Exclusive: Transfix digital freight flourishes amid flux
By Andrew Knoll
23:21, 20 December 2021
The global pandemic has choked supply chains, limited travel, disrupted transport, raised freight prices and presented unforeseen challenges in the freight and logistics sectors.
One emergent power in the industry has been digital brokerage Transfix, which has continued to prosper and expand during the course of the pandemic, including a tremendous third quarter and year to date. With designs on innovating digitisation and connecting carriers on a scaled platform that can service the major importers and exporters, while also integrating mid-level and niche clients, Transfix is a rising star in the growing US market.
Transfix CEO and President Lily Shen met with Capital.com for an exclusive interview in which she offered an assessment of the industry, an illuminating glance at the company’s operations during the pandemic and a glimpse of its future.
“When I think about our results, it’s a function of our technology, our talent and a lot of shippers and carriers that are really seeing the value of the platform,” Shen said. “You also can’t ignore that people are leaning into the role of technology and data in the supply chain, more than ever, especially with what’s transpired over the last couple of years”.
Digitisation as a key component
Shen said that traditional brokers had been focused on manual tools, perhaps utilising spreadsheets and other sparse, old-school digital tools, though the industry has been evolving.
“If you’re Unilever or WalMart or Home Depot, everyone’s only thinking about their existing supply chain,” Shen said. “But we’re approaching it at a platform level, so we aggregate all the data, all the networks and we really look at it holistically, and then we’re able to match it dynamically or project how we would match at capacity with the carriers on the platform.”
She added: “Part of our vision is being able to bring it all together and build that unifying platform, but really empower all the carriers across the board.”
Another distinctive element of Transfix is that where earlier generations brought in brokers and specialists to expand and scale their business, a digital focus has obviated that type of personnel as well as extensive investment in real estate and other such overhead. Instead, Transfix can focus on its top-level management, technology development and other leaner investments.
“We’ve been able to drive the increase in the business while managing our costs incredibly well, which speaks to the power of the technology,” Shen said.
Scale and personnel
Transfix has focused on both depth and breadth in its hiring, seeking to assemble a team with a wide array of not only expertise but also experiential backgrounds, ranging from start-ups to growth-focused endeavours to Fortune 500 enterprises.
“We’re doing something new and we’re doing something different,” Shen said. “So you want to make sure that you have the right blend of folks who understand deeply, who have a strong passion and commitment to really change and also have that experience in building and innovating, not only in tech but across the entire organisation.”
That sprawl mirrors the range of customers that Transfix serves. It has expanded across levels of partners, ranging from enterprise carriers to fledgling ones. Transfix has even sought out mid-level and small carriers to empower them with access to freight, free software and a multitude of resources to advance their business goals and service presence. Using a many-to-many matching algorithm and other technological tools, dynamic and other data can improve supply and distribution chains by matching shippers, capacity, rates, reliability and more.
“The algorithm is a function of the business lanes, the market, the capacity availability and as we bring more customers – loads, lanes and carriers – onto the platform, the algorithm is also adjusting on its own as well,” Shen said.
Volatility and adaptiveness
Freight and transportation have long been subject to the unexpected and unpredictable, such as weather, mechanical issues, cargo inspections and much more. The pandemic has added layers to that uncertainty, in turn increasing demand for control, visibility, transparency, flexibility and integrated platforms.
“There’s always volatility, everyday is different,” Shen said. “That’s not new to them but the degrees in which that’s occurring and then what it takes for them to be able to manage that an increasing pace has really shined a spotlight and made people realise that they need to think differently about this.”
Shen said that Transfix’s model and its catering to such a wide range of service providers emanated from working closely with customers in relationships that fostered empathy and appreciation.
“It is really difficult to build simple and elegant solutions for very complex problems,” Shen said. “What the carriers go through everyday is constantly changing and moving, so the ability to build a dynamic platform with a modern interface that makes it easy for them to use is a huge opportunity.”
Forthcoming public offering
As digital load-matching competitors have mobilised – Echo Global Logistics inc has plans to go private and Uber Freight is in the process of acquiring Transplace – so too has Transfix. It is shooting for a Q1 public launch via a SPAC merger IPO, a combination with G Squared Ascend, who was an early investor in Transfix.
“They have seen firsthand the momentum that we’ve had as a business, and the continued progress that we’ve made from a technology standpoint,” Shen said.
The IPO was still on target for Q1, Shen said.
“I joke with the team that we did all this work to get here so that we can get started. It’s definitely an exciting time, it’s going to give us the opportunity to continue to invest in the technology that we’re building, to consider partnership opportunities over time and it will really help us accelerate as a business, of course, but also a platform for the customers that we serve.”
The future of freight in the US
Shen said that while opportunities to expand business globally were enthralling, that move would be in step with customers’ needs, desires and timing. For now, she said, the US freight sector had plenty of challenges to surmount, efficiencies to improve and collaborations to be undertaken.
There has also been a level of government interest in finding ways to improve capacity and make other improvements to supply chains and distribution, Shen remarked. Throughout the pandemic, U.S. President Joe Biden’s administration has attempted to ameliorate issues on both fronts, including taking measures to extend port hours and engender stronger domestic production of key manufacturing components. Because of the multitude of challenges that exist, Shen believes that there won’t be any single act or actor that will serve as a “silver bullet” but rather that cooperation among all involved entities will lead to improvements.
“There’s a lot going on in the broader ecosystem and there’s an opportunity for various players to work more closely together and collaborate, whether that’s in the private sector or not,” Shen said.
Obstacles are often accompanied by opportunities, and Shen sees plenty in the sector for Transfix and other companies seeking to help businesses optimise transport and rendering.
“The biggest opportunity is absolutely in tech and data,” Shen said. “You have to think about it at a multidimensional level. Yes, there’s a data platform that really underpins everything, yes, you’re building a machine-learning layer that lives on top of that, you have to also be able to not just build but really deliver on better experiences, and, obviously, this is freight, so you have to do that while also delivering the service.”