Every last mile: Why we invested in Baton
Across Europe and the US, there’s a problem with truckers. Or rather, the lack of them. You may have read about it in the press?
… about the consumers who aren’t getting their goods because there’s no-one to deliver them, or the carriers who are now so desperate that they’re offering drivers more than the average soldier or police officer gets paid.
The figures are startling. In 2018, analysts at Transport Intelligence found that just six European countries — the UK, Germany, France, Denmark, Sweden and Norway — faced a combined shortage of 127,500 drivers. Across the Atlantic, the US Government is considering allowing teenagers to haul commercial freight across state lines.
But why is this?
Why are trucking companies struggling to fill a role which offers steady work, plenty of holidays and the chance to explore the country?
Well there are the everyday challenges, such as the long hours and the time away from home. Then there’s the reputational issue, caused by an outdated but widespread belief that the trucking industry lacks diversity.
But there’s another major issue, one which rarely gets covered in the media: The difficulty that many long-haul carriers face in the first and last mile of their journeys.
When we talk about the first and last mile in a long-haul context, we’re not talking about the journeys from warehouses to individual homes, the type of journey that Amazon customers will be familiar with. We’re talking about the journeys between distribution centers and warehouses.
These ‘start and finish’ journeys might sound routine but in fact they can add hours, even days, to the journey.
Truckers coming from far-away distances are at the end of the route forced to drive through congested inner cities which they may never have visited before. The congestion means they miss their original timeslot, so they have to wait hours to drop off their load. Then they face another wait because their next assignment isn’t ready. The dwell time — the amount of time a trucker spends idle during these start-and-finish bottlenecks — can sometimes reach 12 hours.
Here’s where Baton, and it’s trucking-as-relay platform, come in.
Baton has created a series of hubs on the outskirts of Los Angeles, its first major city of operation. These hubs, known as ‘drop zones’, are strategically positioned near major transport arteries and remove the hassle of late-stage long-haul trucking in three specific steps:
- Long-haul carriers can drop off their goods at the drop zones, thereby avoiding the inner-city gridlock.
- The remainder of the journey is passed on to local drivers, who know the roads and can deliver the goods just in time, even travelling at night when routes are quieter.
- These same drivers handle the reverse journey, bringing goods from the inner-city storage hubs out to Baton’s drop zones.
This solution doesn’t just solve last-mile challenges; it avoids delays in the first mile, too. Using the Baton platform, they can ensure that when their driver arrives at the drop zone, their next load is ready to go — having been brought out by the local transporters. Baton makes sure the loads are picked up and dropped off at the drop-zone, so the carrier can focus on the long-haul part of the operation.
A huge chunk of the ‘dead time’ is thus stripped away. In fact, with Baton, the dwell time can drop to just 15 minutes.
For both short and long haul drivers, the experience is vastly improved. Long-haulers can focus on what they enjoy most about the job: getting out on the open road and eating up the miles. Short-haul truckers, on the other hand, get regular work and are home with their families every night. And, by reducing the amount of ‘stop-and-go’ traffic on urban roads, Baton helps to reduce pollution and make cities more sustainable.
This idea is perfect for Maersk Growth, as we search for startups that provide disruptive solutions to the legacy problems of logistics.
Our portfolio is made up of companies that use digital technology to connect and simplify customers’ supply chains. To take just one example, Loadsmart has created an AI platform that matches shippers with truck transportation companies to distribute demand and reduce wasted capacity.
However, few startups have previously focused on the human side of long-haul, specifically the wait times and the inefficiencies that drivers face at the start and finish. At Maersk Growth we are firm believers that truck drivers are the key players in successful logistics operations — the concept of no drivers, no deliveries. Baton’s solution syncs perfectly with this.
As soon as we saw the pitch, we could see that it benefits every single long-haul stakeholder.
Carriers and drivers benefit from less queuing and more driving; facility owners from higher throughput and better planning. Shippers get on-time-delivery and lower fees, and society receives reductions in congestion, accidents and pollution. What’s more, coming from an operator and asset-owner background, we were intrigued by Baton’s ability to find operational efficiencies and business development opportunities for its clients fueled by technology, and not just add a digital layer to an existing process.
Before investing, we spoke at length to the Baton co-founders, Nate Robert and Andrew Berberick, as well as several of their customers. While the solution clearly solved several customer pain-points — the wasted time, the churn of drivers and the difficulty in providing on-time services — what really stood out was the quality of the founding team.
As soon as we spoke with Nate and Andrew, back in March 2020, we were incredibly impressed with their dedication to problem-solving as well as their humility when approaching the market.
Since their first meeting as postgraduates at Stanford University, Nate and Andrew have worked at firms such as Bain and Accenture, and gained operational and product experience at Mindtribe and BuildZoom, before joining 8VC as Entrepreneurs in Residence. To bolster their own experience, the founders have surrounded themselves with the best possible advisors, creating a proposition which is backed by rigorous research. During their time as EiRs, they spoke to 100s of truck drivers and carriers, and they continue to study their market, looking for ways to make their offering even better.
Now, we are looking forward to applying our ‘Rocket Fuel’ to help Baton grow from a brilliant startup to a true global disruptor.
The company has already established a firm presence in Los Angeles, its nearest mega-hub, and we want to help it branch out into other U.S. cities. Our mothership, A.P. Moller-Maersk, already has a significant presence in North American logistics, with a major footprint in warehousing and distribution thanks to our recent acquisition of third-party logistics company Performance Team.
We also want to help the Baton proposition expand. Nate and Andrew have started out by tackling the challenges within full truckload transport, but we’re confident that they’ll keep expanding and address more cargo types and delivery methods. In fact, one dream of the co-founders’ is to enable the use of inner-city electric trucks and autonomous trucking between drop-zones.
So the future is exciting, not to mention sustainable.
By leveraging Maersk’s significant transport volumes, our expertise in logistics and customer relationships, and our 1.3 million square meters of facilities across North America, we are excited about the opportunity to help Baton pursue these ambitious objectives to the benefit of the wider supply chain and industry efficiencies.
