'Uber of trucking' unicorn in China has a very different business model than in the US

Posted by Kevin Hill on

The ‘Uber of Trucking’ in China, Houchebang, recently raised $115m for expansion.  This values the company at around $1 billion valuation. 

 Bloomberg written article: China’s Uber for Trucks Huochebang Fetches $1 Billion Valuation

Bloomberg video: China's Uber for Trucks valued at $1 billion

The key takeaways are:

  • Unlike the ‘Ubers of trucking’ in the US who are paid like brokers, Houchebang uses the Uber concept to sell service and financing agreements to its carriers. 
  • The Chinese trucking market is worth $1.6 trillion.
  • Houchebang is two years old and competes against 200 other mobile apps.
  • Chinese trucks are empty an estimated 40% of the time.
  • Houchebang processes up to $120 million dollars in shipping fees tied to its app.
  • The company also operates parking lots and service centers.

This business model is interesting because the higher margin financing products for factoring, fuel cards, and maintenance make much more sense than trying to make money on traditional brokerage fees.

It also allows a company to undercut a traditional brokerage by charging the customer a true carrier rate. 

Of course, at the end of the day only one app can be crowned the ‘Uber of trucking’.  Until someone figures out how to offer a service that no one else can replicate than it will be tough to scale up enough to dominate the market.

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