Digital drop-freight platform Baton closes $10.5M Series A

Lonsdale agreed to sponsor the young engineers as entrepreneurs in residence at 8VC, and they went to work over the next nine months. Jake Medwell, another 8VC founding partner and the most active investor in FreightTech, took Robert and Berberick under his wing and encouraged them to look into the transportation industry. 

More than 120 transportation industry discovery interviews and countless visits to truck stops and loading docks later, Baton was born. 8VC led Baton’s $3.3 million seed round in November 2019; the capital was used to build out the initial version of Baton’s technology infrastructure and to establish operations in Los Angeles.

“When you explain Baton to people, it sounds intuitive,” Berberick said. “There’s real estate, linehaul drops the load off and a local driver picks up and delivers. But we’re operating several drop zones, connected to several fleets, and aggregating freight from multiple asset-based carriers — there’s a lot of coordination involved. We have to hit the same appointment windows and offer the same visibility the linehaul carriers’ customers required, and we have to efficiently utilize our local fleet.”

It’s a high-tech, non-asset solution for carriers that promises to restore driver productivity, eliminating hours of dwell and slack time built into drivers’ schedules. Today, Baton moves about 50 loads in and out of Los Angeles every day. The Series A capital will help Baton scale its LA volumes and launch in one or two additional markets, likely major transportation hubs such as Dallas, Chicago or Atlanta.

Baton’s model is fairly simple from a balance sheet perspective — it doesn’t own trucks, trailers or real estate — but operationally complex. It establishes close relationships with local fleets, integrating via API with the trucks’ ELDs and GPS systems to provide visibility and automate scheduling. The local fleet drivers are W-2 contractors who are paid day rates by Baton, which sends their dispatchers recommended schedules.

Augmenting Baton’s technology stack is an operations team with freight expertise. Erik Malin, a veteran of CarrierDirect, AFN and LoadSmart, serves as Baton’s head of operations. Ben Woodley, an operations manager on Malin’s team, came from Uber Freight.

“We operate with local fleets in a much closer relationship than, say, a digital broker,” Robert said. “We’re not just throwing it over the fence to hundreds of owner-ops, we have deep relationships with highly vetted local carriers and we’re paying full day rates. It’s up to us to optimize the efficiency of those drivers and those loads per day.”

It’s easy to understand how Baton saves carriers time. Live unloads take hours, and even before drivers reach the dock, they often build in even more of a ‘cushion’ in their transit to ensure on-time delivery. That often leaves them waiting near facilities with nothing to do. Because it’s difficult to know when an unloading will begin or how long it will take, drivers have to build in extra idle time before their next pickup, wasting even more time. 

Baton eliminates those wasted hours — up to 30 hours per load — but in doing so, it also enables trucking carriers to expand capacity despite a driver-constrained business environment. Berberick said that Baton helped one fleet double its outbound volume from Los Angeles without changing its inbound capacity at all, mostly by consolidating freight at Baton’s drop zones.

Because Baton doesn’t own or lease its own trailers but relies on large linehaul carriers to stock its drop zones with their equipment, it needs carrier partners that have high daily inbound volumes to its markets. That might make Baton’s model seem like a niche opportunity at first glance, but a more profound ambition animates the company’s founders and investors. Baton wants to be an integral part of the technology infrastructure that enables autonomous trucking on a global scale.

“I think Baton can become massive,” Medwell said. “The core business is what you see right now, but what happens when the world becomes autonomous? Baton becomes the autonomous infrastructure where these trucks pull in and out of. As long as you have the world continuing to move that way, it’s going to be a core part of the infrastructure.”

It’s Medwell’s conviction that autonomous trucking will first penetrate longhaul stretches of the highway and that the navigation and safety challenges, as well as the regulatory complexity, of operating autonomous trucks inside cities will take much longer to solve. That leads to a world in which autonomous trucks drop and pick on the outskirts of major markets and human drivers handle the first and final miles, a vision of the future you can see by squinting at Baton’s current network.

“This model translates everywhere,” Medwell added. “Not just something in the U.S. — Baton could operate globally. Maersk is a global company.”

Indeed, the basic contours of human and urban geography that make highway transportation more efficient on a per-mile basis than final-mile delivery are the same all over the world. Congestion on city streets is a global problem, and so are the carbon emissions from millions of idling trucks.

Maersk Growth invested in Baton because it saw an opportunity to continue its reach inland and add more complex services for its customers, and it knew that improving the driver experience could be a critical piece of that puzzle. FreightWaves spoke to Jeppe Høier, a partner at Maersk Growth. Høier was introduced to Robert and Berberick by 8VC and picked up the dialogue about making a Series A investment in the fourth quarter of 2020.

“They’re founders with a large amount of energy, and I really like that,” Høier said. “What I love about the Baton solution is that it addresses the waste problem, the CO2 problem, and it also makes the drivers’ lives easier.”

Høier also stressed Maersk’s interest in innovative surface transportation models that could improve customer service.

“At Maersk, we want a customer-centric focus,” Høier said. “I want to be able to go to a Walmart and ask them to get their carriers to use the Baton solution by saying, ‘You can get this high on-time delivery.’ It’s a solution being sold to the carrier, but by helping the carriers improve their on-time delivery we’re improving service for our customers.”