Chinese truck-hailing startup Full Truck Alliance files for $1.5b US listing

Truck-hailing platform Full Truck Logistics, known as Manbang in China, filed for an IPO on the New York Stock Exchange on Thursday without disclosing details about the size of the offering. CNBC reported earlier this month that the startup could raise around US$1.5 billion, citing a source with knowledge of the matter.

The Manbang team/ Photo credit: Manbang

Manbang was created in 2017 after the merger of the logistics firms Yunmanman and Huochebang. Both companies had provided freight listing services through QQ and WeChat groups — a first step toward the digital transformation of the industry — and then launched mobile apps in 2013 and 2014, respectively.

Typically, it would take days for shippers to locate a trucking firm or a driver as they go through multiple layers of middlemen, while truckers would spend a similarly long time securing their next shipment. The matching usually takes place in logistics parks where “shipping orders are written on blackboards in a disorganized manner, with most of the negotiation process conducted over the phone or in person,” according to Manbang’s prospectus.

Manbang claims to be the world’s largest digital freight platform. It spans more than 300 cities and operates in over 100,000 routes in China. The company logged 173.8 billion yuan (US$26.6 billion) in gross transaction value in 2020, according to its filing, which cites data about industry players compiled by China Insights Consultancy (CIC).

By the end of last year, 2.8 million truckers were registered on Manbang, and in December, 1.33 million shippers posted orders through the company. CIC further found that approximately 20% of all heavy-duty and medium-duty truckers in China used the platform in 2020. Manbang’s competitors include Lalamove, which is also known as Huolala, and Didi Freight.

The company, which is backed by Tencent and SoftBank, says that it is still in the early stages of monetizing its online services. In 2018, it launched a membership service for frequent shippers, allowing paying customers to post more orders than non-paying users who can ship limited quantities of cargo for free. Manbang collects the difference between the shipper’s bid and a trucker’s offer. In August 2020, it began charging commission from truckers.

Based on feedback from a Manbang user, users see a higher volume of potential matches by paying extra charges. One shipper surnamed Wang told KrAsia that she had forked over 1,688 yuan in membership dues, but at times still has trouble matching with truckers, even though she knows that there are drivers who are using Manbang to find work.

The shipper also said that drivers also need to pay fees: The more they pay, the more orders become available to them. “This artificially creates a situation for drivers where there are more trucks than needed by shippers.”

There have been other hitches for users on Manbang’s platform. A driver surnamed Shi told KrAsia that in early May, he accepted an order to transport around 30 tons of watermelons from Shandong province to Xinjiang. The match involved an “information fee” of 500 yuan (US$78) and a clause stating that the shipped items would remain on the truck for one to two days after arrival. However, the shipper refused to unload the cargo well beyond the agreed period.

On the fourth day, Shi took action. “I contacted Manbang… but the system just closed the deal without offering any help to me,” he said, adding that Manbang lacked direct and quick communication channels such as a service hotline that users could call in case there are disputes. “I had no other choice but to call 110 [the police emergency line].”

Last year, the firm booked nearly 2.6 billion yuan (US$395.5 million) in revenue, slightly more than the 2.5 billion yuan (US$392.5 million) in 2019. Its net loss, however, widened to nearly 3.5 billion yuan (US$531.9 million) in 2020 from 1.5 billion yuan (US$235.4 million) a year earlier.

This article was first published on KrAsia.

*Currency converted from Chinese yuan to US dollar: US$1 = 6.37 yuan