Ti spoke with David Nothacker, Co-founder & Managing Director of sennder, to understand the future plans of sennder.
Ti: In September 2020, sennder acquired Uber Freight Europe. Why did you think that joining forces with Uber Freight Europe was the right move? Are you already seeing returns from the Uber Freight Europe acquisition?
DN: The rationale behind the acquisition was to get access to a strong shipper base. Uber Freight has had very strong and well-established relationships with shippers in the US and Europe. The deal includes a shipper referral program in which sennder refers shippers seeking freight brokerage services in North America to Uber Freight, and vice versa. The forwarding business is very much relationship driven and sales cycles are very long, hence sennder can only benefit from Uber Freight’s established relationships with the enterprise shippers.
Finally, the deal strengthens our position as the largest digital freight forwarder in Europe. Based on our insights, sennder is now 10 times bigger than the second largest digital road freight player. This size has helped us to secure over $350m in funding, allowing us to lay claim to a potential valuation of over $1bn.
Ti: In addition to Uber Freight Europe, sennder acquired several other companies in the past few years. What is the rationale behind these acquisitions?
DN: sennder pursues M&As for several reasons. Within the digital freight space, we pursue M&As to secure markets and teams. At the moment we’re pursuing M&As with traditional, asset-light companies to secure access to capacity, to expand into new geographies and to unlock synergies, which are mostly driven by higher volume on our platform, the network effects and the technology solutions applied by our acquisition targets. Our strategy is to build presence in every market, because personal relationships with trucking companies are essential in order to increase and encourage technology adoption.
We acquired Cars & Cargo at the beginning of the year and we’re looking at a couple of acquisition opportunities at the moment.
Ti: At the beginning 2021, you announced that sennder will move over 1 million truckloads this year. Are you on track to achieve this target? What are your forecasts in terms of volumes for the upcoming year?
DN: We’re definitely on track to meet this target and this is most likely to happen at some point in Q4. In terms of where we expect to be in the next couple of years, our plan is to achieve €1bn in revenue by 2023 and €2bn in revenue by 2025. Based on our insights this will position us among the top 10 European road freight players in Europe.
Ti: Will sennder have to grow faster than the industry to achieve these targets? Who stands to lose from your rapid growth?
DN: In terms of our revenue forecasts, our rule of thumb is to double our revenue year-on-year in order to remain a fast-growing start-up. If you take into account that the market has grown around 8% this year, we are definitely growing significantly faster than the market.
On your second question in terms of who we get the market share from – I think that the market is so fragmented that probably the impact is not meaningful to any player in the market. The European Road freight market is vast and fragmented. According to our insights, the top 5 European road freight players have a combined market share of only 5.6%. So, the redistribution of shares is very insignificant. It is also important to understand that the road freight market is not a market where the “winner takes all”. Unlike the food delivery market, which is very much scale driven and which will ultimately have one or two players that dominate the market, the road freight market will remain highly fragmented.
Ti: sennder has the largest carrier network among the digital forwarders. Considering that you’ve been expanding your network through acquisitions, how do you enable smooth and efficient onboarding of carriers within your ecosystem?
DN: Technology adoption among carriers remains a big challenge. Due to the capacity shortages that we’re currently experiencing, it is even more challenging to convince traditional carriers to follow a digital process as they already have loads to move, without the need to digitalise their operations and share data with a digital forwarder.
But sennder’s value proposition to carriers has become even stronger and this has a positive impact on technology adoption among carriers. As an incentive to bring carriers onboard, sennder offers reliable payment terms of less than 3 days. The industry average is 45- to 60-day payment, so these payment terms attract a large number of carriers and convinces them to join our network.
Another solution that is very much appreciated by our carriers is a fully digital invoice-factoring, that simplifies the invoicing process and gives carriers the ability to register their clients to a centralized invoicing system in only 15 minutes. The stickiness for this feature is quite high.
Cash flow is a big challenge for trucking companies, and this is why we decided to invest in these solutions which are convincing carriers to join our ecosystem.
Ti: Having raised $350m, sennder is the most highly funded digital forwarder start-up in the European road freight market. How will you use this capital?
DN: We’re looking to expand our European footprint, bring more carriers and shippers onto the sennder platform, while also expand our digital offering – such as SaaS. Acquisitions and strategic partnerships are part of this strategy, and the additional funds give us the flexibility to capitalise on the right opportunities.
We’ll continue to invest in tech engineering and product development as well as geographic and service offering expansion. We’re going to expand the 200-person technology team, which is the largest tech team of a logistics company in Europe. Expanding our technology team will enable us to accelerate research and development so as to increase our value proposition to our customers and carriers.
With regards to expansion, we’re planning to expand geographically but also further develop our service offering. In the short-term, we’ll remain focused on FTL, but potentially expand into new geographies. We might pursue smaller acquisitions to give us better access to capacity in new markets, as they already have established relationships with shippers within their respective markets. We’re not planning to expand in LTL or pallets in the near future.
We’re also going to invest in value-added services and launch our financial services in other countries. For instance, we intend to introduce the invoice-factoring service that we currently only offer in Germany to new countries and plan to launch it in Poland this year.
Ti: sennder has recently developed sennOS, which is the company’s transport management and operating system. Why did you decide to expand into the SaaS business?
DN: Even if we become one of the largest FTL providers in Europe, the market will remain highly fragmented with 98% of it unserved by sennder. At sennder we’re developing advanced technology that can truly make a difference, to tap into this unserved market. In addition to providing us with an additional revenue stream, the SaaS business comes with data benefits and the network effect that we can leverage as a forwarder.
Having said that, it’s important to highlight that our focus will remain full truckload and exploring value added services in the FTL market which have proven to work really well for us as a company.
Ti: What do you expect to be the main challenges for sennder in the next 5 years, what might jeopardise the growth trajectory of sennder?
DN: Capacity access and driver shortages remain one of the key challenges.
Technology adoption among carriers and shippers is another barrier. We believe that size will be a crucial factor in this regard and that once we become one of the largest, if not the largest FTL provider, carriers will not hesitate to adopt our technology and join our ecosystem. In Italy, through the JV with Poste Italiane sennder has become the largest domestic FTL freight forwarder. This size and scale attract Italian drivers to our network, who have quickly realised that in order to drive effectively and efficiently in Italy, they need to sign up to the sennder platform.
The technology is available, and it is mostly applied to automate and optimise our internal processes, but we have to push it more towards both carriers and shippers to see the real benefits.
Ti: Do you plans to file for an IPO and take the business public?
DN: Taking the business public is our goal in the medium term. But for now, we remain focused on building up our scale and revenue.
There are already examples of a few digital freight start-ups filing for an IPO. The digital freight start-up Transfix for instance recently announced plans to go public. China’s Full Truck Alliance, an Uber-like trucking start-up and a hybrid model between TimoCom and sennder also went public this year. I expect a few more digital players from the USA to go public in the next couple of years, creating a strong IPO momentum in the industry.
Source: Transport Intelligence, November 16, 2021
Author: Viki Keckarovska
