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Freight-matching services, which pair shippers to freight carriers like trucks and vans, are attracting growing investment. Despite a slow initial uptake — in a 2018 FreightWaves survey, carriers that use freight-matching services said that they only sourced 11% of their freight from the services — they’ve become a larger source of business as the pandemic encourages companies to invest in digital supply chain solutions. Flock Freight, Loadsmart, Next Trucking, and Convoy have raised hundreds of millions of dollars to grow their networks to hundreds of thousands of trucks.
While the freight-matching sector is becoming increasingly competitive, new startups with novel approaches — or what they claim are novel approaches — are emerging to take on incumbents. Among the newcomers is Parade, which leverages AI-powered technology to help find matches of freight load, route, equipment type, and a carrier’s (i.e., shipper’s) on-time reliability. Unlike many of the freight-matching services on the market, Parade works with freight brokers — intermediaries between shippers and a freight service provider — rather than to shippers directly.
Applying AI to freight matching
San Francisco, California-based Parade, which was founded in 2015 by Anthony Sutardja, Preet Sivia, and Tony Wu, offers a dashboard of operational metrics designed to help brokerages pick the proper equipment for a given load. Parade operates as a service and infrastructure provider, delivering tools that allow freight brokerages to find and book trucks online from most trucking companies in North America.
“[Parade] was first known as a digital broker that was looking to quickly connect freight with carriers and owner operators,” Sutardja said. “We realized that our software would greatly help brokers and [third-party logistics companies] optimize their operations while automating some manual day-to-day workflows and streamlining the process of finding and booking loads digitally. Having these digital tools [allows] brokers [to] scale business and improve the manual processes currently used in the industry.”
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With Parade, brokers can use “AI-informed” carrier profiles to determine lane eligibility and store notes on carrier preferences, capabilities, and engagement metrics. (In trucking, a “lane” refers to any route that a carrier covers on a regular schedule.) They can also automatically send targeted opportunities via email to re-engage and reuse carriers and compare historical and pricing information for bidding and negotiating freight shipments.
“Brokers receives hundreds of emails every day from trucking companies about available trucks. Parade built a natural language processing engine to read these emails and respond to them so that brokers don’t have to,” Sutardja explained. “Data that brokers have about trucking companies is incomplete, [so we also] use machine learning to predict what trucking companies like to do and what equipment they have.”
A growing business
Over the past year, Parade says it has secured contracts with 97 customers including major freight brokerages like Armstrong Transport, Schneider, USA Truck, and Worldwide Express. Underlining the growth, the company today announced that it raised $12.7 million in a series A funding round led by Menlo Ventures with participation from Greenhawk Capital, Jones Capital, The House Fund, and Oriza Ventures.
“The team saw digital transactions managed by Parade customers increase by more than 500% last year. The pandemic increased demand for trucking capacity,” Sutardja said. “Outside of [the] labor shortage the industry is facing, [there’s] a massive need to digitalize across different functionalities, such as marketing or operations. There is [also an] increased need to acquire tools that help increase flexibility, improve use of human resources, and reduce cost to conduct business.”
Twenty-six-employee Parade’s total capital stands at $18.4 million, which the company plans to put toward expanding the platform’s capabilities and hiring talent.
Investor enthusiasm aside, it’s key to note that while software solutions like Parade’s hold promise, they aren’t always a silver bullet. In another FreightWaves survey conducted in partnership with Redwood, of the shippers using APIs — including freight-matching services — to digitize their business, over 40% said that the APIs made “no material impact” on revenue.
Still, Sutardja argues that Parade has substantial runway in the ever-growing shipping and logistics segment.
“Given the seriousness of supply chain delivery issues, Parade’s ability to help enterprises via brokers is significant. Brokers, Parade’s customers, work for shippers, many of which are enterprises like manufacturers across many industries. Shippers have genuine problems getting goods delivered. Therefore, they have been heavily relying on freight brokers and third-party logistics companies to help place loads on trucks,” he said. “Parade helps brokers reduce the overhead cost of booking a load, improve operational efficiency, [and] increase the number of loads booked and digitally book loads.”
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