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BlackRock bets on Loadsmart with $90M investment

BlackRock leads a Series C round in the digital freight technology company

(Photo credit: Jim Allen/Freightwaves)

Loadsmart, a digital freight brokerage and technology company, has secured $90 million in a Series C round led by BlackRock as market volatility accelerates supply chain digitization and investment giants take a growing interest in transportation and logistics startups.

The round, announced on Friday, included investors from transportation company TFI International Inc. and ocean carrier Maersk, a Loadsmart investor since Series A. 

Headquartered in New York, Loadsmart uses artificial intelligence, machine learning and strategic partnerships to automate the ways freight is priced, booked and shipped. Since 2015, the year it was founded, the startup has rolled out a variety of digital offerings, with the goal of providing shippers with a one-stop shop for logistics solutions.

Its initial service, truckload instant pricing and booking, came online in 2015, server-to-server autonomous truckload booking via API and TMS integrations in 2016, and drayage and transload digital services in 2019. 

The latest unveiling came earlier this month, when Loadsmart announced a multimode expansion supporting less-than-truckload, partial and rail.

“Our goal is to provide capacity to shippers when they need it,” Hunter Yaw, vice president of product management, partnerships and marketing, told FreightWaves. 

Yaw credited Loadsmart’s 250% growth since January to the fact that today’s shippers, facing an extraordinarily tight market environment, recognize that technology integration is not just nice to have — but essential.

“It’s gone from being a vitamin to painkiller,” he said.

The new coronavirus lockdowns will drive continued stress on supply chains, he observed, “and the digital solutions we provide make it easier for shippers to access real capacity in real time: an essential release valve for that stress.”

Providing customers with instantly bookable rates, delivered through API directly to their TMS, he explained, gives shippers choices they can receive, review and act on “in a matter of seconds.”

Investment giants eye freight tech

Like Loadsmart, many digital freight startups are seeing record growth, as shippers look to such companies to help them moderate spiralling transportation costs and record high tender rejection rates.

Investment firms are following the money.

In October, Uber Technologies (NYSE: UBER) announced that Loadsmart competitor Uber Freight raised $500 million from an investor group led by Greenbriar Equity Group, a New York-based investment firm.

BlackRock, a investment behemoth that manages $7.4 trillion globally, has accelerated venture capital freight tech and other future oriented transportation investments this year, sinking $113 million into U.K. electric delivery vehicle startup Arrival in October and participating in a $2.5 billion investment in Rivian, the electric vehicle company that is making a custom delivery van for Amazon.

For Loadsmart, the Series C investment is an affirmation of its “fiscally conservative” approach to building market share.

Digital competitors like Convoy have relied for growth (up to a point) on negative gross margins — charging the shipper less than what they pay the truck. Loadsmart, in contrast, has focused on acquiring customers organically, Yaw said.

“We believed from early on,” he said, “that if we were going to rely for growth on our willingness to charge customers knowingly less than we would have to pay to move a load, the only way to turn that business model around is eventually to raise rates.”

And while that strategy might work in the business to consumer space — think Netflix raising its rates and no one blinking an eye — that approach wasn’t a good fit for its savvy shipper customer base, Loadsmart believed.

There were times when the team questioned the slow and steady approach, Yaw acknowledged, especially as competitors grew at a rapid clip.

Nevertheless, he said, “we are proud to have established the approach we took — investing in technology much more than sales and marketing and not giving into the temptation to move freight at a loss — and see BlackRock as validation of that strategy.”

Yaw saw Loadsmart will use the Series C round to “double down” on shipper solutions. This entails improving processes such as coordination of facilities and shipment tracking and enabling easier flow of data to customers.

The company also will continue to invest in value-added services like mode optimization, price transparency and data insights.

Co-leading the Series C round was Chromo Invest, with participation from Perry Capital, founded by Richard C. Perry; and Bramalea Partners, recently founded by Andrew Boyd, former head of global equity capital markets at Fidelity Investments.

Prior to the Series C, Loadsmart had raised $56.4 million, according to Crunchbase.

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Loadsmart picks up rail, less than truckload

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Linda Baker, Senior Environment and Technology Reporter

Linda Baker is a FreightWaves senior reporter based in Portland, Oregon. Her beat includes autonomous vehicles, the startup scene, clean trucking, and emissions regulations. Please send tips and story ideas to [email protected]