In the U.S., trucking is the most used form of freight transportation. According to the Bureau of Transportation Statistics, the sector accounts for $12.5 billion of the total $17 billion freight market.
Despite its importance to the U.S. economy, trucking operations tend to be inefficient. There are thousands of operators, many of them small mom and pop shops, that still rely on paper-based systems. One startup out of Phoenix is trying to change this.
Emerge built a platform that enables brokers and shippers to allocate freight more efficiently across thousands of carriers. On the heels of a $20 million funding round, Emerge is ready to expand and bring trucking into the 21st century.
Trucking Veterans in the Driver’s Seat
Andrew and Michael Leto founded Emerge in 2018 after careers in the trucking industry. The brothers worked at a company with a multimodal shipment platform that recently sold to Trimble for $400 million. Since then, Emerge has processed over $1 billion in freight. Between 2018 and 2019, processing grew by 1,500 percent.
Emerge’s technology is solving a long-time problem in the industry. Many shipments go out with excess capacity when they could be carrying additional goods traveling in the same direction. Today, 20 percent of all truck shipments carry no products at all.
The underlying challenge is that a lot of freight booking occurs on a contract basis. Eight in ten shipments are contract-based, while the remaining two occur ad hoc when capacity exists. Shippers often use antiquated spreadsheets or rigid applications to book within a fragmented ecosystem.
Emerge gives shippers and brokers a more comprehensive view of all carriers and their capacities so that they can optimize booking. Shippers are encouraged to work with other shippers to share capacity amongst carriers. To date, the platform has helped shippers cut costs by as much as 20 percent. Overall, there are currently 30,000 carriers on the platform.
New Road Capital Partners led Emerge’s $20 million funding round. The startup has also received investments from Greycroft and 9Yards Capital, which highlights how optimistic high-profile investors are about the company’s future. In total, Emerge has raised $40 million and is valued at over $100 million.
The Future of Trucking
The trucking sector will experience significant transformation over the next decade. Thanks to players like Emerge, a new wave of technology will flood trucking and related businesses. Other companies, like Berlin-based Sennder and Kenya’s Sendy, are tackling trucking inefficiencies and broader logistics challenges in different ways. One of the biggest success stories is Flexport, which is now valued at $3.2 billion.
At the same time, autonomous driving is likely to disrupt the human labor side of the equation. Democratic presidential candidate, Andrew Yang, has drawn mainstream attention to the space with his projections at how autonomous vehicles will impact the truck driving career altogether. He believes more than 3 million American jobs are at risk of replacement.
It will be interesting to see how the sector absorbs all of these changes and rebalances for next-gen freight needs. The industry may become exponentially more efficient at the detriment of millions of human workers.