DrayAlliance seeks to remove friction in first-mile of containers with seed funding

Start-up is latest seeking to automate the fraught process of securing truck capacity with its test bed at busiest port in U.S.

DrayAlliance received $3.5 million in venture funding as the Los Angeles-based start-up looks to add carriers and shippers to its container-focused load matching and booking app.

Craft Ventures, the early seed venture fund which also backed Elon Musk’s SpaceX project, provided the cash infusion.

Steve Wen, who founded DrayAlliance in 2017, said the new funding will be used to bolster DrayAlliance’s headcount, which currently sits at 18, with additional engineers.    

Wen began DrayAlliance after running his own drayage service in the busy Southern California market. Picking up a container at a port is still too manual, Wen said, involving emails and phone calls between shippers, motor carriers and terminals.

“We’re really big on eliminating friction in each step of the delivery process,” Wen said. “Almost every single process is almost manual right now.”

The friction involved in the first-mile of a container off a ship was in full display last year as shippers brought in a record number of containers into the U.S.

Despite the freight bounty, carriers and shippers expressed frustration at the congestion and delays plaguing the ports. Motor carriers saw turn times at major container terminals rise, decreasing the number of runs a driver can make. The delays also forced shippers to pay increasing amounts of detention and demurrage.

“Drayage is the biggest bottleneck to ocean shipping,” Wen said. “After spending three years running a drayage carrier, it allowed me to understand at a much deeper level how the industry works.”

As with other matching and booking platforms, carriers can search for loads via a web-based interface. Wen said DrayAlliance is testing fees ranging from 15 percent to 30 percent for each load transacted on the platform, depending on demand.

DrayAlliance is not the only company to offer load matching for trucking. The drayage space in particular has seen an array of start-ups including DrayNow and NEXT Trucking offer ways to connect shippers to carriers.

“There’s a lot of competition in this space now,” Wen said. He added that the company’s exclusive focus on drayage sets it apart from others.

DrayAlliance also optimizes driver time through a default feature that finds backhaul loads.

Wen said 90 percent of headhaul loads get matched to a backhaul, helping to increase the number of loads a driver can take in a day.  

“We’re almost on our way to eliminate bobtailing,” Wen said. “Because we have obtained enough scale in the greater Los Angeles market, there’s almost always something for a driver to take back. If you are running a 10- or 20-truck company, there’s no way you can always find another load of freight to bring back. There’s definitely going to be bobtails every day.”

In addition to load matching, DrayAlliance’s platform will book the terminal appointment time for a container pick-up and provide real-time updates to shippers on container status.

Terminal appointments are the bane of truckers due to the lack of availability and the possibility of being bumped if a driver is delayed.

Wen said the DrayAlliance platform cannot guarantee a terminal will fulfill the actual appointment time. But his company is working with terminals to improve the appointment process and the platform looks for next best driver availability when appointment times cannot be met.

“We haven’t really reached an agreement with the terminals on this issue when drivers are being turned away,” Wen said. “We’ve seen the issue getting better, but there’s the possibility that some appointments can be missed.”

Because dynamics at each terminal are different, DrayAlliance is developing market expertise one terminal at a time. Most of its current loads are coming in and out of the Eagle Marine Services terminal in the Port of Los Angeles.   

Since the first version of the platform went live in February 2018, Wen said about 1,000 truckers are registered to use the platform. Mattel uses the platform as does ocean carrier CMA CGM.

“Almost everything the consumer lives on depends on the port,” Wen said. “But if every consumer understood how everything moved, they would want to change it.”