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According to a report by Transparency Market Research, the global logistics market is expected to grow 7.5% annually from $8.1 trillion in 2015 to $15.5 trillion by 2023. The report believes that roadways will continue to be the most favored mode of logistic transport in terms of revenues. In recent years, China has been the biggest contributor to growth due to the growing presence of a large manufacturing base. A separate report pegs the Chinese logistics industry to be worth $1.6 trillion in 2016. That has spurred the entry of Truck Alliance Inc., known in China as Huochebang, to become the latest Billion Dollar Unicorn entrant in the region.

Huochebang’s Offerings

Huochebang was founded in 2008 by Wenjian Dai under the name Guiyang Huochebang Technology Co Ltd. It is headquartered in Guiyang in Guizhou province. Huochebang is known as the “Uber of trucking”. It is an online platform that connects cargo shippers with truck drivers for shipping. It helps build efficiency in the logistics market as shippers are able to find trucks that have spare capacity, thus increasing utilization for trucks and lowering costs for transportation. It also provides additional services to truck drivers such as helping them identify available parking lots in the area, selling toll cards, and helping with financing options.

The service has been received well in the country primarily because more than 90% of the country’s trucks are owned by individuals. The service has helped bring a good number of them under a single umbrella. It claims that more than 2.3 million truckers use the platform and about 100,000 orders are processed daily. It processes almost $120 million in shipping fees on a daily basis. Additionally, the company operates about 1,000 offline service centers for the trucks.

Huochebang is also expanding beyond China. Last year it was targeting expansion in South East Asian countries including Vietnam, Thailand, and Myanmar. The expansion will begin with the launch of local language smartphone apps. Huochebang is also improving its presence in the US where it plans to set up a research and development center this year to focus on the industrial design of new energy trucks.

Huochebang’s Financials

While Huochebang may be similar to ride sharing services, it differs significantly in its business model. It does not take a commission from every shipment booked through the application. Instead, it charges money through the sale of additional services such as sales of toll cards, card top-ups, and financing for trucks. It is privately held and does not disclose any financial information.

Huochebang is privately held and has raised $150 million in four rounds so far. Its investors include names like All-Stars Investment, DCM Ventures, Genesis Capital, Hillhouse Capital Group, IFC Venture Capital Group, Tencent Holdings, and Zhongding Power. Its last round of funding was held in December 2016 when it raised $115 million in a round led by All-Stars Investment that valued it at $1 billion. Prior to this round, it had raised $35 million from Genesis Capital earlier in 2016 at an undisclosed valuation.

Huochebang competes against trying to minimize the amount of time that cargo-haulers stand empty. Its investors Tencent is optimistic about the prospects of integrating the logistics industry with th200 rival applications e internet and will help build the startup’s computing and big data platform.

However, I would like to point out that experimenting using VC money doesn’t really work, and such high valuations are unwarranted.