The trucking industry is large and integral to society, but there are several distinct problems facing the market today. Fleets are often poorly utilized, with inconsistencies between large and small players. Hiring is also a major issue, with the average cost per new hire ranging between $6,000 and $15,000. High churn rates further complicate this issue for trucking companies. Recent data shows annual churn rates among small firms of about 73%. For large companies (those with annual revenue of $30 million or more), this number surges to 96%. Add all of this together and it becomes apparent that there’s a real need for improvement in this industry.

Fleeting is an attempt by its founders to address these issues. In its simplest form, the company’s app and website is designed to connect drivers with firms that are looking for freight to be moved. This design gives autonomy for non-owner-operating drivers. It also handles the costly hiring process by automating it, rather than leaving it in the hands of the trucking companies themselves. According to management, the entire vetting and hiring process takes only 24 hours to complete, and it includes background checks, drug tests, reviews of previous employment, and more. Their entire ecosystem, then, creates a sort of ‘trucker-on-demand’ business model.

Since the platform’s launch, drivers have spent more than 15,000 hours in aggregate on the platform. What’s more, over 1,500 loads have been transported as a result of the company’s services. In 2018, revenue for the business totaled $41,866. The company generated a net loss of $50,094, and its operating cash flow was -$41,251. Financial results have not been released for the firm’s 2019 fiscal year. However, management did say in their marketing materials that revenue for the year was approaching $400,000 on an annualized basis. This figure was based on $1.75 million worth of GMV (gross merchandise volume).

To monetize the platform, Fleeting charges the customer (the company needing the trucker) hourly for each driver booked. It extracts from the customer a platform fee of between 20% and 45%. In one illustration, the company looked at the average of $40 per hour that it charges for truckers on its platform. Its average take on this is 22%, or $8.80 for each hour.

There are few industries in the US that are larger than trucking and perhaps even fewer that are more important in nature. According to one source, the total gross freight revenue realized in the latest fiscal year for the industry was $796.7 billion. An impressive 71.4% of domestic gross tonnage in 2018 was transported via truck, amounting to 11.49 billion tons of freight for the year. Not only is trucking vital for domestic trade, it’s crucial for trade with our closest partners as well. In 2018, 67.4% of the value of surface trade between the U.S. and Canada was transported by truck, totaling $348.3 billion. For Mexico, that figure was 83.5%, or $424 billion.

Estimates vary, but the most commonly accepted figure for the employment of truckers is about 3.68 million, and nearly 0.9 million of these are for-hire carriers. Excluding the self-employed, it’s estimated that there are 7.8 million people employed in jobs that relate to the trucking industry. That’s a sizable group of people considering the population of the US and the total number of those employed.

Even though the industry is large (or perhaps because it is so large), it does face issues from time to time. Last year, it was estimated that 795 trucking companies failed across the US. Collectively, these firms resulted in 24 thousand trucks being removed from the market. As previously mentioned, the churn rate in this space is particularly high. For large players, the figure was 96% in the twelve months ending in the third quarter last year. For small players, the figure was 73%. The reason for this disparity had to do with how these firms were changing. A sizable chunk of the churn among larger players was due to downsizing, while the lower churn for small players was due to the growth of their fleets.

Based on these findings, the trucking fleet is just begging for an innovative solution to its problems. Fleeting, by providing access to a network of drivers, can reduce the burden of hiring and firing employees. It can also automate (or nearly automate) the contracting process. Its fee structure appears reasonable given the costs it’s looking to save customers, and the time it saves them from not having to contact prior employers, contend with drug tests, and more will add up over time. Though not stated, an expansion to international markets could prove very valuable for the long-haul. The same can be true of the company eventually moving into non-trucking niches.

The management team at Fleeting has decided to go with a relatively simple type of capital raise to grow the firm. In exchange for a capital infusion, starting at $100 per participant, the firm is offering holders a SAFE which will exchange for equity at some point in the future. The rate of conversion is set at a 20% discount to the valuation of the firm upon its next raise. This rate is subject to a valuation cap of $10 million. As of this writing, the company has $47,710 committed to its raise. Although that exceeds the $25 thousand minimum it was seeking, it’s still far removed from the $1.07 million the firm is hoping to close with.

One thing that makes Fleeting unique is that it was founded by four individuals, and they are the core of the Fleeting team. The first of these is Pierre Laguerre, the company’s CEO. Laguerre brings strong experience to Fleeting, having worked for 11 years as a CDL Class A Driver. He is also an Owner/Supervisor in both JP & L Transportation and Mac Transport Staffing. At JP & L Transportation, Laguerre built the company to $1 million in revenue in its first year of operations. 

Next in line is Anil Jagarlamudi, Fleeting’s CTO. He has around 20 years of experience with software systems. He was previously a VP of Engineering at Luma. Before it was acquired by VMware, he served as the CTO and Head of Engineering for AirWatch. He was also a Director of Supply Chain Services and a Partner at a firm called Brevadum.

The third founder of Fleeting is Paul Munguia. He leverages his background in banking, operations, and company building to serve as the company’s COO. Munguia worked for some time managing a loan fund for minority/women-owned businesses. He then went on to found Currencie, a fintech startup for Millennial borrowers. Munguia also successfully co-founded Upright, which co-builds startups, where he worked as Head of Operations and Finance. 

The final founder is Benny Hammond, the firm’s CRO. He has two successful exits under his belt. He was in charge of Sales & Marketing at FR8Star before its acquisition by Sandhills Global. Before that, he served as COO at BlueKite before it was acquired by Xoom Corp.

After careful consideration, Fleeting has been rated a “Top Deal.” The company’s business model is interesting and sensible. It fills multiple needs in a simple and effective manner, and there is the potential for Fleeting to create real value for an industry that at times has struggled. The size of the industry and the magnitude of the problems the firm is addressing makes the opportunity to scale up significant, as seen by comparing 2018’s results with management’s stated (but not yet verified) 2019 figures. On top of it all, the business does have a founding team that is stacked with experience in both the trucking industry and building companies. 

However, there is always the possibility of risks. Execution risk is always present for startups and their investors. In addition, Fleeting faces the challenge of scaling up and getting the word out. The company must cater not to one group of users, but two: truck drivers and trucking firms. This dual approach can be costly and time-consuming. There is also the possibility of competitive risk due to the fact that this business model is easy to duplicate, and the prospect of a larger player coming in and fighting the firm is real. Another issue is that the valuation cap for holders, at $10 million, does appear high given the circumstances. Even so, the strength of the industry, the business concept, and the team appears to outweigh the risks, and investors would be wise to consider a stake in Fleeting moving forward.