Meet Cargonexx: The German online logistics scaleup which uses AI to reduce empty runs and CO2 emissions

With a new EIT Digital Challenge edition just around the corner, we get in touch with past winners that have since made it big. In their answers to our 5 questions, the CEO’s of Europe’s most innovative startups tell us what the startup life has brought them, and where the future will bring them. Today: Rolf-Dieter Lafrenz, CEO of Cargonexx, about expanding throughout Europe, new funding, partying and winning the EIT Digital Challenge.

Optimizing transport, reducing CO2 emissions

Hamburg-based startup Cargonexx has set out to become the largest truck transport network in Europe. By connecting shippers and transporters and using machine learning algorithms and deep neural networks they are able to combine shipments and tours in advance. This not only makes trucking cheaper and more efficient for all involved. It also greatly reduces empty runs, which means less traffic and less greenhouse gas emissions. Up until last year, Cargonexx raised $6 million from private investors and won numerous prestigious awards all over Europe, besides the 2018 EIT Digital Challenge. Their CEO is Rolf-Dieter Lafrenz.

What is your start-up story: how did it all start, interesting facts about the early years?

“When I founded Cargonexx, I had no logistics experience whatsoever. My background is in the media industry. In the last 15 years I have experienced how new technologies changed the media markets. I have seen how powerful they can be and how fundamentally markets can change. Then I happened to know the trucking market. It was pure coincidence, but I saw the opportunity right away. It is a huge opportunity because it is a huge market. I was sure that this is a once-in-a-lifetime choice, so I did not hesitate to take it.”

” I called some freight forwarding companies and explained my plan. They all told me that it would not work. It was really frustrating. But then I thought, if Google had called the newspapers and had explained their plan about programmatic advertising, what would the newspapers have answered? And programmatic advertising now has a market share of 30 percent. I think that we will see the same shifts in the trucking market. But when I started there was no evidence and no market proof. It was just a personal conviction.”

What do you consider to be your greatest achievement so far and how did you achieve it? What about the hurdles you encountered?

“Well, it is not so easy to set up a company out of nothing. Every single process is new, every employee is new. Sometimes it felt like we made every possible mistake because you start at the top of the learning curve with every subject. In the end however, a company is successful if it has satisfied customers. We are now working with some of the greatest companies in Europe. These are leading consumer goods manufacturers, industrial groups, retail chains and freight forwarders. I am very proud that we have won these customers and that they are happy with our service.”

“On the other side of our business model, we partner with transportation companies. More than 8.000 transportation companies have already registered with Cargonexx. Every week, 100 to 150 new companies join our service. In our last customer satisfaction survey, the transportation companies gave us a score of 9,5 points out of 10. This is a very good feeling. But maybe the biggest achievement is to create a team that works with great enthusiasm, even under pressure. Because the startup-life means hard work and renouncing many amenities. But we also party a lot.”

What has been the greatest advice anyone has given you since starting your company and why is this such great advice, what did you do with it?

“Persevere. There will be many setbacks and you need to hold out and survive. Believe in your vision and focus on execution. In the end, it is the execution that matters. As a founder, you must constantly review your value for the company. It is an illusion that you are the best man or woman in every stage of the company. Maybe you are a good strategist but a poor executioner. Or you are a technological genius but a bad salesman. Or the other way around. In the last three years, I have redefined my role at least two times. And who knows what is about to come?”

What did winning the EIT Digital Challenge mean for your company?

“First, it is a great confirmation for our team that we are on the right track. More important will be the assistance to expand on a European level. It is very hard for a startup to conquer new countries outside the home market. An international network and sales support can be very valuable.”

What are your plans for the future? Are you looking for external funding? Any news coming up?

“The trucking industry is one of the biggest markets in our economy. The market volume is about 370 billion Euro in Europe alone. This is why we focus on customer satisfaction, technology and operational excellence. Our goal is to build a scalable organisation in trucking because there is virtually no market limits for us. We have tripled our transport volume last year and we continue to grow at the same pace. As we are heavily investing in sales and technology, we will have constant funding rounds. The new money will allow us to expand in France, Spain and Italy as our anchor markets outside Germany.”

Apply now for the next EIT Digital Challenge

If you think your business has got what it to make its mark in a billion dollar market as Cargonexx, you can still sign up for the EIT Digital Challenge 2019. Deep tech startups from all over Europe will compete in different categories and pitch their business to win money and a years’ worth of support from Europe’s leading accelerator. Sounds good? Check out the application criteria and apply now, registration closes on June 14th.

This article is produced in collaboration with EIT Digital. Read more about our partnering opportunities.