Logistics and analytics startup FreightWaves is ready to make sustainability an integral part of the transportation industry.
“Shippers already think about cost, transit times, and service levels when they’re designing their supply chains. We want to make carbon the fourth variable,” Craig Fuller, Chief Executive Officer & Founder of Chattanooga-based FreightWaves, told Hypepotamus.
FreightWaves Carbon Intelligence (FCI) platform is a new way for companies to track and analyze emissions. The first version of Carbon Intelligence is designed to bring relevant data to enterprise shippers, which are often under pressure from regulatory agencies, consumers, the media, and ESG (Environmental, Social, and Corporate Governance)-focused investors to reduce carbon emissions.
“The main issue was that in transportation markets, relevant carbon footprint data hasn’t been aligned with incentives to reduce emissions. Trucking carriers know their fuel consumption and fuel economy and can easily calculate their emissions, but they have little incentive to cut their emissions,” said Fuller. “For a trucking carrier, that might mean something like ‘drive fewer miles’ — at least until electric and hydrogen infrastructure is built out — which is completely antithetical to its revenue model where it gets paid by the loaded mile.”
The problem to date has been if companies rely on third-party logistics providers, they “don’t really have much visibility into their transportation networks,” Fuller added. “If they use third-party logistics providers, they often don’t even necessarily know who the trucking companies moving their freight are. Beyond that, they have very little insight into the driver behavior, technology, or vehicle specifications the carriers are running.”
To bring transparency to the space, FCI first ingests shipper data from ports to manufacturing plants to distribution centers.
“We get all of those shipments, including distance, weight, mode, etc, and we apply well-accepted emissions intensity factors from the EPA (for North American shipments) to calculate the carbon emissions based on that. We’re currently building the capability to show the impact to carbon emissions of, for instance, using one port of entry instead of another, or growing sales in a specific region, or slowing down shipment velocity by using the railroads, placing a distribution center in one location instead of another, and potentially even suggesting how some smaller shipments, based on commodity type and weight, might be combined into a single truckload move,” said Fuller.
New Funding in Supply Chain Space
The FreightWaves team just announced a $16 million private equity raise, led by Palo Alto-based Triangle Peak Partners. Additional participation included 8VC (part of FreightWaves’ Series A in 2018), Hearst Ventures, Prologis Ventures, Rise of the Rest fund, Fontinalis, and Kayne Partners, and Erik Levy (Group Head of Corporate Development for DMGT, the parent company of the Daily Mail Group).
The funding comes after a $30 million raise from Kayne Partners in the summer of 2020.
“We still have all of the capital we raised from Kayne last summer on our balance sheet,” Fuller added in a statement. “We finished 2020 much better financially than forecasted, dramatically improving our burn rate and we’re already seeing greater acceleration to date in 2021. This additional capital will help us speed investment in the FreightWaves Carbon Intelligence platform while maintaining a very strong balance sheet for opportunistic investments such as acquisitions and product development.”
FCI is part of a larger movement to make the transportation industry greener. “There’s also a lot of interest and investment in alternative fuels and alternative energy sources, but some of that is still nascent,” Fuller added. “There’s probably more interest and commitment on the shipper/customer side of the marketplace, but once the first carriers figure out how to help their customers achieve carbon neutrality, we think it will spread quickly. And we’ll be fueling that adoption with a SaaS-based product.”