Loop: Simplifying Logistics Payments

9Yards is excited to announce that we are participating in Loop’s Series B alongside Index and J.P. Morgan Growth Equity with participation from existing investors 8VC and Founders Fund as well as a select group of strategic investors including Penske, and Four More Capital. Read more here.

A Modern Audit & Payment Platform

The transportation and logistics industry is the backbone of the U.S. economy, accounting for more than 8% of the country’s GDP, and a staggering $1.8 trillion in payment volume. The most visible part of logistics is the movement of cargo: trucks, ships, rail, and airplanes. But behind the scenes, for each movement of physical goods, there is also the movement of money. The same challenges that slow the movement of goods also impact the movement of money: complex rate agreements, unplanned charges, manual paperwork, and messy data. 20% of logistics invoices have some kind of error, and within the trucking industry, it takes truck drivers on average 50 days to get paid.

Freight billing is complex. Invoices can contain hundreds of possible surcharges. The surcharge rate is calculated based on contracts that are signed on paper but never codified in software. This leads to payment friction that raises costs for all parties in the system, including consumers. No one wins with this arrangement. Shippers must add back-office staff to reconcile invoices, carriers rely on higher cost capital to generate short-term cash flow, and consumers pay more for goods due to increased logistics costs.

Enter Loop. Loop is building a modern audit & payment platform to unlock profit trapped in the supply chain with frictionless payments for logistics. The Loop platform extracts data from any document type (paper, pdf, email, etc) across data sources to centralize premium shipment data and so invoices and payments can be cleared in close to real-time. The result is lower transportation costs, better financial decisions, and ultimately stronger relationships amongst shippers, carriers, and brokers. The Loop vision is clear: build the modern payment rails for the supply chain to lower costs for consumers.

First-Order, Critical Software

The Freight Audit & Pay system serves as a crucial entry point for Loop by providing premium data and automation to both shippers and third-party logistics companies’ accounts payable processes. Their domain-drive AI directly impacts a customer’s bottom line, making it an essential tool for their operations. Most importantly, it contains a treasure trove of shipment data, information that Loop can leverage for its future product rollouts, such as dynamic discounting and supporting ocean shipment . Once customers become accustomed to Loop’s products, data, and automation, it becomes very difficult to switch to another solution. For competitors to win over Loop’s customers, they would need to convince them that they can save more money while charging less, an incredibly challenging task when an established solution is already in place. Additionally, freight audit is a highly complex system that becomes incrementally more automated and accurate over time, resulting in substantial cost savings for both brokers and shippers.

Strong Network Effects

Loop’s tech-first approach drives network effects that make its platform incrementally more automated and reliable with each new customer. There is no industry-standard invoice layout, and each carrier has a unique way of submitting invoices including email, paper, and fax. Loop utilized a data-first approach whereby creating carrier profiles enables them to audit a carrier’s invoice with incremental accuracy over time. For example, if Shipper A works with the same truck driver as Shipper B, Loop will require less, or zero, time training its algorithms for invoice accuracy since they have already documented this carrier.

The Right Team to Back

This phrase gets thrown around quite loosely in our world, but after spending the past two years with Matt and Shaosu, we are convinced this is truly the case with Loop. Matt and Shaosu come from Uber Freight where they experienced invoicing problems firsthand and set out to solve them. In addition to possessing relevant operational experience, Loop’s deep industry relationships provide them with unparalleled access to some of the largest logistics businesses in the U.S., including companies like J.P. Morgan Chase, Great Dane, and GILLIG. This has given Loop an “unfair advantage” in building enterprise-grade software and has enabled them to continue to win market share.

We are excited partner with the Loop team as they continue to bring meaningful change and improvement to our supply chain.