Lahore: The trucking-based startup Trella has quietly decided to withdraw from the Pakistani market. According to Bloomberg, the company’s decision was due to the “deteriorating economic condition,” and they began their exit “last month in March when they stopped taking orders.”
The company has not yet announced the decision to the media, and representatives have not responded when Profit reached out for comment. This raises questions about the reasons for Trella’s exit.
Fahad Rauf, Head of Research at Ismail Iqbal Securities, says, “These exits are not just limited to Pakistan. Globally, the allocation of capital is being revisited. Pakistan’s business environment is also not encouraging at the moment, as the economy is going through a contraction. It seems that Pakistan’s growth will remain on the lower side over the next few years,”.
What even is Trella?
Trella is an Egypt-based trucking startup founded in November 2018 by Ali El Atrash, Muhammad El Garem, Omar Hagrass, and Pierre Saad. In 2021, the company raised $42 million from investors, including the venture arm of A.P. Moller-Maersk A/S. The company operates in Egypt, the UAE, Saudi Arabia, and, until recently, Pakistan.
Trella and Pakistan
Trella launched in Pakistan in October 2020. Pakistan was the company’s third and, according to a post on its website, its “most promising” market. The company cited Pakistan’s logistics industry, valued at over $30 billion at the time, as the reason for its decision. In their post, Trella further justified its decision by stating that the majority of freight (~94%) is moved via a road network that includes national highways and motorways from Gwadar Port to Khunjerab Pass into China.
The company claimed to have had a successful first seven months in the Pakistani market. By June 2021, Trella had onboarded over 1500 carriers and serviced more than 25 shippers in the industry, with clients ranging from logistics and trucking giants to major household brands. Furthermore, the company touted itself as “one of only two digital players propelling the e-commerce industry forward through timely deliveries on inter-city shipments with live shipment tracking.”
The sudden and abrupt nature of the company’s exit, despite its aforementioned success, makes the situation all the more sombre.
Should we be on the lookout in this space now?
If the economic crunch in Pakistan is indeed the actual reason, Trella is not alone in experiencing it. Attributing the decision to the macroeconomy raises the question of whether one should be cautious of more dark clouds on the horizon in this space.
“Inflation has become ubiquitous, and we are impacted by it one for one. Volumes across the industry have come down; there is no doubt about that,” says Sheryar Bawany, Co-Founder and CEO of Trukkr. “Activity in the construction industry has reduced, and so have imports into Pakistan. All of this has a spillover effect on the trucking industry because there’s just less cargo being moved around,” Bawany adds.
However, Bawany does not believe that the current state of the economy is the defining moment for the trucking space. “Transport as a business will always continue. It will always exist because other businesses and industries will always need to have items moved from one place to another,” Bawany adds. “Transport companies can always increase their fares to offset the impact of inflation to some degree. Whether industries are operating at 60%, 70%, or even 100%, they will always need transportation,” Bawany continues.
“The logistics industry is big, and the opportunity is still there,” Bawany muses. Bawany’s optimism contrasts with the rationale Bloomberg attributes to Trella’s decision. Maybe it was a tactical withdrawal? Maybe they took a move from their Egyptian peer Swvl’s playbook? We’ll have to wait for when the company comes forward to explain its thought process fully.
Fahad Rauf, Head of Research at Ismail Iqbal Securities, says, “These exits are not just limited to Pakistan. Globally, the allocation of capital is being revisited. Pakistan’s business environment is also not encouraging at the moment, as the economy is going through a contraction. It seems that Pakistan’s growth will remain on the lower side over the next few years,”.