Business

Trucking Startup Trella to Exit Pakistan Due to Economic Crises

Egypt-based trucking startup Trella has decided to exit Pakistan due to economic crises. The company ceased taking new orders last month, and two sources familiar with the situation have confirmed that the business is no longer sustainable in Pakistan.

Trella’s decision to exit Pakistan

Recent macroeconomic turmoil means Trella’s business in Pakistan was unsustainable, the sources said. Trella entered the Pakistani market in 2020, intending to dominate the road freight market in the Middle East, North Africa, and Pakistan, worth $50 billion. Trella’s platform connects corporate shippers with trucking carriers across the region, driving efficiency in a highly fragmented logistics industry.

Trella, which raised $42 million in 2021 from investors, including the venture arm of A.P. Moller-Maersk A/S, has not responded to a request for comment. The company will retain some staff to assist its operations in Egypt, United Arab Emirates, and Saudi Arabia.

Impact of Pakistan’s economic crisis on the trucking industry

Pakistan has experienced one of its worst economic crises due to a delay in its loan program with the International Monetary Fund, which has led to multiple downgrades from rating agencies. This has resulted in the country restricting imports due to a dollar shortage, a 30% loss in its rupee value, and fuel prices nearly doubling in the past year alone. These factors have had a significant impact on the trucking industry in Pakistan.

Trella is one of the few prominent entities impacted by the situation, so it has decided to exit the Pakistani ecosystem. Other technology companies that have faced similar struggles include Vitol-backed VavaCars, Dubai-based Swvl Holdings, Uber’s Careem, and Airlift, which raised a record $85 million, but ultimately folded.

Trella’s funding and the impact of its exit on development

Though Trella had sufficient financial backing for operations in Egypt and Pakistan, recent events have proven otherwise. Trella received funding from Sustainable Finance (ALMA) and the US International Development Finance Corporation (DFC) through a $4.2 million loan guarantee transaction in Pakistan and Egypt. The guarantee facility allowed ALMA to deploy $6 million in debt financing to support Trella’s operations in both countries.

ALMA’s borrower, Trella, is the fastest-growing digital freight marketplace in Pakistan and the Middle East, facilitating over two million tons of shipments in 2021. Trella’s platform connects shippers to carriers while helping to solve challenges faced by both parties. A platform is a reliable option for shippers with transparent and fair pricing to move their goods and track their shipments in real-time. Carriers (truck drivers) can improve their load utilization and efficiency using the platform.

However, despite this funding and backing, Pakistan’s economic situation has worsened, and Trella, along with many other startups, has been left with no other option than to exit such a high-risk market.

The Big Picture Impact of the Situation

Trella’s exit from Pakistan is not an isolated incident. The country’s economic turmoil has significantly impacted its startup ecosystem, with several other prominent entities such as VavaCars, Swvl Holdings, and Airlift also exiting the market in recent times. This has resulted in a funding crunch and a squeeze in the valuations of global technology companies operating in the country.

Trella’s exit from Pakistan underscores the challenges that startups face in high-risk markets like Pakistan. While the company had sufficient financial backing, it could not sustain its business in macroeconomic turmoil. Pakistan’s economic crisis has had far-reaching consequences, not just for businesses but also for the country’s growth and development. The government needs urgent action to stabilize the economy and create an enabling environment for businesses to thrive.

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