SmartHop, a startup developing an AI-powered freight dispatcher service for small businesses, today announced it raised $4.5 million. A spokesperson for the company said the funding will be used to help scale service and accelerate SmartHop’s go-to-market efforts.
Over 90% of trucking companies in the U.S. are categorized as small carriers and operate with fewer than six trucks. SmartHop asserts that industry rules and regulations put these businesses at a disadvantage when booking loads and leveraging buying power. Insurance also plays a part — small carriers are often locked into a set of insurance provider-dictated recruitment rules, which can have trickle-down effects on the rest of the business.
SmartHop — which CEO Guillermo Garcia, a supply chain veteran of Nestle’s Venezuela division, cofounded in 2016 — leverages machine learning algorithms to customize and match freight load suggestions and schedule with carriers. Its portal provides access to brokers and load sources across the country, with a performance tracker that records trips and habits to suggest ways to boost revenue.
SmartHop is designed to work with 53-foot semi-trailers and refrigerated trailers and doesn’t charge an upfront fee for usage. After carriers create profiles indicating the type of trips they prefer, the kind of loads they can handle, and when and where they will be empty, SmartHop begins sending jobs their way. For each they choose to accept, the startup levies a 3% commission.
On the broker side, SmartHop solicits available loads without requiring reformatting or manual data entry. Brokers get market predictions and data volunteered by carriers as well as strategic analyses of the carriers interested in their loads.
Equal Ventures led SmartHop’s seed round with participation from Greycroft and Las Olas VC. Among previous backers in the Miami-based company are Redwood Logistics director Alex Yeager, GlobalTranz and Emerge TMS founder Andrew Leto, and Project44 founder Jett McCandless, along with strategic partner Anheuser-Busch InBev.
The logistics market is an increasingly attractive investment in light of the novel coronavirus pandemic. With customers either choosing or being mandated to stay at home, companies like SmartHop says it’s seeing interest from end-customers in addition to ecommerce and brick-and-mortar stores. Even pre-pandemic, last-mile delivery was fast becoming the most expensive part of the supply chain, with research firm Capgemini pegging the percentage of costs at 41%.
SmartHop competes with startups like DispatchTrack, FarEye, SourceDay, and Flock Freight in the global logistics space, which is anticipated to be worth $15.5 trillion by 2023. Uber offers a service called Uber Freight, to which it recently committed another $200 million as part of a major expansion. San Francisco-based startup KeepTruckin last year secured $149 million to further develop its shipment marketplace, and Next Trucking closed a $97 million investment. Convoy raised $400 million at a $2.75 billion valuation to make freight trucking more efficient.