Why we invested in aifleet

Automation doesn’t stop there. They’ve built their back office upon the latest technology to dramatically increase the productivity of dispatchers, schedulers, etc. You’ve probably seen a bunch of "GenAI for X” features in logistics. aifleet rolls their own and is now automating most mundane emails including load bidding, responding to the track and trace emails, etc.

“But why invest in a trucking company and not just sell SaaS?” – summer MBA associate at big brand VC firm.

A few observations led us to the inevitable conclusion that the future of trucking needs to be built from the ground up.

First, optimization and AI/ML algorithms can drastically improve trucking company operations. Period. I did my PhD in this field. Marc El Khoury, cofounder/CEO of aifleet, saw this firsthand at AT Kearney then as CSO of US Xpress. Mark Farkas, cofounder/CTO of aifleet, saw this in his optimization startup and consulting business for EU fleets. Other startups selling this software proved this.

The question isn’t “Can you create value?” it is “How can you capture that value?” Several startups tried selling dispatching tech to small fleets, but they ended up battling churn attributable to poor performance from drivers not adhering to the algorithm’s advice. Several other startups chased larger fleets, but legacy tech debt hampered results and presented an integration issue that impeded scale. The answer became clear: build a trucking company from the ground up.

Second, the logistics industry has so many small operational pain points that add up to a massive inefficiency. Over the last half-decade, many startups popped up to solve individual pain points in the logistics space. AI/ML, now GenAI, features can help increase operational efficiency of various distinct logistics functions. However, these are (for the most part) features at the end of the day, and despite their effectiveness will have trouble scaling to become massive businesses. Again, the answer here was: build a trucking company from the ground up – leveraging emerging tools to maximize total operational efficiency.

Third, scalability. It is counterintuitive for a trucking company to have "scalability” when you must acquire trucks (aifleet leases trucks) and employ drivers. Trucks and drivers certainly hamper scale, but there is a huge benefit in operating a trucking company.

Many folks ask: “who are aifleet’s customers?” The answer is that we don't always know. We canvas load boards where shippers and brokers list freight to be moved. In this way, we kind of have infinite customers. We don’t need to sell them, we just bid on the load, deliver it, and move on to the next load. We don’t have a lengthy sales cycle or churn battle. While the revenue is not “annually recurring,” it is almost better in that there will always be freight to move, and we have access to it. Further, as we grow and as shippers see our fantastic safety and on-time records, we can secure increasingly better rates. We love the ability to simply lease a truck, then pick and choose loads to make revenue vs a traditional sales motion, so again a trucking company wins.

Thus, it was clear that the answer was aifleet. Fast forward a couple of years and powering through a difficult US trucking market, aifleet is doing exactly what they set out to do.

Their tech-forward approach has recently achieved two important milestones: 1) 40%+ more utilization of trucks compared to the industry average and 2) industry-leading cost-per-mile. That is, make more money for less.

Utilization obviously maps directly to more revenue per truck per week. It also means significantly less deadheading (driving without a load) which unnecessarily burns gasoline and produces emissions.

Lower cost-per-mile allows us to generate greater profits on the loads we run. It also helps ensure that we will be able to weather (and even thrive during) the down cycles in the highly cyclical trucking industry. The chart below shows that we are already industry leaders on cost-per-mile and it's only the start.