The movement of goods around the world (by air, truck, shipping carrier) is an integral part of the global economy.

When this flow gets delayed or hits roadblocks, the downstream impacts are widespread to manufacturers, suppliers, retailers, and consumers.

With advances in technology, logistics and supply chain dynamics has started to improve. Companies are able to better manage inventories, forecast demand, optimize capacity, and automate manual tasks (i.e. consolidating shipments and finding carriers). The latest software management tools have helped the industry level up in the last two decades.

The next evolution for tech in the logistics industry is FreightTech, which delivers new growth for companies by adding financial services (such as payments, banking, lending). New fintech companies focused on transport are raising capital and providing product development for market expansion, liquidity improvement, and scaling.

industry Painpoints in logistics

New technology assists shippers, receivers, and drivers in viewing tracking information in real-time, operational decisions with inventory management, and connecting shippers to drivers for transport.

Early developments towards FreightTech had basic payment features that allowed for drivers and maintenance workers to get paid for completing services. Only few of these companies included an option to invoice another party with a digital payment link.

As the need for financial services in logistics increases, multiple parties can be considered end-users: truck drivers (individuals), warehousing\manufacturing\purchasing companies (businesses), repair service providers, and brokers.  Most logistic companies may not be ready or choose to not be involved with direct money movement. Instead, these firms maintain a core focus solely on the movement of goods — outsourcing payment activities to outside vendors (which can be a poor experience for drivers and businesses).

The most common painpoints are connected to:

• Billing and receiving payments on-time;

• Covering expenses for unloading shipment (known as lumper payments, which are not pre-determined and must be paid in cash by driver);

  • These are fees (also called lumper remittances) initiated at a receiver to cover the cost of a laborer who unloads a delivery truck at a warehouse or distribution center;

  • It’s an unplanned, cash expense ($25 - $500) paid to pay to get their trailers unloaded, based on the amount of labor involved;

  • Drivers (low on cash) are coming out of pocket and paying the fees themselves to avoid delays in unloading shipments and finishing routes;

• Lack of financing options for cash flow management;

• Friction with tracking and reconciling business transactions.  

More and more logistic companies with access to workflow automation are interested in enhanced payments & collection (more options and faster money movement) and expense management. 

Momentum towards Embedded Banking & Finance

As banking partnerships leveled up in the last decade, offering payments, wallets, accounts, and cards became easier for new verticals outside of financial services. Retailers, travel companies, healthcare, automotive firms have added some type of banking product or feature.

With FreightTech, there are multiple opportunities to optimize business operations, reduce costs, and gain new revenue streams. The top use cases include:

• Financial ecosystem: accounts + payments + cards for carriers, brokers, and drivers that allow for internal transfers and payments;

• Business banking for global companies: accounts for parent entities & subsidiaries (in various countries) with transacting capabilities for streamlined reconciliation and accounting; invoicing features can be added to collect payments easily;

• Expense management platform: card issuance and transfers for employees of logistic companies to make approved purchases daily;

A blend of the above use cases can lead to a customized program focused on serving individuals and business entities, in or outside the US.

Multiple companies with an industry presence have already made the leap into embedding financial services.

Freight Tech Companies to Look out for

Here’s a list of 10+ FreightTech companies leveraging banking to deliver a quality platform experience:

• Relay Payments: (based in Atlanta) offers digital payments for carriers, brokers, owner operators, merchants, and lumpers;

• RoadSync: (also based in Atlanta) serves drivers, brokers, warehouses, and merchants with payment processing, advances, and card issuance – serving ;

• Melio Payments: B2B payments platform (based in New York & Israel) for logistics firms and other verticals – focused on multiple payment rails and invoicing;

• CloudTrucks: platform (from San Francisco) for owner operators to lease trucks, receive payments, and apply for a business credit card;

• NEXT Trucking: digital freight matching platform (based in Utah) that matches drivers with load availability; serves shippers, carriers, and owner operators, in addition to payouts for drivers;

• FourKites: predictive supply chain platform (from Chicago) for shipment tracking and managing exceptions; has the largest network of global carriers (400K+);

• Bringg: logistics operations platform (based in Tel Aviv) for managing local & last-mile deliveries; includes payments (Click & Collect’) as part of offering;

• NuvoCargo: cross-border freight services (from NY) focused on cargo movement across the Americas (Mexico <> US);

• Tank Payments: digital wallet platform (based in Santa Barbara) automates payouts to trucking companies and includes commercial credit cards issued by Celtic Bank (Visa);

• FlexPort: freight forwarding platform (from San Francisco) provides visibility and control over the entire supply chain, as well as financing;

• TransFix: online freight marketplace (based in New York) that connects drivers & shippers with business intelligence and insights;

• Flexe: multichannel logistics platform with a network that optimizes the global delivery of goods;

Payments, banking, and financing are now more common for clients of logistics platforms. The last two (TransFix, Flexe) are part a new wave of management & analytics companies exploring financial services over the next year.

Drivers for Increasing early Adoption

The question isn’t ‘if’ FreightTech will catch on, but ‘when.’

From the list above of platforms already leveraging banking services, the common thread is flexibility & customization. Customer experiences are tailored to the specific needs of the logistics community. As needs continue to evolve for carriers, operators, and drivers, so to will applications featuring one (or more) financial products.

The main trigger will come from top trucking & shipment firms increasing margins through new revenue streams (such as deposit interest on customer balances, interchange revenue from user card spend, subscription fees). Other companies would soon follow in order to stay competitive. The ‘Freight Bank’ may come sooner than expected.

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