Kargo cuts out middleman to simplify goods transport

Kargo, a Yangon-based start-up founded by Australian Alexander Wicks in September 2016, is out to simplify a fragmented transport and logistics market and an opaque pricing structure for transporting goods in Myanmar.

The company, which aims to directly link transport and logistics firms with customers, received US$800,000 in pre-Series A funding from Singapore-based Cocoon Capital and two angel investors in early May.

Starting with a website and then setting up a smartphone application at the end of 2017, Kargo cuts out the middleman by directly connecting companies that want to move goods with trucking firms.

The app also allows customers to track goods while they’re being transported. All goods are insured by Kargo up to US$100,000 (K151.3 million).

Kargo does not take a commission from the trucking firms or drivers, instead taking a 5 percent to 10pc commission from the customer, depending on the type of goods they ship and their location. This ensures that the trucking firms get better margins.

The going has not been easy, admitted Kargo’s CEO Wicks, who used to work in online marketing and designing websites for small businesses. The company initially signed up with Phandiyar, a tech accelerator for Myanmar start-ups, before opting out.

He said the country’s fragmented transport and logistics market, the use of cash for transactions, and reluctance to adopt technology continue to be problems for the company.

To persuade owners of trucking firms and their drivers to use the Kargo app, Wicks and his team had to find out what was happening on the ground. “It’s quite a challenge to change the mindset of drivers and persuade them to use our platform,” Wicks said.

First unsecured SME loan

Evidently, some people in the country have taken notice. Getting a loan to grow a business can be notoriously difficult in Myanmar, as small-and-medium enterprises (SMEs) can attest, but Kargo managed to clinch a K200-million loan from Yoma Bank before getting funding from Cocoon Capital.

“This is the first unsecured SME loan in the country. This is fantastic, as we are using the money to finance our daily operations. We need to pay our truck drivers daily, whereas our payment terms (from customers transporting goods) are 60 days,” Wicks said.

Its potential remains largely untapped, although Kargo has managed to connect some 2300 drivers and their trucks with companies that have goods to be transported.

Wicks said that during the peak transportation season from October to April, the company faces a shortage of drivers and trucks. Myanmar’s location at the crossroads of China, India and Southeast Asia ensures that overland transportation opportunities abound.

Wicks envisions expanding Kargo’s reach to the overland border trade. “In the next 12 to 15 months we want to build up the team and fleet to expand the overland trade with China and Thailand,” he said.

“We have grown rapidly in the past six months and will continue to grow for the rest of the year. We are positive about the future of transportation in this country and hope the government will support the industry’s growth,” Wicks said.

Kargo, which won the Seedstars Yangon award in 2017, a global start-up competition for emerging markets, received funding from Singapore-based Seed Myanmar, and another six-digit amount in US dollars from the GSMA Ecosystem Accelerator Innovation Fund.

Source: Myanmar Times

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