Rivals compete to make trucking logistics more efficient in trillion dollar market

Huochebang, aka Truck Alliance, is a Unicorn private company which is valued at US$1 billion or more. They received another $156 million in funding in a round led by Baidu. At the end of 2016 they had received $115 million in funding.

Dai Wenjian, Huochebang’s founder, told a Beijing forum last month the company has connected some 2.6 million trucks with around 400,000 logistic companies in China, and is set to deliver a profit in 2017.

The latest investment comes at a time when Baidu is gearing up to rebuilt itself as an artificial intelligence(AI)-focused company, and transportation is seen by it as a key future earner.

Trucking remains by far the primary means of ferrying goods across China. More than 80 percent of goods are delivered via roads in a country whose logistics sector was worth $1.6 trillion in 2013, Deloitte has estimated. But the industry remains fragmented and inefficient.

Huochebang competes against 200 rival applications trying to minimize the amount of time that cargo-haulers stand empty, a rate that currently hovers around 40 percent, according to Industrial Securities Co.

They want to match the country’s 20 million trucks with commodities in need of transport, vacant parking lots and service centers it operates. That’s essential because more than 90 percent of the nation’s road haulers are owned by individuals.

Unlike Uber, which takes a cut from every ride, Huochebang makes money primarily from selling toll cards, taking a cut from the card top-ups, and helping truckers with financing.