Deal focus: Kargo serves Indonesia’s logistics needs

Tiger Fang, CEO and co-founder of Kargo Technologies, has the distinction of being sold by Uber twice. He launched the US ride-hailing giant’s operations in Malaysia, Thailand, and Indonesia and then moved with the company to China, rolling out services in second-tier cities. In 2016, Uber sold its China operation to Didi Chuxing, so Fang returned to Indonesia as general manager. Two years later, Uber did a similar deal in Southeast Asia with Grab.

Not that he begrudges the experience. “Without the sale in China I wouldn’t have come back to Indonesia. Without the sale to Grab, I wouldn’t have had the team to build Kargo. Most of the guys came with me from Uber,” Fang says. “We were also lucky that after Grab, we had time to research. We came up with different ideas, asked which met the country’s needs, and put all that into a Venn diagram.”

The result was Indonesia’s only pure online marketplace for the trucking industry, a platform that matches small-scale transporters with fast-moving consumer goods and e-commerce shipments. In less than two years, Kargo has accumulated 50,000 trucks and 6,000 active shippers. The company recently raised IDR504 billion ($31 million) in Series A funding led by Tenaya Capital. Amatil X Indonesia – the VC arm of Coca-Cola’s joint venture in Indonesia – was among the other participants.

Coca-Cola was a customer before it became an investor. “They see the value of a platform like ours that has scale and can digitize their operation and reduce their logistics costs. We were their trucking supplier first and that evolved into us managing a large portion of their routes,” Fang says.

On a macro level, the Indonesia logistics opportunity isn’t a hard sell. Logistics spending is equivalent to 25% of GDP and Kargo estimates that trucking accounts for $50 billion a year. More than seven million trucks were sold in the country over the past 10 years and they tend to be owned by individuals or companies with fewer than 10 vehicles.

“These guys are hyperlocal. When we started our website, we were the only one with national coverage and we filter down to truck drivers and cargo holders,” observes Fang. “Trucking reminds me of Uber in its early stages. We would have conversations with car rental companies and drivers that didn’t have smart phones and couldn’t navigate our software.”

Fang has ambitious growth plans, but the immediate priority is survival. The Ramadan period normally sees a spike in volume – Kargo’s monthly shipments would rise from a couple of thousand to tens of thousands – but this hasn’t come due to COVID-19. The company is now focused on transporting consumer staples such as water, rice, and cooking oil, while providing financial support to drivers hurt by customers delaying payments.

“Before this, we were looking at horizontal and vertical expansion,” says Fang. “Now, it is hard to say what the third quarter will look like.”

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• Topics
• Southeast Asia
• Technology
• Indonesia
• Tenaya Capital
• Logistics
• Transportation
• TMT