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After Uber deal, Sennder wants to command the European digital freight business

After Uber deal, Sennder wants to command the European digital freight business

David Nothacker had a busy summer of deal making. He heads up Sennder, a digital freight forwarder that connects different parts of the logistics process, from shippers to carriers, and the startup has been greatly expanding its reach this year.

In June, the Berlin-based company merged with French rival Everoad and entered a €100 million joint venture with the Italian postal service, Poste Italiane.

Most notably in September it acquired the European freight business of Uber in all stock deal – no terms were disclosed – with Uber becoming a shareholder in the company.

Uber Freight had been making inroads in Europe – just launching in Germany a little over a year ago in July 2019 – and counted some big names among its client base like Nestle and LG but its vision for Europe didn’t quite match up with the US.

While Uber Freight decided to sell off its European operations, just weeks later the Uber unit raised $500 million from investors to take on other markets. That left Sennder in prime position to become the dominant player in Europe.

For Nothacker, the sale to Sennder was driven by key differences between the US and European freight businesses, where the industry will see “continental champions”.

“If you look at sea and air freight, we're going see global champions, moving a container from China to Europe or China to the US,” he said.

“In road freight, every continent is very different, which sounds absurd because the problem we're trying to solve is the same in principle that Uber Freight tries to solve.”

The US model and approach couldn’t be applied to Europe as the typical profile of trucking companies differs in Europe, according to Nothacker, with the US having many larger owner-operators and Europe with many small fleet owners.

“The best thing to conquer Europe is to have a company that can invest significant resources in developing a solution for Europe,” Nothacker said.

“Everyone’s trying to connect the demand and supply side but the markets are so different that every market needs a different approach, especially a different technology stack.”

Nothacker added that the deal isn’t just a case of acquiring a customer base. The two sides will work to co-develop new tech and API standards, he said, to address a lack of standardisation in the freight industry.

Going digital

This is just one strain in Sennder’s broader mission to serve European freight more effectively with technology, something Nothacker said has been lacking in the industry for some time.

Sennder has raised more than $100 million since it was founded in 2015 with backers like Accel, Lakestar and truck manufacturer Scania.

But the mission hasn’t always been clear with the company cycling through different ideas early on like same-day parcel delivery.

“We tried to offer same-day parcel delivery across regions by combining empty capacities in buses with the last and first mile,” Nothacker explained.

“The hypothesis was back then that Amazon, Zalando and a third company from Germany Notebooksbilliger just started offering same-day parcel delivery,” he said.

“We thought the smaller e-commerce companies also have to have a chance to do that,” he thought, but the take-up of the idea was scant and since then it has matured into a much bigger vision tackling the large-scale freight industry with a digital solution.

Nothacker said the lack of digitalisation in freight is down to the fragmented nature of freight in Europe where most markets still think very locally. As a result the industry is a patchwork of operators and subcontractors.

“There are multiple reasons why it makes much more sense to break down this very complex with subcontracting – where everyone knows everyone – into smaller pieces because they run these smaller units more efficiently than the big machine.”

Sennder and the likes of US rivals Flexport and PayCargo, which raised $35 million last month, are trying to weave these fragmented parts together but expansion will be a tricky path to navigate in Europe.

Sennder has offices in seven markets because Nothacker said that the company still needs to have boots on the ground to carve out local relationships and win over customers to its digital ways. It has grown the team to 550 now.

With its latest M&A deals in tow, the company is eyeing up further expansion through acquisitions with a particular focus on Eastern Europe and eventually into Russia.

It will soon be returning to investors to raise its next round, expected to be north of €100 million, in order to finance that growth and a shopping spree will then play a key part of that strategy.

“Going forward we want to do other M&A that we had to park. We had a couple of deals in the pipeline that we had to park because of the acquisition of Everoad and Uber Freight, which is the acquisition of small, family-owned broker businesses,” Nothacker said.

“There are a lot of these companies that have 20 to 100 people, which is typically too big for a neighbour to take over when the owner wants to retire and too small for private equity.”

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