Editor’s note: This is the third Supply Chain Startup blog looking at platforms coming to market from the startup community. You can read the blog on SVT Robotics here. You can read the blog on CognitOps here.

Anshu Prasad, the co-founder of Leaf Logistics, spent ten years at the consulting firm Kearney, working on projects to help very large shippers use technology and data use technology to buy freight. In hindsight, Prasad says, no one asked a predicate question: Put aside doing this faster or cheaper; should we fundamentally change the way we buy freight? The first approach, the one being utilized by many of Kearney’s clients, could bring incremental value. But actually changing the premise for how freight is bought and sold had the potential of being transformative. It’s a Big Idea.

“When I was at Kearney, I worked on a project that looked at a large retailer’s supply chain ten years out,” he recalls. “That was a pretty advanced client, one who was already a leader, and realized they needed to reinvent their supply chain to remain a leader in the future. But eventually, I realized that for most other shippers, it was like the movie Groundhog’s Day: They were hiring us to do the same project, year after year.” Another realization: Buyers and shippers called what they were doing contract freight “but there was no real contract. The shipper doesn’t really guarantee volume and the carrier doesn’t really guarantee capacity.” He also noticed that one of his large clients with a dedicated fleet had a cost per mile that was 20-to-25% cheaper than contract rates, and the business was more profitable for the carrier because it was predictable: The carrier had a pretty good idea what was going to ship and when, and could plan accordingly. “In the RFP world, a shipper might say they’ll have 12 loads a week, but it turns out 8 of those might be on Friday this week but not next week,” Prasad says.

READ  New 2020 Volkswagen Golf: UK prices and specs

His Big Idea was this: What if he could create a platform where shippers could contract for guaranteed freight, like the shipper utilizing a dedicated fleet or the way a company like Kellogg’s or General Mills buys wheat, with guaranteed volumes at guaranteed prices. With that idea, the company now known as Leaf Logistics was born. “The objective over time is to have a large shipper, like a brewer or CPG company, automate freight buying just like wheat buyers automate the purchase of wheat,” he says. 

Before going live in 2018, Prasad and his team built two things out of the gate. The first was an analytics engine that could take a shipper’s shipping data and identify how much of the truckload transportation could be planned and scheduled across specific lanes and loads. Working under an NDA, they got billions of dollars of data from some very large companies. From that, they learned that, depending on the company, anywhere from 40-to-70% of the loads could be planned.

Next, was a trading platform where shippers and carriers could put that information to use to contract for freight, on a guaranteed basis. “With that information, a carrier like Schneider knows it’s going to go to a big box retailer’s distribution center every Tuesday to serve a lane going from Los Angeles to Phoenix. The shipper can essentially buy a digital dedicated fleet, but on a shipment level,” Prasad says.

Along with shippers providing data to put the thesis to the test, Prasad approached some large brokerages. “What they told us is that most of their business still required emails and phone calls,” he says. “They’d love to have a platform, but they couldn’t stop what they were doing to build it themselves.”

READ  3 injured in LAPD patrol car crash - Los Angeles Times

With shipper data and interest from the brokerage community, Leaf Logistics raised a seed round in 2018 to fund the trading platform. The first round was led by the Silicon Valley firm Floodgate, with participation from other firms, including Schematic Ventures and Dynamo Ventures. More recently, the firm raised $20 million in an A round, led by Playground Global. Small scale trading began in late 2018, and has continued to grow since.

“We started with small amounts of freight, but in some instances, it was 23% cheaper for the shipper because they operated to a plan and a schedule,” Prasad says. With some successful trades under its belt, Leaf Logistics began to scale the data and contracting. “Our goal was $10-to-$11 million in contracts by the end of 2019, and we had over 8 times our plan, with only 9 of us working in the company,” he says.

Like a number of startups, Leaf Logistics is introducing itself to potential customers during a pandemic. Prasad sees an opportunity in these difficult circumstances. “Now that we see our supply chains are fractured, there’s a chance to ask if we should return to the status quo, or build something new,” he says. “There are structural opportunities to imagine a new supply chain. If that happens in the transportation industry, we’ll all be better off.”

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at .(JavaScript must be enabled to view this email address). Remember that the purpose is not to promote any one firm – and a blog shouldn’t be interpreted as an endorsement of a firm or its technology. Rather it’s to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow’s supply chains.

READ  Electric cars will drive big change in the service station market - The South African

About the Author

Bob Trebilcock

Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here