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Full Truck Alliance: Revolutionizing China’s Massive Logistics Sector

Gene Frantz & Chengpeng Mou
21 Jun 2021
Full Truck Alliance: Revolutionizing China’s Massive Logistics Sector

Congratulations to Zhang Hui and the entire Full Truck Alliance team on becoming a publicly traded company on the NYSE! We’re honored to be your partners on this journey and can’t wait to see what you accomplish next.

By CapitalG investors Gene Frantz and Chengpeng Mou

We first met the Full Truck Alliance (FTA) team on a winter trip to Guiyang in the southwest of China back in February of 2018. The conversations started at 8 am and lasted into the wee hours of the next morning. We were jet lagged, cold (despite the snow outside, the hotel where we were meeting had no heat!) and exhausted after 10+ hours of back-to-back meetings, but it was clear to us from that memorable first encounter that we were onto something truly special.

FTA was formed in 2017 by the merger of two freight matching platforms, Huochebang (HCB) and Yunmanman (YMM). When we invested, the merger had just closed, and their monetization model, which involved FTA acting as a broker between shippers and truckers, had only launched a month earlier. There was no revenue of note, and uncertainties abounded, but we were inspired by the team’s bold vision to revolutionize China’s long-haul trucking market, as well as their track record of impeccable execution.

China’s $800B trucking markets were highly fragmented among SMB shippers and owner-operator truckers. The system was overly complex and inefficient. Shipments were arranged on-demand, and information flow was asymmetric. Matching shippers to truckers was an exceedingly manual, cumbersome and time-consuming process that took place in remote logistics parks 30 miles outside of the closest cities. Shippers would spend days finding a trucker and had to wade through layers of middlemen to enter into a contract on blind faith. Thus, transportation costs were high, truck utilization rates low, pricing opaque, and disputes all-too frequent.

FTA’s answer to these problems is a digital, AI-driven platform that matches shippers and truckers seamlessly, leveraging the proliferation of smartphones. It was an approach that perfectly matched our investment thesis. And the rest is history. Today, FTA processes $25B GMV through its platform by fulfilling 72 million orders over its 100,000+ routes. It has 1.3 million active shippers and 2.8 million active truckers who use the platform to earn a living and provide the essential logistical services that fuel China’s economy and, increasingly, the world’s as well. And FTA is just getting started.

FTA’s journey is a testament to the world-shaping tech investment opportunities that we seek at CapitalG. The entire FTA team never wavered from their bold vision, even in the early days when salespeople were physically threatened by gang members who had previously monopolized local shipping routes. That bold vision persists today, as FTA enters its next stage as a public company operating on the global stage.

Congratulations to the entire FTA team. You’ve built a platform that is valued and loved by millions of truckers and shippers. We feel so fortunate to be your partners on this journey and look forward to congratulating you on many more incredible milestones to come.

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