Why We Invested: Axle
The ongoing COVID-19 crisis is shedding light on the fragile, interconnected nature of the global economy, perhaps nowhere as sharply as in our supply chains. Never more vital to ensuring a steady stream of supplies flowing across the country, small freight intermediaries and logistics companies are facing not only the typical challenges endemic to small businesses but also existential threats caused by payment delays during the pandemic.
Carriers are working harder than ever. Recently, the US Federal Government approved waivers to allow truckers to work longer hours to transfer supplies, like masks, ventilators and food. With dramatically decreased air freight, truckers are shouldering a larger burden to transmit goods from ports across national commercial corridors.
Against this backdrop, we’re thrilled to announce our investment in Axle Payments. Bharath Krishnamoorthy, Shawn Vo and the team have built an integrated digital payments, collections and invoice factoring solution for small freight intermediaries and carriers — who often run into severe cash flow problems because they lack access to bank financing and face unfavorable trade terms. This can hinder their growth and threaten their financial viability. This is even more extreme in the current climate.
Axle provides an automated back office solution, allowing those involved in the brokering to manage all their invoices in one place — and digitally pay carriers and collect from shippers. They also have the option to factor any of their outstanding invoices, enabling them to pay carriers within 24 hours, rather than the weeks it can take shippers to pay.
Startups in the trade finance and logistics space are innovating and digitalizing global trade massively. This, together with the growing shortage of truck drivers, has put pressure on traditional freight brokers to offer carriers a better digital solution, including quick and seamless payment. By partnering with smaller freight intermediaries, Axle seeks to help carriers streamline their back office processes and improve their cash flow management. This is essential to attract and retain the best carriers.
The COVID-19 crisis has posed far more questions than we have answers. Shippers are facing enormous challenges as the health crisis bleeds into a broader economic crisis, with people buying far fewer goods. As economic strain creates uncertainty about corporate and consumer buying habits, the need for consistent supply chain financing will be even more acute.
Invoice factoring isn’t a new product, while the market for intermediaries, shippers and carriers is as sizable as it is established. The Axle team has admirable experience in this market, a novel distribution strategy and an ambitious aim to become a global digital financing platform, accessible at various nodes in the value chain. We’re thrilled to support Axle on this journey!
