CargoX raises US$2.8 million to fuel trucking companies with working capital

Contxto – Earlier this year, logistics startup CargoX stated that it wanted to finance more transport companies in Brazil. To that end, this it recently raised R$15 million (about US$2.8 million) through Pattac Empreendimentos e Participações to procure small and medium-sized trucking businesses with working capital.

In April the “Uber for trucking” startup had closed US$80 million in funding through LGT Lightstone. Although at the time, CargoX stated the funds were for improving its tech as well as increasing its user base.

• Related article: Brazil’s CargoX hauls in credit lines for trucking and real-time pricing

Be that as it may, Covid-19 is putting many of CargoX marketplace’s small-sized carriers in a financially tight spot. Consequently, they need a little credit to keep going.

Rightly so, many independent truck drivers are reliant on working capital to pay for things like gas and vehicle maintenance. They can even live from paycheck-to-paycheck. 

And without that cash flow, they’re driven into a corner.

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Grasping CargoX’s concern in Brazil

As is, the freight industry is quite disjointed, but it’s been further twisted up by the coronavirus pandemic. Large trucking companies have the resources to weather drops in volume. Likewise they have a more consolidated customer-base. Nonetheless small and medium-sized businesses are less equipped to cope.

While CargoX’s marketplace is designed to help these smaller players have a steadier workload, if overall demand for their service falls, so do the operations that happen on CargoX’s platform.

By the numbers: A survey by the National Association of Freight, Transport, and Logistics (NTC & Logística) showed that there was a 45 percent drop in cargo volume handled in Brazil from March to April.

With less cargo going around, revenue for transport companies has fallen. 

During the first round of surveying, businesses reported a 66 percent drop in sales, that number jumped to 89 percent sometime later.

What the experts are saying: For Francisco Pelucio, President of NTC & Logística, besides tax brakes, trucking companies need working capital with longer terms. 

Enter CargoX’s proposed credit lines.

Related articles: Tech and startups from Brazil!

-ML