Chinese app Manbang handled US$100 billion worth of goods a year by matching shippers with truckers
- Manbang app has 6.7 million trucker users and handled about 700 billion yuan (US$101 billion) worth of goods a year
- Many truckers used to hang out for-hire signs and wait for days to get business to haul goods
It can sometimes take two days or more to get business so Zheng Xiaopan found some shade, parked his truck and made himself comfortable for the wait. A for-hire sign was his principal way of advertising his services to haul goods around China’s southeastern Guangdong province.
“There’s no knowing when my truck can be filled up,” said 26-year-old Zheng, a high-school dropout who took up one of the world’s most dangerous occupations to help pay for his sisters’ college tuition. “Not knowing how long I had to keep waiting was just as tiresome as driving.”
Then in 2016, a friend introduced Zheng to an app that matches truckers and shippers and there was no turning back. Using the app by Manbang Group, Zheng managed to cut the time that his truck remained empty by 87 per cent, increasing his overall income.
For the estimated eight million truckers in China, the advent of freight-booking apps has revolutionised the way business is done in one of the backbone trades keeping the world’s second-largest economy running.
For all of its importance to the economy, long-haul trucking in China is fragmented and inefficient, with 95 per cent of rig-drivers either self-employed or working for a small firm, according to a report by McKinsey & Co. Only one per cent of trucking companies employed more than 50 staff.
Today, more than 1.8 million registered shippers and 6.7 million truckers use the Manbang app to find and book haulage services in China. The app handled about 700 billion yuan (US$101 billion) worth of goods a year. More than 70 per cent of truckers pick up orders within the first 20 minutes of posting.
Manbang Group counts Masayoshi Son’s SoftBank Group, Alphabet’s CapitalG and state-backed China Reform Fund among its investors. The start-up, headquartered in Guizhou, one of China’s poorest provinces, was valued at US$9 billion after its latest funding round last year, according to media reports. The company was formed from a merger of arch-rivals Huochebang and Yunmanman in a marriage brokered by investors on both sides after years of intense competition.
Manbang is close to breaking even this year, after branching out into electronic toll collection, truck sales, vehicle maintenance, auto financing and insurance, according to Zhang Hui, the company’s chief executive.
“Our income comes from multiple sources,” Zhang said on the sidelines of the Guiyang Big Data Expo held at the end of May in Guizhou’s provincial capital. “Some new businesses like second-hand truck sales require continued investment, but basically there isn’t any money-bleeding unit now.”
Manbang is now focused on increasing user loyalty and there is no rush for an initial public offering or pressure to generate more revenue from its services, according to Zhang.
The company is a market leader in a logistics industry with a total value of 280 trillion yuan, according to estimates by a research institute under the Chinese Academy of Sciences.
Globally, there are a raft of start-ups that seek to be the Uber of trucking, including Seattle-based Convoy and New York-based Transfix in the US, Madrid-based OnTruck and Paris-based Convargo in Europe, and Rivigo and Blackbuck in India.
To Zhang, Manbang may draw comparisons with Uber at first glance but is in essence more like Taobao, the e-commerce marketplace of mostly retail merchants operated by Alibaba Group, which owns the Post. “Ride hailing platforms offer standardised products, while our business is more complicated,” said Zhang. “There would be bargaining between drivers and shippers, depending on market demand and supply at the time. Other price factors range from truck height and length to cleanliness of cargoes and waiting time spent on uploading and offloading.”
Algorithms and big data analysis play a decisive role in calculating the optimal pricing for non-standard services such as long-haul trucking, according to Zhang. “With truckers’ trajectory, we can roughly predict price movement in following days,” he said, adding that algorithms also enable transparency when ranking shippers and orders by detecting and preventing fraud.
Dealing with truckers and shippers also require a different strategy from that of mainstream internet services that target mostly educated users.
To sign up users in the early days of the app, the company’s operations staff would have to dress and act like truckers to fit in and not get beaten up or kicked out of the industrial estates, where they congregate, according to a Manbang staffer.
To be sure, not everyone is happy with how internet-based apps like Manbang are reshaping the industry. The company faced resistance from shipping agents who were afraid that the platform would cut out the middleman.
The merger of Huochebang and Yunmanman also meant the creation of what drivers see as a monopoly that forces them bid for freight orders at cutthroat prices, depressing their average incomes. Last year, protests by truckers broke out in cities including Shanghai and Chongqing.
Zhang, Manbang’s chief executive, said the company is only a small part of the logistics industry, much of which is still offline.
“There was a truck shortage in the early years when China’s GDP growth kept rising with a surge in demand for transport for goods,” said Zhang. “Many got into the business and some took out loans to buy trucks. But now, the industry growth has slowed down, driving down the price.”
“It’s understandable that some truckers with debt pressure are unhappy, lashing out to the platform instead of searching for other reasons,” he added.
For 57-year-old trucker Qu Bo, who signed on with the Huochebang platform in 2016, while the most profitable driving days are over, the use of the platform still outweighs the alternative.
“I still get 2 years and eight months to go [before the retirement age for truckers]”, he said. “I guess I will keep driving till the last day.”
