OneRail raises $9M Series A to scale last-mile delivery network

OneRail’s last-mile logistics operating system gives shippers access to a vast network of couriers, including Lyft’s, Uber’s and PostMates’ driver networks, integrating them directly into shippers’ transportation management systems, warehouse management systems, point-of-sale systems or e-commerce engines.

Although the company was founded as an asset-based courier named Zapt, today OneRail acts as a tech-enabled third-party logistics provider in this space, normalizing and structuring shipment data, aggregating capacity for shippers, managing exceptions, and providing freight density for couriers. OneRail collects software-as-a-service revenue from shippers for its platform and monetizes its marketplace like a traditional nonasset logistics provider. The team grew from nine to 80 employees in a year and should hit 200 by the end of next year, Catania said.

Catania told FreightWaves that OneRail has closed deals with its customers that will scale the business to 2 million deliveries per week in the first quarter of 2022. Current major customers include GoPuff, the consumer goods and food delivery service with hundreds of fulfillment centers in the U.S., Menards Home Improvement, and American Tire Distributors (ATD). OneRail supports ATD Express, a program that offers 90-minute tire deliveries from 120 warehouse locations to approximately 80,000 service centers and shops nationwide.

“This capital is execution capital — customer success, implementation and building out our logistics operations team,” Catania said. OneRail’s revenue is currently “north of $10 million,” and the capital-efficient business “could be cash-flow-positive in February if we wanted it to be.” OneRail’s highly automated marketplace allows it to achieve an operating margin of 85% on its net revenue.

What OneRail promises shippers in addition to a vast capacity network and seamless visibility is something of a holy grail in retail logistics: profitable last-mile delivery.

Today, a number of inefficiencies plague last-mile logistics, driving up fulfillment costs and negatively affecting customer experience, including the difficulty of matching a given shipment to the right courier given the shipment dimensions, courier capabilities and the relevant service level agreement. Shippers are often forced to subsidize the cost of last-mile fulfillment in order to drive sales volume into e-commerce platforms, hampered by a lack of high-fidelity data integrations with couriers.

Catania said that OneRail starts by right-sizing the asset: by finding the smallest (and least expensive) courier vehicle option that can move the shipment. About 80% of OneRail’s capacity network is made up of light vehicles like sedans and SUVs, and the remainder are commercial vehicles, including straight trucks. By rate-shopping for efficient, small assets that can accomodate a shipment’s cubic size and weight rather than maintaining a fixed-price contract with a certain courier, OneRail keeps shippers from overpaying for capacity and capabilities they don’t need. Taking over exception management cut one major shipper’s operating expenses for the last mile by 70%, Catania said. The shipper went from spending about 16 minutes on each shipment — multiplied by 300,000 shipments annually — to completely outsourcing it.

Last-mile capacity is governed by market dynamics that look a lot different than truckload freight cycles: In last mile, it’s often very short intraday cycles that move the market. Many GoPuff drivers are idle in the morning, before GoPuff starts delivery in secondary markets, freeing up capacity for other shipments. Food delivery demand is concentrated around mealtimes, whereas demand for automotive parts delivery spikes at midday. On a longer time horizon, e-commerce delivery capacity tightens across the board in November and December, and furniture delivery spikes after income tax refund checks arrive in the spring.

“You can find supply in final mile in ways you can’t in truckload freight,” Catania said. “Across the five verticals we work in, we modulate supply and demand intelligently, in a data-driven way.”

Providing great visibility is also simpler in final-mile logistics. Drivers making a short local delivery run are more willing to be tracked by a mobile app for the hour or two that it takes to complete the shipment than, for example, a truckload owner-operator who may be hauling a cross-country load for three days. There are also fewer exceptions: Catania cited an exception rate of about 10%, most often things like late delivery, missing items or a customer question, and only about half of those need to be managed manually by OneRail’s operations team.

“We’re actually making final-mile delivery profitable for the shipper,” Catania said.