Why Latin America’s freight forwarding opportunity continues to attract capital – Marketingwithanoy

“Investors are pouring in” money in Latin America’s logistics and shipping operations,” wrote our former colleague Jon Shieber in 2019. But a pandemic later, amid turmoil over gasoline prices around the world, it’s time for another visit.

Nowports (YC W19) is a good starting point for comparison. In February 2019, the Mexican startup just graduated from Y Combinator, and in Shieber’s words, “sett[ing] itself into the Flexport of Latin America.” Fast-forward to today, and Nowports has raised $92.6 million in funding, including a $60 million Series B round led by Tiger.

Examples like this abound as investors around the world are optimistic about freight forwarding. The pandemic played a role in boosting logistics startups and shed light on how essential supply chains are. But venture capital continues to flow even as COVID-19 eases, recent news shows.

This month Marketingwithanoy reported on three fundraising events in the shipping industry. Seattle-based Convoy is valued at up to $3.8 billion after a $260 million Series E round. OnePort in Nigeria has secured a $5 million investment that will help it expand to three major African hubs by the end of the year. And in Latin America, DeltaX has its eyes on the Andean region and $1 million in the bank.

Digitizing freight forwarding is a global challenge as the industry still lacks transparency and efficiency. Latin American startups have a steeper hill to climb, but this also drives them to innovate and help each other in interesting ways.

Much more than copycats

In Latin America, the problem is not only that freight is still very analogous, it is also not optimized. In the region, “demand for trucks exceeds capacity, yet trucks run empty 40% of the time,” according to Mexican startup BeGo (YC W20).

According to Jonathan Lewy, whose fund Investo backed BeGo and Nowports, the two startups represent the industry’s key models: marketplaces and freight forwarders. Other examples are CargoX from Brazil on the market side and Nuvocargo on the forwarding side.

However, business models in Latin America are often fused, and Nuvocargo is a good example.

Leave a comment