As many as 20 percent of transportation invoices contain rate errors, which often leads shippers to leave money on the table and deplete their working capital. This means the end consumer often pays more for goods, according to Loop co-founder Matt McKinney.
This conundrum is what led McKinney to start the AI-based supply chain auditing platform in 2021 alongside co-founder and fellow Uber Freight alum Shaosu Liu. They built the platform to simplify the payment of complex trucking freight bills that are often recorded by hand and poorly audited.
Related Stories
During their stint at Uber Freight, McKinney said he and Liu noticed a common problem in the logistics payment process—many invoice costs didn’t match the expected contract cost due to discrepancies. These errors, which legacy auditors often miss, meant companies would end up paying more in their bill than what was stated in their contract. Plus, it often would take an average of 50 days to process and pay a single invoice.
In founding Loop, McKinney wanted to reduce shippers’, brokers’ and 3PLs’ reliance on the manual processes that record shipping documents, like invoices, bills of lading and delivery receipts. The solution is built to centralize all shipment invoice data across documents.
“When we were at Uber, we realized it was fundamentally a data problem,” McKinney said. “You’ve got this messy unstructured data—CSV files, invoices, PDFs, photos of documents and EDIs—that has to be structured into a unified data format if you want to automate downstream workflows, like audit and payment, and all of the insight to gather on top of it.”
Used by digital freight networks Convoy and Loadsmart and global shippers including semi-trailer manufacturer Great Dane, Loop’s AI-based technology platform goes beyond assisting users in linking disparate documents. The platform’s “transportation spend intelligence” is designed to understand patterns and issues that can also help discover the root cause of billing discrepancies and even assist in contract renegotiations.
Loop can accelerate the movement of money between shippers, carriers and brokers by improving cost visibility, with the technology identifying factors such as the carrier with the most corrected invoices, the costliest bill of lading labeling error and the carrier with the best rates.
Although McKinney hasn’t revealed which retailers uses Loop, he said the firm targets DTC brands and big-box retailers alike.
The co-founder shared one example of a client that processed all of its transportation invoices manually prior to working with Loop.
“They were cutting paper checks for these [invoices]. It took a lot of people in the process, it was slow and inefficient and they were leaving a lot of money on the table,” said McKinney. “With Loop, we were able to get them to 99 percent automated—they’re still going to touch 1 percent of those invoices—and then transition them to electronic payment methods. They reduced their transportation spend by 5 percent globally, which is a big deal.”
Year to date, the company’s customers have booked $3 billion in total payment volume, a fixed percentage of which goes to Loop as revenue. Via a tiered, consumption-based pricing model, the more a customer uses the product, the lower the percentage they pay.
On Oct. 3, Loop announced a $35 million Series B funding round co-led by J.P. Morgan Growth Equity Partners and Index Ventures. It will use the raise to expand its audit and payment capabilities beyond the trucking side of logistics into ocean freight and air freight.
“This is something that all of our shippers have been knocking on our door about,” McKinney said, also acknowledging that the company will expand its offerings to service more 3PL players.
As the company scales, it relies on talent with a keen understanding of both data science and the current issues facing the supply chain today. Seventy-five percent of the staff at Loop work in product and engineering, with approximately half of the company’s more than 40 employees having worked at either Uber or Flexport in the past.
Loop plans to introduce a new working capital product “that enables shippers to pay their carriers faster, while not divorcing from their funds” amid higher interest rates and higher inventories.
Loop is also partnering with additional regional parcel carriers as more retailers try to diversify their last-mile delivery capabilities in the wake of the contentious UPS labor contract negotiations.
