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Here’s how Africa Chivas Regal winner EmptyTrips will disrupt logistics sector

Barely a year old, Johannesburg based online trip exchange platform EmptyTrips has been having a good year. The startup won the Africa Chivas Regal Venture Pitching Den at the SA Innovation Summit earlier this month and will represent South Africa at the 2018 Startup World Cup in San Francisco next year.

EmptyTrips will next take part in the Slush Global Impact Accelerator in Finland between 21 November and 2 December. The startup has also participated in Singularity U Global Impact Challenge where it was one of the top five finalists and in the annual Seedstars competition where it was placed third in the SA leg of the competition.

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The five-month old company aims to solve a common challenge that transport companies often face with empty return legs, by leveraging on the benefits of the shared economy. To do so the online marketplace uses algorithms and an auction system to match and connect spare capacity on vehicles to those requiring goods to be transported.

“Although exciting, trophies don’t pay bills and the venture and angel networks of South Africa have a very risk averse appetite. The incubators and accelerators can at times not be as beneficial as expected,” EmptyTrips founder and CEO Benji Coetzee told Ventureburn.

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Read more: These were 10 startups that competed in the SA finals of Seedstars World

“The Chivas Regal Venture Pitching Den had some interesting concepts and startups. Presenting was a tad challenging on the day as the technology of the venue was giving issues, yet with calm panache we had impressed the judges to win. We are very excited and hope to do the same great job in San Francisco,” said Coetzee (pictured above, right).

EmptyTrips online platform allows users to offer, find and request for empty trips

When she jets off to San Francisco in May next year for the 2018 Startup World Cup the startup stands to win $1-million in prize funding. “This would be a game changer for a small startup in Africa,” said Coetzee.

Realisation led to starting up

Coetzee decided to start the business after she noticed the number of empty trucks and railway wagons running on the Johannesburg-Durban route. This realisation coupled with complaints from clients she consulted for on how expensive transport costs were eating into their margins and the limited data available to support the investment in transport infrastructure inspired her to found the startup.

“Applying economic theory to oversupply and high costs simply did not make sense, excess supply leads to lower prices, not higher prices. This anomaly encouraged me to start working on a prototype of a smart connected platform to assist the transport industry with better utilisation, lower costs and traffic volume transparency,” said Coetzee, a former management consultant who holds several academic degrees in finance.

Algorithm behind it

So how does EmptyTrips work? Coetzee said once shippers or agents upload a request for cargo or deck capacity, an algorithm automatically matches the listed request by size, date, type of goods and area to a transporter’s listed deck space and maximum carrying capacity.

“Once matched, both the transporter and the shipper are notified and they are able to accept or decline the offer,” she said.

“The Trip Exchange offers open and closed digital auction rooms. Transporters and shippers can choose to auction their capacity or cargo to pre-selected sub-contractors or alternatively to all registered users of the marketplace for a certain period of time.

“This offers fantastic corporate governance control to limit collusion and kickbacks due to anonymity until payment,” she said, adding that the system can be used for requests for proposals too.

The company currently charges a five percent service fee off each trip it facilitates. The fee goes towards covering transaction costs for online payment. “It is free to sign-up and upon success of a trip matching or bidding we charge a set service fee of 2.5% to both parties,” she said.

Pilots planned

Coetzee said the startup has signed up over 160 companies to create capacity and demand. “We are currently setting up a number of pilots with large couriers and state-owned rail operators. In addition, we have facilitated a number of paid successful trips to date which were unexpected, yet not a number to brag about at this stage.”

She said that she has funded the company herself, bootstrapping it with consultancy fees from Seedpitch, a strategic advisory firm she consults for. “We have secured seed funding from a listed South African company, which if all goes as planned will be drawn down in October 2017,” she added.

Future Blockchain plans

Coetzee said EmptyTrips aims to move into the fintech space. “We do not aim to monetise via the trip service fees, as these cover our transaction fees for online payment, we aim to be a fintech, monetising by financial add-on services. Cargo owners or shippers can opt-in for good in transit cover digitally and instantly whereby we earn a service fee from the insurance broker,” she said.

She said she plans to also offer carbon credits for the amount of “saved” wasted space, as well as trade finance for larger cross border consignments. She is also looking into implementing the Blockchain for a secure flow of supporting documentation and to facilitate a token payment system.

EmptyTrips currently operates in South Africa and has limited cross border facilitation within the Southern African Development Community (SADC) region. “We are focused on the sub-Saharan market and we are in the process of looking for strategic partners in Africa. We want to go global,” said Coetzee.

“Creating a marketplace is not simple,” said Coetzee. She said the main challenges the startup has faced included setting up pilots and integrating with corporates. She also mentioned that a restricted marketing budget had forced the startup to be creative with its public relations strategy.

Said Coetzee: “We do have first-mover advantage and have come this far. We will keep on pioneering.”

Featured image: (From left to right) Empty Trips founder and CEO Benji Coetzee (right) pictured accepting her Chivas Regal Venture Pitching Den award (Supplied).

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