In creating a more connected world, Uber has redefined personal transport by building an on demand model that focuses on capacity utilization for the drivers. NEXT Trucking does the same for the trucking industry by monitoring and taking advantage of excess trucking capacity. The company is the mobile-first trucker-centric marketplace that connects carriers and shippers through a matching system. While truckers have been able to do this through brokerages in the past, this LA startup empowers the truckers with an app instead of hours of back and forth with brokerages. The shippers also benefit from working directly with the trucker.
LA TechWatch chatted with CEO and cofounder Lidia Yan about their company’s third round of funding and told us a little about the company’s origin
Who were your investors and how much did you raise?
We received investments from China Equity Group, Shea Ventures, Simon Nixon as well as other individual investors for our Series A funding. In total, we secured $5 million.
Tell us about your product or service.
Next Trucking is America’s first trucker-centric online marketplace focusing on the $240B truckload long-haul market. Different from traditional trucking brokerage, Next Trucking allows truckers to post their real-time and future capacities via mobile app, so they can be connected with shippers who are searching for efficiency and competitive pricing for the delivery of their loads. The purpose of Next Trucking is to increase transparency and efficiency in the trucking industry and build the largest virtual fleet and trucking community in the nation.
What inspired you to start the company?
My family has been in the logistics business for 14 years and runs one of the largest TV distribution centers in Southern California. Business is steadily increasing and there are more and more loads for us to deliver. The problem is that it is extremely hard to find qualified truckers, which is the industry’s number one problem. Typically, there are two main reasons truckers leave their job: low pay and forced dispatching. To begin, truckers find loads by relying heavily on brokers who normally charge 25 to 30 percent commission for passing information between shippers and truckers, squeezing the profit margin significantly for truckers. Additionally, truckers have their own route preferences which, often differ from those assigned through forced dispatching. A driver who wants to go home on Friday night is unlikely to accept a load going to a place far from his home. However, many drivers may not have currently have the option to deny these jobs due to the lack of information available for them to find posted tenders on their preferred routes in real time.
Also, the entire dispatching process as it presently stands is extremely inefficient. Truckers usually spend hours negotiating back and forth with brokers for routes and rates. Therefore, we wanted to create a solution to help the truckers by making the market more transparent. We created Next Trucking, a trucker-centric marketplace, to enable our truckers to decide where they want to go and how much they want to make to give them more control over their time.
How is it different?
Next Trucking is different from others in the market because we are trucker-centric. Truckers dictate what they want and post their availability on our marketplace to be directly connected with shippers as opposed to shippers providing load information to brokers who call several truckers to find the cheapest one to work with.
What market you are targeting and how big is it?
We are targeting the $240 billion truckload long-haul market. The antiquated trucking industry needs to operate more efficiently and transparently, keeping the truckers top of mind.
What’s your business model?
We charge shippers a 10 percent transaction fee. During the “slow” season (typically January and February, after Christmas and Chinese New Year), we lower this charge to five percent. On the trucker side, we minimize any fees coming out of their direct earnings by only charging a three percent fee if truckers choose the quick-pay option. This option expedites payment to receive funds within 48 hours after the delivery. If they choose the normal payment option, truckers are paid within 15 days of completing the delivery.
What have you learned about truckers since starting the business?
Truckers are extremely hardworking and humble. While it is traditionally not the most tech savvy industry, once they understand we are here to help them, many of them will work with us. They are extremely motivated to join Next Trucking not only because we provide them with user-friendly technology to simplify the process of locating a load, but for the services and the relationships that we built. They know we are not here to replace them, but rather to help them find work more efficiently.
What was the funding process like?
While we have a few offers from various VCs, we choose to work with China Equity due to their connections with large Chinese manufacturers and brands. This will allow us to strengthen our relationships with potential shippers overseas.
What are the biggest challenges that you faced while raising capital?
Most VCs are not familiar with the industry and would compare us to startups in other segments such as less than truckload (LTL) and small parcel. Additionally, there is concern that autonomous trucks will be a threat to our marketplace. While I believe the age of autonomous vehicles will eventually arrive, someone will still have to move the loads and most likely it will be a carrier that we work with.
What factors about your business led your investors to write the check?
To begin with, our growth has been phenomenal. We grow on average 25 percent month over month in revenue and hit $2 million this month. Additionally, we have an incredible, knowledgeable team. Our experience in logistics is definitely something investors value.
What are the milestones you plan to achieve in the next six months?
Our big goal for the next six months is to triple our revenue. We plan to accomplish this by strengthening the operations and sales team, launching both conventional and digital marketing campaigns.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
Build it for a cause, not for applause. Create a business, not a bubble.
Where do you see the company going now over the near term?
We want to continue to grow and own a significant market share in California.
Where is the best place in LA to watch the sunset?
To me, it’s our office in Lynwood, CA next to the 105 Freeway. Since we are 15 min away from Long Beach port and LAX and we home ourselves in a warehouse, we not only see tons of beautiful trucks everyday but also a beautiful sunset, which serves as a reminder to take a break from work and enjoy the moment.