Trella co-founder Omar Hagrass offers his insight on MENAP freight market

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Founded just a few years ago, Egypt-based Trella has become the fastest growing digital freight marketplace in the MENAP region. Last year, the company attracted $42 million in investment, some of which came courtesy of Danish shipping giant Maersk. With the ambitious business now operating in Egypt, Saudi Arabia, Pakistan and the UAE, and with plans to expand, we took the opportunity to speak with Trella co-founder Omar Hagrass.

In this Trans.INFO exclusive, Omar shares his thoughts on the ins and outs of the MENAP freight market, as well as Trella’s plans for future growth.

Hi Omar, thanks for talking to us at Trans.INFO. You set up Trella in Egypt 3 years ago, since then the company has expanded to another 3 countries, attracted $42 million in Series A funding, and established a partnership with ExxonMobil. How have the last three years been for you and the business, and what are your growth plans for Trella?

Since 2019, Trella has grown rapidly and remains just as committed to our mission of moving economies forward. We are proud to be the fastest growing digital freight marketplace in MENAP and during February we celebrated our third year of operations.

The progress to date has been hugely rewarding. With operations in Egypt, Saudi Arabia, Pakistan and the UAE, we have successfully cemented our position as the regional market leader – and a direct contributor to the region’s economic growth. The economic prosperity of countries is proven to be linked to logistics competency – so we are delighted to help these economies grow via a more efficient transportation of goods. The growth of economies directly empowers communities and citizens, ensuring the maximum impact of our expanding operations.

Our growth required us to increase our headcount to +400 and have 15,000+ carrier partners and 350+ shipper partners including blue-chip brands such as Coca-Cola, Maersk, Mondi, Henkel, Orascom and Cemex.

Our future growth plans anticipate multiple new market entries in the GCC and potential M&A activity, as we seek to consolidate the wider value chain.

At Trella, we are very excited to be at the next frontier of delivering efficiency for trucking.

As it stands, Trella operates in Egypt, Saudi Arabia, Pakistan and the United Arab Emirates. Although there are some cultural similarities these nations share, no doubt the way of doing business, the regulations and the infrastructure available may be noticeably different. What challenges did you encounter when expanding to those other markets?

Trella sees three key differences between emerging and developed markets, which are focused on technology maturity, level of supply fragmentation, and regulations and infrastructure.

  1. Developed markets are more receptive to automation and tech solutions due to better education, and technology familiarity. This level of sophistication in developed markets requires a different level of technology maturity, and patience will be low.
  2. Supply fragmentation is clear and well-defined in developed markets, compared to the complexity of emerging markets. Emerging markets generally seem to be highly fragmented; this complexity and level of fragmentation forces Trella to alter its supply strategy accordingly.
  3. Emerging markets lack the consistency, transparency, and sophistication of developed markets with regards to infrastructure and regulations. This means that standardization is extremely difficult. As such, we must find the balance between product customization and streamlining processes.
  4. Ultimately, introducing a tech play in the trucking space is hard – in particular, in emerging markets. However, it is within these challenges that lies great opportunity, and the value of our model is over-indexed in emerging markets compared to developed, and we choose to have as bigger impact as possible.
  5. Technology: In emerging markets we’ve seen some resistance from our supply base when it comes to using our application. This is due to a multitude of reasons, but education and familiarity with technology seem to be key drivers. For instance, many drivers can’t read and write, making onboarding challenging. The low level of education doesn’t equip drivers with the tools to acknowledge the importance and power of the application operationally. This poses an opportunity when compared to developed markets, but ultimately means trying to eliminate manual communication between our team and carriers to achieve scalability is hard. Moreover, the lower social class is usually the hardest to try to convince them to change the system they have been working with over the last decades. As a result, we have been devising creative solutions to leverage our product and demand to get the supply base on our systems.

In Egypt, we launched financial visibility features for carriers to see how much they made with Trella and how much they are owed. This immediately drove a spike in adoption. Carriers like the simplicity and visibility that had never been provided to them before.

In Egypt and Saudi, we have been focusing on carrier engagement using consistency of demand as our key retention strategy. By becoming the main source of demand for our supply base, we start to gain their trust, which has consequently enhanced our adoption numbers and improved our processes. For example, many carriers would only accept cash payments when they first started with us. Now, after trusting us and getting constant demand through our platform, they have agreed to bank transfers.

  1. Supply Fragmentation: In general, the level of fragmentation can be seen to be correlated with the level of “development” of specific markets. This hypothesis is validated by our understanding of Saudi, Pakistan and Egypt, where fragmentation is higher in Egypt and Pakistan compared to the more developed emerging economy of Saudi Arabia. Understanding the level to which the supply base is segregated in emerging markets is very important as our supply strategy shifts based on these different dynamics.

For example, in markets with high fragmentation there are many IOs that move together under one leader. Thus, we started addressing that leader, the “IO Champion”, as a fleet partner, giving them access to allocate drivers and be responsible for their communication with Trella. This has greatly reduced our onboarding effort, improved collection of PODs, and enabled the easier distribution of payments.

Regulation and infrastructure: The infrastructure and regulations of emerging markets, when compared to developed markets, are unorganized, bureaucratic and inefficient. For instance Egyptian payment systems for carriers are complex and confusing. Carriers pass by a checkpoint to weigh and assess the weight and commodity of cargo carried, and are then charged accordingly. However, as there is no clear rubric or process, the same cargo and weight can be charged different amounts from two different officers. Trying to incorporate such differences into one’s application is extremely challenging. Thus, on the path towards standardization, we need to also accommodate for the reality on the ground to have any kind of success.

In Egypt and Saudi Arabia, we built features on our product to accommodate the different dynamics of payments for carriers. We have fields for all specific extra charges and force carriers to upload supporting documents to verify such costs. We are also working towards having a software that analyzes the information on these documents and verify against the information input by the carrier so we can automate and eliminate any manual interactions.

Last summer it was reported that you had 15,000 carriers using your platform. How have the numbers grown since then, and what kind of difficulties do freight marketplaces such as Trella face when trying to get carriers onboard?

So far, Trella has +33,000 registered carriers on its platform. When acquiring carriers, there are two challenges that can arise: a) market characteristics (e.g. over or under supplied) and b) carriers tech adoption (migrate the industry from offline to online systems).

Given the road-freight market is greatly oversupplied, Trella’s Carrier Qualification team has the opportunity to pick and choose the carriers that best fit the company’s vision and mission.

To mitigate risks, as a carrier sign-ups and creates their Trella Account, they need to accept all terms and conditions to proceed. During the onboarding process, Trella’s team offers proactive support throughout and delivers a high quality of service.

In an article published last autumn, you talked about how waits for backloads in countries like Sudan can make international truck transport in Africa more expensive than it is in Europe. Do you feel the digital infrastructure in countries such as Sudan is sufficient for the likes of Trella to be able to offer solutions to this problem?

The need for Trella in markets with a comparably lower digital infrastructure is far greater than ones with an established infrastructure. As long as there are laptops or mobiles in the hands of shippers and carriers, Trella can operate. With smartphone penetration hovering at 80% as of 2020, Sudan is most definitely a market with the potential to support and be supported by Trella.

Last summer’s Series A funding round saw Maersk as one of the key investors. At what point do you foresee Trella embarking on a further series funding round?

In June 2021, we completed a $42 million funding round, comprising $30 million in new equity and $12 million debt facilities. We are continuing to deploy this capital and proceeds are being invested across tech capacity, product development and operations to fuel our growth. It is ultimately helping to accelerate our journey to reduce the cost of moving goods, and solidify our position as the regional market leader.

What are the big issues carriers in the MENA region at this moment in time, and what are you at Trella working on to dry and address them?

The MENA region remains challenged by the inefficiency of its trucking and logistics industry. Trella is addressing this weakness by encouraging the increased application of modern technologies within the industry and promoting the transition into a new phase of smarter, tech-driven growth.

By connecting shippers directly with carriers, Trella’s platform is solving industry challenges such as shippers suffering unreliability, inefficiency via fragmented truck ownership, high price points and low transparency. We are promoting a more technologically-driven, advanced industry which holds the key to unlocking the huge potential of the MENAP Road Freight market – which is currently worth $50 billion.

The digitalization of trucking and logistics will naturally outpace and overcome legacy problems and behaviours will change. Decision-makers’ mindsets will evolve, digital business models will have greater acceptance, and the level of digital capabilities continue to rise. We are delighted to be leading this revolution in the trucking and logistics industry.

When writing about expansion to the Pakistan market, Trella’s Saim Chaudhary and Peter May said the company would “double down on innovation and experimentation”. What innovations have you implemented since then or are working on currently?

Due to its highly fragmented and layered market, Pakistan gave us exposure to extremely localized challenges and opportunities.

The local market is largely driven by a spot procurement model, allowing us to test the efficacy and scalability of operating a spot vertical that relies on daily repricing – a procurement model not tested before in any other market. At the same time, we have been able to unlock traceability due to the presence of agile and on ground GPS tracker providers. Such opportunistic partnerships enabled internal efficiencies and provided our shippers with visibility of their in-transit shipments. As we evolve, there will be more opportunities for innovation in the market, which we are excited to unlock over the course of this year.