Unicorn Flexport is revolutionizing the world of logistics, serving as a freight forwarder with software that enables customers to manage their shipments. But there are still thousands of smaller freight forwarders, many running on outdated ERP software or spreadsheets. A startup called GoFreight wants to help them compete by providing the “Shopify of freight forwarding,” with backend software that makes their operations run more smoothly, and a frontend that lets them set up a storefront and provide quotes in a few minutes.
The Los Angeles and Taipei-based startup has raised $23 million in Series A funding, co-led by Flex Capital and Headline. The round included participation from LFX Venture Partners, Palm Drive Capital and returning investors Mucker Capital, Cornerstone Ventures and Red Building Capital.
GoFreight, which currently has about 1,000 customers, helps manage transportation of goods through ocean, air and land routes. It also lets them set up online storefronts with a few clicks. Potential customers can connect to freight forwarders by sending them an inquiry through storefront and getting a quotation within a few minutes, instead of the 24 to 48 hours usually necessary.
Once a freight forwarding job is underway, shipments can be tracked with an EDI-integrated, real-time tool, so freight forwarders and customers know exactly where their shipment containers are. Tracking software also integrates with accounting tools on GoFreight’s platform, so users know how the performance of shipments is impacting their earnings.
Co-founder and CEO Trenton Chen earned his Masters and PhD in the United States before returning to Taiwan to join TSMC. At that time, AppWorks and other startup programs were getting a lot of attention, and Chen decided he wanted to become an entrepreneur. He left TSMC (“it was a tough decision, because no one agreed with that,” he told TechCrunch), and gave himself six months to find a viable idea. During that time, one of his co-founders was living in Los Angeles, working as an importer for a family business.
“When I was in the States, I knew a lot of people in this industry as well. So many of our good friends asked us to go there and see how bad the software is. So in the last month of my six month period, I decided to give it an opportunity, bought a ticket for three months to go to LA and spend time with the first 10 freight forwarders, learning how they do business with software. We founded GoFreight after the first week we were there,” Chen said.
Even though Chen says the global freight forwarding market is worth about $280 billion dollars, almost all the software it runs on is outdated. GoFreight’s goal is to empower traditional freight forwarders to stay competitive with the same quality of technology that Flexport has.
“A freight forwarding business is about how to ship cargo from point A to point B. Software can really help, but that’s not their main business. The service itself is the main business and software cannot help minimize the shipping costs or get it there faster. But it can certainly help provide additional valuable information to customers, importers and exporters,” Chen said, adding, “We try to empower incumbents to compete with Flexport. That’s an approach to make this entire industry better and faster.”
Chen says GoFreight differentiates from other freight forwarding software startups because most of them are trying to create new ERP system, or integrate with existing ones. This is challenging to do because many freight forwarders use ERP systems that are out of date, and it’s a fragmented market. Some don’t even use ERP systems; instead, they work off of spreadsheets or pen-and-paper systems.
On the backend, GoFreight’s software has sales, operating and accounting tools, so when customers have an inquiry, freight forwarders can enter it into their system and then come back with a quotation. Once a job is confirmed, GoFreight manages bookings, real-time shipments and any necessary electronic filings. They can also generate and send invoices through GoFreight.
“Very importantly, we’re trying to become the Shopify of the space, so in one-click they can open an online store, and their importers can use the online web portal to send an inquiry and it just pops up in the system, automatically with pricing and they can book their tickets online,” said Chen. “So the front end application is so important and we provide visibility solutions as well.”
A major challenge that GoFreight wants to solve is the process of generating quotes, which can take a couple days since freight forwarding orders are complex. For example, if a customer wants to ship three containers from Shanghai to Los Angeles, freight forwarders need to check with overseas agents who are also freight forwarders. They also need to arrange trucking and warehouses. Another thing to consider is spot rates versus contract rates, since spot rates can be much lower.
Most of this work is done through emails, phone calls and text messages, but a centralized customer-facing app means freight forwarders can complete the entire process, including checking with overseas agents, through GoFreight’s integrations, which Chen says reduces the process from two days to about 10 or 20 seconds. GoFreight is currently working with partners to build a network that connects customers with freight forwarders, and freight forwarders with carriers.
GoFreight also provides a digital payment solution, since most payments were done by paper checks. This means freight forwarders can issue a link to customers, and once they click on that they are taken to GoFreight’s website, where they can decide what invoices to pay with credit cards or bank accounts. Then that information goes back into GoFreight’s ERP system.
Analytics provided by GoFreight can help freight forwarders make more money, Chen said. For example, if they book a 40-foot container, GoFreight will record how much they paid for it and how much customers were charged. The system analyzes performance for top customers and overseas agents, uncovering hidden fees so freight forwarders have a better understanding of the real cost of a shipment. It also breaks down costs per SKU, so freight forwarders and their customers know exactly how much it cost to ship an item.
The new funding will be used to develop more features like smart quotations, rate management and purchase order management.
In a statement about the funding, Headline partner Tom Gieselmann said, “GoFreight’s all-in-one software provides greater transparency to freight movement, allowing freight forwarders to better manage their business, which can range anywhere from 0-1500+ users, end-to-end. This versatility makes the product incredibly impactful, and a big reason behind why we’ve identified them as one of the most promising logistics tech companies on the market.”
GoFreight raises $28M to become the “Shopify of freight forwarding” by Catherine Shu originally published on TechCrunch
Originally published at techcrunch.com