“Investors are flocking money in Latin American logistics and shipping companies,” our former colleague Jon Shieber wrote in 2019. But a pandemic later, amid gas price turmoil around the world , it’s time to come back.
Nowports (YC W19) is a good starting point for comparison. In February 2019, the Mexican startup had just graduated from Y Combinator and, in Shieber’s words, “sett[ing] become the Flexport of Latin America. Fast forward to today, and Nowports has raised $92.6 million in funding, including a $60 million Series B round led by Tiger.
Examples like this abound as investors have shown optimism for freight transport around the world. The pandemic has played a role in boosting logistics startups, highlighting how essential supply chains are. But venture capital continues to flow even as COVID-19 wanes, according to recent reports.
This month, TechCrunch reported on three fundraising events in the freight transportation world. Seattle-based Convoy is valued at $3.8 billion after a $260 million Series E funding round. Nigeria’s OnePort has landed a $5 million investment that will help it expand to three major African hubs by the end of the year. And in Latin America, DeltaX has its sights set on the Andean region and $1 million in the bank.
The digitization of freight forwarding is a global challenge because the sector still lacks transparency and efficiency. Latin American startups have a steeper hill to climb, but it also pushes them to innovate and help each other in interesting ways.
More than copiers
In Latin America, the problem is not only that freight transport is still very analog, it is also under-optimized. In the region, “the demand for trucking exceeds capacity, but 40% of the time the trucks run empty”, according to the Mexican startup BeGo (YC W20).
According to Jonathan Lewy, whose Investo fund has backed BeGo and Nowports, the two startups represent the main models in the sector: marketplaces and freight forwarders. Other examples would be Brazil’s CargoX on the market side and Nuvocargo on the freight forwarder side.
However, business models in Latin America are often mixed, and Nuvocargo is a good example.