'Uber of logistics' looking at M&As to grow in Brazil

Thursday, November 24, 2016

Shipping goods by truck is good business in Brazil, a country where the vast majority of transportation is done via roads. Keeping that in mind, Brazil-based cargo transport e-commerce firm CargoX, which connects truck drivers to enterprises that need deliveries, is considering M&As to expand inorganically.

The company is currently in talks with small and medium-sized transport firms, although it is not ruling out possible acquisitions of tech companies that develop logistics solutions, according to CargoX CEO, Federico Vega (pictured), a former JP Morgan Chase executive.

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"We want to take advantage of transportation firms with a large client base for rapid expansion in the country," Vega told BNamericas. Recently, when talking about the future, Vega predicted that autonomous freight trucks could start crisscrossing Latin America within the next five years.

According to the executive, many Brazilian transport firms have been affected by the current crisis, due to the pressures of a combination of scarce credit, high tax rates and fewer goods to ship. In this scenario, CargoX helps truckers find cargo for otherwise empty trips and tracks the most efficient routes, retaining a small percentage of the freight price.

Vega said CargoX has 15mn reais (US$4.4mn) earmarked for M&As, after collecting around 50mn reais from two investment rounds. In the latest round, last July, Goldman Sachs injected some 33mn reais into the company. The firm is estimated to make 48mn reais in revenues this year.

CargoX claims to have 200,000 registered truck drivers, though only half of them are actually active users, and 500 listed companies, including large ones such as Ambev, Unilever and Whirpool.

The company kicked off operations in 2011, after being selected and accelerated by Chilean start-up accelerator Start-up Chile, when it was still called Transportar Online. After operating in Chile for a time, the company expanded to Argentina and then to Brazil, where it opted to focus its business, thus ending the other operations.

Vega said: "There were lots of self-employed, autonomous drivers in Brazil, many of whom had idle periods. On the other hand, we had transport firms that couldn't wait long for shipping. It was the ideal scenario."

Now, after growing larger in Brazil, CargoX is considering making a return to Argentina and Chile. According to the executive, that could take place by the end of next year, pointing out that the cross-border transport between Brazil and Argentina is the busiest in South America.