Global Trade Series: Q&A with Nuvocargo's Deepak Chhugani

Today, we kick off our Global Trade Series, where we interview founders within the QED portfolio who have created companies that are fueling this $32 trillion market by moving one of three crucial elements: goods, money and data. 

The first interview in this series is with Deepak Chhugani, founder and CEO of Nuvocargo, a company that we invested in for both the Series A and Series B rounds.  

Nuvocargo is a B2B digital freight forwarding platform designed to facilitate cross-border commerce, specifically between the U.S. and Mexico. Shippers are desperate for a smoother process, and Nuvocargo has simplified the process by bringing all stakeholders under one roof, providing end-to-end shipment management, tracking and document digitization. Nuvocargois currently embedding a number of fintech products into their platform, including carrier quick pay, trade finance and insurance and customs solutions,and continues to prove the thesis we as a firm have come to: digital freight forwarders are the central hub connecting multiple parties within the intricate web of global supply chains, giving them a unique advantage.

Read on to learn more about Nuvocargo, what the company is most excited about global trade in the coming years and the role it’ll play in the industry as it continues to grow.

1) What is it that Nuvocargo does? What is a freight forwarder and why does it need to exist? 

Most of the products you rely on every day – your television, the chair you are sitting on, your clothes, or even the car in your driveway – went through an intricate supply chain process. This process spans thousands of miles and many back and forths, before reaching you. To get to you, they were likely moved by a freight forwarder from point A, where they were ultimately manufactured, to point B, in the country where you purchased them. Components of some products, like cars, might’ve criss-crossed the border as many as eight times.

Nuvocargo is a digital freight forwarder simplifying logistics across what is the largest bi-lateral trade corridor in the world: U.S.-Mexico cross-border. And it’s growing fast, with the land port at Laredo, Texas, now becoming the largest port into the U.S., with almost $1 billion worth of products crossing through there every day.

Cross-border trade, however, is anything but straightforward, with any one movement from the U.S. to Mexico (or vice-versa), involving a dozen or more parties. This is where Nuvocargo steps in, offering simplicity and predictability from end-to-end. By acting as the coordinating entity and leveraging proprietary software, Nuvocargo streamlines transportation, customs, insurance and supply chain financing, all in one place. This all-in-one approach provides granular visibility and actionable data, radically simplifying the lives of both brands and carriers involved in U.S.-Mexico cross-border trade.

2) Could you tell us more about the focus on Mexico? There has been a lot of discussion on nearshoring as a trend. Could you explain to us what is driving it and how it is changing the landscape? 

Though nearshoring has recently brought Mexico back into the spotlight, the U.S.-Mexico trade relationship has been at the core of Nuvocargo’s business thesis since its inception in late 2019. Early this year, Mexico regained the position as top U.S. trading partner, surpassing China, with bilateral trade totaling $263 billion in the first four months of the year and accounting for more than 15 percent of total U.S. trade. China-U.S., on the other hand, sits at a 12 percent share and dropping.

Global supply chains are experiencing a once-in-a-lifetime shift, partly due to the nearshoring of supply chains to Mexico from China and elsewhere; a trend projected to add a further $35.3 billion annually in exports of goods alone in the next few years to what is already the world’s largest bilateral trade relationship. Many companies have moved from Asia to Mexico or the U.S. to reduce transit times and risk of sudden disruptions. In fact, the data shows that when we buy a good that’s made in Mexico, roughly 40 percent of the value of that good is actually produced in the U.S.(compared with China’s four percent), which means that when we trade within the region, we’re effectively creating demand for (North) American-made goods.

The shift is powerful and the momentum is piling up with Mexico expected to welcome at least 495 new companies between 2024 and 2025 driven by nearshoring.

3) What are you most excited about global trade in the next five to 10 years, and what role do you envision Nuvocargo playing as the industry grows? How is fintech an element of its value proposition? 

Looking ahead five to 10 years, we envision a future where companies of all sizes, from global corporations to emerging entrepreneurs, can seamlessly access North American trade through Nuvocargo's platform, eliminating logistical complexities and providing access to capital. In this future, embedded fintech products on the platform play a vital role, offering supply chain financing for brands, secure cross-border payments and other financial solutions for carriers to grow their businesses efficiently (see more on Carrier QuickPay here).

A key step in achieving this vision is building out NuvoOS, the next evolution of the industry's first end-to-end Transportation Management System (TMS) crafted specifically to the complexities of U.S.-Mexicocross-border trade. Nuvo OS enables us to provide shippers with visibility and control through data (especially in Mexico and at the border), as well as a repeatable, predictable experience. It also allows us to interact seamlessly with carriers on the other side of the marketplace, as well as to add customs, insurance or financing to any shipment without the hassle.

This vision also aligns with the broader trends in global trade, which are increasingly shaped by technology, specifically the convergence of Artificial Intelligence and supply chain digitization. 

4) Why did you choose QED as your investment partner? How have they been helping you?

We’ve been hugely privileged to work with the team at QED. First of all, we believe there are very few investors globally who understand how to build iconic $60 billion businesses while also having had a front-row seat to building and scaling the first wave of highly successful Latin American tech unicorns. This gives QED a unique understanding of the intersection between the U.S. and Latin America, which is central to our business model. Additionally, they bring a very specific expertise that complements our vision: financial services. Building Nuvocargo into a multi-product platform (freight, customs, insurance, trade finance) that can help customers with more than just moving their freight has been a complex challenge, and having QED by our side has been vital.