Freight Tech Investor
FreightWaves spoke to Jake Medwell, founding partner of 8VC and a partner at Evercore, about the broader trends shaping the transportation industry. FreightWaves is one of the sponsors of FreightFest, the nation’s largest commercial transportation industry conference, back in September 2020 in Houston, Texas.
“The investment market is beginning to price the truckload transportation market well as it matures and continues to consolidate,” Medwell said. He also stated that although smaller freight companies make up the majority of the industry today, 8VC is not investing in truckload logistics companies.
With consolidation in the market, trucking companies are merging. Some of the biggest consolidation in the trucking industry will likely come at the operator level.
“The number of players, their portfolio and the number of trucks they have in their fleet is quite high, and when you merge two fleets, the first thing that they tend to do is get rid of redundant capacity. So the ability to buy and manage a portfolio of trucks is far more valuable than owning individual trucks.”
Although there is high-tech and proprietary data in trucking, Medwell said the “intangible competitive advantage” is often the people.
“The more sophisticated investors will buy trucks that have top-tier drivers who have been rated and monitored by a customer company like Fleetworks or Eagle Express Solutions, which have stellar safety records, or Continental Transport,” Medwell said. “The trucking business has been very large, fragmented and labor-intensive. The supply chain has not necessarily been built to deal with the complexity that the truckload sector is inherently built for.”
While the trucking industry has had challenges in the past, Medwell believes that even as freight volumes continue to grow and modernize, the industry will continue to be strong.
“As we’ve seen over the past five years in the U.S., that transportation has historically been a volatile industry, but you’ll see that relatively stability because the market has focused on the efficiency of the fleet. The industry is more sophisticated today.”