In Africa and the Middle East, most companies in the freight industry still use old-fashioned methods such as spreadsheets, phone calls and emails to manage their shipments. They are electronic yet manual processes that make their work very inefficient.
While incumbents have pioneered various enterprise resource planning (ERP) systems to digitize these processes, companies would still get four to five different software platforms to complete multiple tasks.
Ideally, stakeholders in this industry — from manufacturers and distributors to retailers and logistics providers — require a single software that connects them with their entire shipping ecosystem, therefore cutting time and cost.
Freterium, a startup based in Morocco, is one such company providing this software, and it has raised $4 million in seed to scale across the country and into surrounding regions.
San Fransisco-based investor Partech led the round. CDG Invest, Y Combinator, Flexport, Swiss Founders Fund, Outlierz Ventures, and a few angel investors from the U.S., Europe, Asia, and Africa participated.
There are other companies addressing various issues within the MENA’s freight and logistics space, particularly Egypt. Some are marketplaces or brokerage platforms connecting shippers with trucks, such as Trella. Others like ShipBlu and Flextock play in the e-commerce fulfillment segment and cater to last-mile and warehousing needs. But SaaS solutions to manage the flow of these shipments, collaborate internally with different departments within the company such as sales, customer service, finance and accounting, and aggregate data from multiple ERP systems are few and far between.
And that’s what Freterium, a YC-backed startup launched in 2020, is trying to build: a holistic approach to solving critical backend challenges of the freight industry.
“We’re building a logistics operating system to allow the shippers, our customers to manage all of their domestic shipments on a single interface. So we connect organizations, people and technologies across the entire logistics value chain,” said CEO Mehdi Cherif Alami.
“And our main product is transport management software for shippers enables multi-enterprise collaboration. But also, very importantly, it’s platform-agnostic. So we are a neutral software that plays nice with everyone. We’re kind of the Switzerland of logistics, in that sense.”
Alami and CPO Omar El Kouhene previously worked in consulting and logistics for companies like McKinsey, PwC, OCP Group and Strategy& (formerly Booz & Company) across Africa and the Middle East. According to Alami, the company’s Transport Management Software allows companies in the freight industry to manage shipments from the port to the factory, then products from the factory to the warehouses, B2B customers and eventually end customers.
Here’s an illustration of how the company’s software works: Say you order a TV from an electronic appliances retailer with Freterium software integrated into its e-commerce website. The software informs the customer when they will receive the TV on behalf of Freterium. But behind the scenes, the software helps the retailer check many moving pieces to ensure that the delivery is carried out optimally. Some of the parameters it studies involve the availability of vans, the best route to reach the customer, and comparing cheaper and more efficient options between using an in-house or third-party courier.
Beyond the planning part, Freterium software helps with the execution and monitoring by sharing the shipment information with parties involved in the transaction. And after the package has been delivered, retailers can control invoices from the delivery providers, analyze the performance and quality of service, and get insights on inefficiencies within their organization.
In its first full year since launch, Freterium onboarded more than 20 enterprise customers, growing 35% month over month, according to the CEO. More than 3,000 users also utilize its software.
While incumbents have high implementation costs and long installation periods, which can span months, Freeterium claims merchants can install its platform in under a week with no upfront costs. Upon installation, enterprise customers pay between $100 to $1,000 a month, depending on their size.
“We have been looking closely at the freight trucking market in Africa and the Middle East for the past five years, a market worth $250 billion. 85% of the volume is carried through established legacy partnerships between shippers and carriers and still run with manual, inefficient tools,” Partech general partner Cyril Collon said about the investment.
“Freterium has built a holistic approach to solving the key challenges of the industry and we are excited to support them in their mission to empower manufacturers, retailers and logistics teams across Africa.”
The round makes Freterium one of the most-funded startups in the emerging Moroccan ecosystem. Only B2B e-commerce startup Chari and proptech Mubawab has raised more recently.
Alami said the funds will be used to invest in the company’s R&D, hire more talent to double the current size of its team within the next 12 months, market its software, and expand across Egypt, Saudi Arabia and the UAE.
IMAGE SOURCE: Freterium