Investors include Access Ventures, FuturePlay, Nextran, Viet Capital Ventures, and three angel investors
Vietnam-based B2B logistics startup EcoTruck has bagged US$1.7 million in a Pre-Series A round from investors including Access Ventures, FuturePlay, Nextran, Viet Capital Ventures and three angel investors.
EcoTruck will use the funding to improve its logistics platform and expand its team.
The company previously raised US$300,000 in a seed round, giving it a combined war chest of about US$2 million.
Vietnam’s logistics industry is rife with inefficiencies: poor management, outdated infrastructure and processes — involving plenty of manual paperwork and emails to fill out and calls to conduct — and even corruption (kickbacks between supply chain employees and logistics vendors) have unnecessarily driven up operating and shipping costs.
According to Le, the logistics industry has an “extremely low economy-of-scale due to its highly fragmented industry landscape.” In Vietnam, there are over 3,000 logistics vendors who collectively operate 100,000 container trucks, moving over 12 million TEUs (20 feet containers). These trucks operate from two hubs: one in Ho Chi Minh City and the other out of Hai Phong.
The supply of logistic trucks in the country is certainly not lacking, but because these inefficiencies exist, merchants often have to allocate 25 per cent of their revenue to offsetting logistic costs, said Le.
For vendors, they also high seasonality and volume fluctuation, and this leads to the underutilisation of their resources.
To solve these problems, Le built a centralised platform that leverages the sharing economy model and data intelligence to lower costs and streamline operations.
All a merchant has to do is create an account EcoTruck and make an order, and the customer service team will take care of the rest — contacting vendors, tracking the delivery, managing customs, and loading/unloading. EcoTruck will automatically notify the merchant about the delivery status in real-time with the help of GPS data.
Once the order has been completed, all necessary logistics fees and documents from the different vendors will be consolidated by EcoTruck’s accounting tool and presented to the merchant.
Essentially, EcoTruck becomes the middleman between the merchants and the logistics vendors. By analysing their data insights, they can suggest the most suitable vendor to dispatch the merchant’s freight. Le also claimed that EcoTruck’s platform can also calculate the most optimised delivery route.
Merchants can also select their preferred logistics vendors who are bidding for their job, based on their own criteria. In addition, the merchants will receive round-the-clock support from EcoTruck’s customer service team.
For logistics operators, EcoTruck allows them to maximise their truckload, helping them to increase their revenue; while merchants can save time on having to manage shipping processes that were hitherto lengthy and complex, as well as reduce their transportation expenditure through EcoTruck’s transparent bidding system.
“With technologies and the right business model for a much bigger scale, EcoTruck can operate with a much lower cost, resulting in much lower prices,” said Le.
To date, EcoTruck has partnered with over 90 logistics partners in Vietnam. Together, these vendors operator 500 container trucks in the Ho Chi Min City hub and 200 container trucks in Hai Phong hub. They ply over 200 routes and can move over 1,000 containers daily.
The company has also partnered with insurance companies and banks to insure the logistics vendors’ trucks and provide financing for merchants’ payments.
Le said that EcoTruck has over 80 merchants who use their portal regularly. These businesses transport a range of goods including fertilizer, rubber, frozen fruit and vegetables, bioproducts and even more delicate and hazardous cargo like chemicals.
In the month of August 2018, over 820 orders were completed. The company hit a trucking GMV of US$130,000 last month, while its trucking revenue was $6,500. It also earned US$2,500 in revenue from other services including customs and freight booking.
But while EcoTruck’s solution looks to be a perfect fit for Vietnam’s economy, there are several competitors looking to serve up their version of a disruptive logistics tech platform.
One of them is LOGIVAN, which has raised US$2.35 million in funding from investors including Ethos Partners, Insignia Ventures Partners and Vietnam-based VinaCapital Ventures. It, too, has a truck tracking and management system. And it is reportedly seeking to expand its logistics services in Ho Chi Minh City, Hanoi, Hai Phong and Da Nang.
That said, both companies are still nascent service providers, operating in an industry with many deep-rooted issues. It may take a while before they hit a critical mass of users and really start wrestling over territory; but now, there’s room for plenty of competition.
EcoTruck also has set its sights on other countries including Lao, Cambodia, Thailand, Malaysia, Indonesia, the Philippines, and Australia. But Le said that market expansion will only happen after EcoTruck has raised its Series A round.
Image Credit: EcoTruck
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