With an angle on a long-neglected part of the shipping industry — the short-haul movement of cargo from docks to logistics centers — Dray Alliance is joining a growing startup scene for logistics businesses based in Los Angeles.
With some of the nation’s largest ports in Los Angeles and Long Beach, the Southern California region is now fertile ground for businesses hoping to tackle what amounts to a trillion-dollar industry.
Companies like Shippabo, a provider of shipping tracking and logistics for international small cargo transport, and NEXT Trucking, which handles long-haul and short-haul trucking, have both launched in the Los Angeles area to tackle different areas of the shipping industry. And now Dray Alliance is joining them, trying to take a piece of the market transporting cargo from the docks to logistics centers.
The company has raised $3.5 million in seed funding from David Sacks’ Craft Ventures and has already signed contracts with the toy company Mattel and CMA CGM Group.
“Drayage is currently the most neglected area of the transit supply chain. The nuances of drayage create distinct challenges and opportunities that are quite different from other trucking segments such as FTL and LTL,” said Jeff Fluhr, general partner at Craft Ventures, in a statement. “Focus on drayage is what sets Dray Alliance apart. That focus, combined with deep industry expertise, technical skills, and entrepreneurial grit is why we believe this team will emerge as the leader in the sector.”
Founded by middle school friends Steve Wen, Hank Cui and Jason Yu, Dray Alliance leverages years of work that Yu and Wen had done as founders of their own trucking company. Cui was brought on board to start developing the technology product — which Wen says is exactly like an Uber for trucking.
Wen says the company has thousands of truckers who have signed up for the service — most of whom are now on a wait list as the company builds up supply before opening the floodgates on the demand side.
For every successful shipment, Dray Alliance takes 15 percent to 30 percent of the total cost of the shipment, which Wen acknowledged was a bit higher than the industry norm. The reason for that, he said, was because of the massive savings that shippers can realize.
Fines for late pickup on cargo can range from $100 to $1,000 per day. Working with Mattel, for instance, Dray Alliance was able to save the toy manufacturer nearly a quarter of a million dollars through its service.
“The drayage trucking industry still depends on emails and spreadsheets for its daily operations — leading to massive inefficiencies that result in lower earnings for truckers, less predictability in delivery times and 20-50 pefrcent increases in the drayage trucking cost of freight deliveries for shippers. This is not in the best interest of anyone involved,” said Steve Wen, CEO of Dray Alliance. “Dray Alliance wants to bring Uber-like airport pickup efficiency to the drayage industry by providing a seamless mobile experience, more predictability in delivery time and better economics for shippers, carriers and truckers.”