500 shipments, the possible pooling combinations exceed 62 billion, to put numbers in to show the scale.”

Disrupting competition in the freight industry

Flock Freight claims its driver network in the U.S. and Canada numbers are in the thousands, and each individual driver can be tracked in real time via a dashboard or email notifications. The company says its damage claim rate is a low 0.001% and its on-time delivery rate is 97.5%. It also says it is able to reduce fuel emissions by up to 40% by eliminating the need to switch trucks or stop at warehouses.

“Flock Freight has pooled close to 20,000 shipments … Additionally, Flock Freight’s hubless pooling product has attracted new customers in 2020, including mid-market and enterprise companies such as Berlin Packaging, Blue Diamond Almonds, Mueller Industries, Nature’s Bounty, and Tuft & Needle,” Zaslansky said. “The company has tripled its workforce in 2021 and plans to add even more talent to its Encinitas headquarters and new Chicago location this year, and additional plans to hire more than people in 2022.”

Zaslansky argues that those stats set it apart from competitors in the freight logistics space. Uber offers a service called Uber Freight, to which it recently committed another $200 million as part of a major expansion. San Francisco-based startup KeepTruckin has secured hundreds of millions to further develop its shipment marketplace. Next Trucking last year closed a $97 million investment. Meanwhile, Convoy raised $400 million at a $2.75 billion valuation for a platform that it asserts makes freight trucking more efficient.

“Flock Freight is disrupting the $2 trillion freight industry because it is doing something that no other company has been able to do: fundamentally change the way the industry operates. While digital freight brokerages, such as Convoy, Uber Freight, and Transfix, automate and streamline the connection between shippers and carriers, Flock Freight is the only company changing the way freight gets transported with a whole new mode of shipping,” Zaslansky said. “Our business has grown in spite of the pandemic, not because of it. Because we offer faster shipping times all while protecting shipments from damage, our customers are recognizing and experiencing the power of our shared truckload technology.”

Solana Beach, California-based Flock Freight — which has raised $399 million to date and is on track to hit 325% year-to-date revenue growth — plans for an initial public offering in the next 18 to 36 months.

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Categories
AI

Optimal Dynamics nabs $18.4M for AI-powered freight logistics

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Optimal Dynamics, a New York-based startup applying AI to shipping logistics, today announced it has closed an $18.4 million round led by Bessemer Venture Partners. Optimal Dynamics says the funds will be used to more than triple its 25-person team and support engineering efforts, as well as bolstering sales and marketing departments.

Last-mile delivery logistics tend to be the most expensive and time-consuming part of the shipping process. According to one estimate, last-mile costs account for 53% of total shipping costs and 41% of total supply chain costs. With the rise of ecommerce in the U.S., retail providers are increasingly focusing on fulfilment and distribution at the lowest cost. Particularly in the construction industry, the pandemic continues to disrupt wholesalers — a 2020 Statista survey found that 73% of buyers and users of freight transportation and logistics services experienced an impact on their operations.

Founded in 2016, Optimal Dynamics offers a platform that taps AI to generate shipment plans likely to be profitable — and on time. The fruit of nearly 40 years of R&D at Princeton University, the company’s product generates simulations for freight transportation, enabling logistics companies to answer questions about what equipment they should buy, how many drivers they need, daily dispatching, load acceptance, and more.

Simulating logistics

Roughly 80% of all cargo in the U.S. is transported by the 7.1 million people who drive flatbed trailers, dry vans, and other heavy lifters for the country’s 1.3 million trucking companies. The trucking industry generates $726 billion in revenue annually and is forecast to grow 75% by 2026. Even before the pandemic, last-mile delivery was fast becoming the most profitable part of the supply chain, with research firm Capgemini pegging its share of the pie at 41%.

Optimal Dynamics’ platform can perform strategic, tactical, and real-time freight planning, forecasting shipment events as far as two weeks in advance. CEO Daniel Powell — who cofounded the company with his father, Warren Powell, a professor of operations research and financial engineering — says the underlying technology was deployed, tested, and iterated with trucking companies, railroads, and energy companies, along with projects in health, ecommerce, finance, and materials science.

“Use of something called ‘high-dimensional AI’ allows us to take in exponentially greater detail while planning under uncertainty. We also leverage clever methods that allow us to deploy robust AI systems even when we have very little training data, a common issue in the logistics industry,” Daniel Powell told VentureBeat via email. “The results are … a dramatic increase in companies’ abilities to plan into the future.”

The global logistics market was worth $10.32 billion in 2017 and is estimated to grow to $12.68 billion by 2023, according to Research and Markets. Optimal Dynamics competes with Uber, which offers a logistics service called Uber Freight. San Francisco-based startup KeepTruckin recently secured $149 million to further develop its shipment marketplace, while Next Trucking closed a $97 million investment. And Convoy raised $400 million at a $2.75 billion valuation to make freight trucking more efficient.

But Optimal Dynamics investor Mike Droesch, a partner at BVP, says demand for the company’s products remains strong. “Logistics operators need to consider a staggering number of variables, making this an ideal application for a software-as-a-service product that can help operators make more informed decisions by leveraging Optimal Dynamics’ industry-leading technology. We were really impressed with the combination of their deep technology and the commercial impact that Optimal Dynamics is already delivering to their customers,” he said in a statement.

Including this latest series A, Optimal Dynamics has raised over $22.4 million. Fusion Fund, the Westly Group, TenOneTen Ventures, Embark Ventures, FitzGate Ventures, and John Larkin, and John Hess also contributed to the round.

Updated on May 14 at 11:02 a.m. Pacific: This article has been updated to reflect that the funding round totaled $18.4, not ~$22 million as originally reported. We regret the error.

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Categories
AI

How Uber Freight handled shifts in demand during the pandemic

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Roughly 80% of all cargo in the U.S. is transported by the 7.1 million people who drive flatbed trailers, dry vans, and other heavy lifters for the country’s 1.3 million trucking companies. The trucking industry generates $726 billion in revenue annually and is forecast to grow 75% by 2026. Even before the pandemic, last-mile delivery was fast becoming the most profitable part of the supply chain, with research firm Capgemini pegging its share of the pie at 41%.

To tap into this, in 2017 Uber launched Uber Freight, the company’s grab at the $8.1 trillion global logistics transport industry. Uber Freight connects carriers and drivers with companies that need to move cargo. When a business schedules a delivery through Uber Freight for shippers, they get prices upfront in the Uber Freight app. Customers are matched intelligently with carriers in Uber’s network and see a real-time, mutually agreed-upon quote that’s determined by market conditions and “other factors.”

Uber Freight customers can book loads and reloads together to make it easier for carriers to travel more efficiently. For recurring shipments, the recently introduced Lane Explorer feature leverages machine learning to assess dynamic factors and generate rates for each of the next 14 calendar days out.

In a conversation with VentureBeat, Uber Freight marketplace head Bar Ifrach spoke about the logistics and freight challenges and opportunities brought about by the COVID-19 pandemic. While some shifts in demand were more predictable than others, such as the uptick in hand sanitizer shipments, others, like the explosion in home goods purchases, required a watchful eye on the part of Uber’s engineers to ensure the algorithms powering Uber Freight remained stable.

Starting in March, when the pandemic was just taking hold, Ifrach says there was strong demand for consumer products and medical equipment, followed by sudden shortage shocks. In the second half of 2020, demand for shipment was still increasing — but supply was becoming less efficient.

“The freight network is never fully balanced, but it has some organic balance to it, meaning that when a truck goes from point A to point B, there’s some chance it will come back from B to A full of merchandise,” Ifrach explained. “The industry average is about 79% of the time a truck is full. But what we were seeing early on was that there was a really big increase in imbalance.”

Even in the face of instability, Uber Freight’s algorithms remained remarkably consistent, according to Ifrach. He explained that Uber uses both internal and external data to train the algorithms, as well as internal tools to monitor them and guarantee they remain adaptive to change.

Load bundling increased on the Uber Freight platform by 100% in April and May, according to Ifrach. This led to a 22.6% reduction in empty, or non-revenue, miles for drivers using bundling. As an added benefit, because it gave drivers the option to book loads and reloads together instead of booking each load separately, Uber said it likely helped reduce greenhouse gas emissions from trucks on the road.

“Many of our algorithms are looking at what’s happening [in real time] and are able to look at all sorts of adjustments to the baseline,” Ifrach said. “When there’s a very strong impact in a particular region, it’s this ability to adapt more quickly that’s needed.”

Beginning last June, Uber began tracking thousands of loads per week with its participating freight partners. Using this data, the company developed an estimated time to arrival model based on machine learning algorithms Uber claims are 50% more accurate than a leading industry benchmark.

Uber’s investment in technology and infrastructure is paying dividends. During its most recent earnings call, the company revealed that Uber Freight posted year-over-year revenue growth of 43% to $288 million, up 8.6% over Q3. CFO Nelson Chai told investors listening in that there was a 45% quarter-over-quarter increase in the number of active shippers using Uber Freight’s API and enterprise offerings.

Chai attributed a least a portion of the growth to the launch of Uber Freight Enterprise and Uber Freight Link last September. The former is a corporate-scale extension of Uber’s self-serve shipping platform, while the latter enables enterprise shippers to leverage Uber Freight’s technology across their full carrier network.

Uber announced in March 2019 that it would hire hundreds of Chicago-area Uber Freight workers ahead of plans to lease additional city office space. Later that year, Uber signed a 10-year lease on the Old Main Post Office in the Chicago River district and hired “thousands” of new employees in the region, substantially growing its Chicago workforce. The investment came to $200 million collectively, according to Uber.

“We have a terrific group with people with stats expertise, distance expertise, economics expertise, operations research, and very strong engineering around handling data and flowing back data and algorithms — building products that [perform really well]. The goal is to provide shipping quotes really quickly to shippers [so that they can] make the best decision for the business,” Ifrach said.

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