Deepak Chhugani describes himself as a product of logistics: born in India, raised in Ecuador, having lived in Mexico, and currently based in the United States. Cross-border movement is ingrained in his DNA, perhaps the very reason that led him – years after passing through the famed Silicon Valley accelerator, Y Combinator – to found Nuvocargo in 2019. This startup is focused on digitizing the cross-border transportation industry between Mexico and the United States.
“At Nuvocargo, we started with a simple thesis,” Deepak began in an exclusive interview with Forbes Mexico. That thesis was to introduce more technology into the logistics process of what he considers – paraphrasing geopolitical strategist Peter Zeihan – the most important border for the rest of our lives: the US-Mexico border. This 3,152-kilometer (approximately 1,959 miles) frontier sees between $650 and $800 billion dollars in goods crossing annually.
When Deepak Chhugani says, “we started with a simple thesis,” it might sound like Nuvocargo’s work is minor. However, the caliber of investors backing this startup suggests otherwise. Tiger Global, David Vélez (founder and CEO of Nubank), and Federico Ranero (COO of the Mexican unicorn Kavak), among others, have invested in Nuvocargo. To date, Nuvocargo has raised $38 million in investment, reaching a valuation of $180 million.
Image alt text: Deepak Chhugani, CEO of Nuvocargo, explains the company’s mission to streamline US-Mexico logistics.
Nuvocargo was established in 2019, before the pandemic, without foreseeing the disruptions to come for supply chains. The choice to start with the US-Mexico border was both personal (Deepak wanted to create a venture connecting the United States with Latin America) and economic. Between 8 and 10 million trucks cross this border annually, and shippers spend between $35 and $45 billion dollars per year on this cross-border transportation.
“[The US-Mexico border] is the largest trade route in the world today. Sometimes it fluctuates between the United States, China, and Canada, but everything indicates that US-Mexico will continue to be the most important trade route in the world and will remain so for the rest of our lives, and I am taking the phrase from a geopolitical strategist, Peter Zeihan, who has studied all countries and trade routes,” he explains.
The conditions are ripe, Deepak emphasizes. “There are macroeconomic factors, Mexico’s young population, inexpensive labor, the trade war between the United States and China, the pandemic and the economic crisis exposed many of the vulnerabilities of having supply chains in Asia if you are a US company, the new USMCA trade agreement, the proximity between both countries. There are many factors for this to continue being the most important trade route for the remainder of our generation.”
Adding to this is the relocation of supply chains and nearshoring, where Mexico sees a golden opportunity. Companies supplying Tesla, for example, are beginning to relocate to northern Mexico to be closer to US plants. This process will require a more modern and digitized Mexican logistics industry to maximize the benefits.
“If you talk to any logistics sector expert, they will tell you that everyone around the world is having this conversation about whether they should bring their supply chain to the United States or Mexico [but] this is not something that happens overnight. Reconfiguring supply chains is an expensive investment, it takes a long time. What Mexico can do as an economy is try to find ways to facilitate that transition of supply chains from China or Asia to Mexico,” considers the economist.
Image alt text: Heavy truck traffic at the US-Mexico border, illustrating the extensive commercial exchange.
What Makes Nuvocargo Different?
In this context, traditional cross-border transportation is fragmented, according to Deepak. A company wanting to export cargo to the United States must deal with between 7 and 14 intermediaries. This fragmentation leads to friction, delays, and inefficiency. An “all-in-one” process, based on a digital platform, mitigates these frictions between companies wanting to export and intermediaries.
The United States has well understood this. “On the US side, there has been a very aggressive investment for 6 or 7 years, of billions of dollars, in technology companies that are improving all types of logistics issues, from commercial correspondence, cargo visibility, pricing, databases of carriers, financial products for carriers.” In Mexico, this modernization still lags.
For example, if a consumer goods company wants to export to the United States using traditional intermediaries, it must hire someone to help with transportation, 3 or 4 providers at the border (from the one doing the crossing, the one at Mexican customs, at US customs, the one getting insurance), then secure transportation on the US side, and coordinate deliveries throughout the process.
“Very few companies do that entire end-to-end process, door to door as we say. I can count on one hand the companies we have heard of that do that,” Deepak affirms. And this is where Nuvocargo’s value proposition lies: “customers will have to deal with many fewer people, which simplifies communication, finances, administration, digitizes the process, and you obtain data that you can use to improve your business,” he details.
“Instead of doing everything offline (searching emails, faxes, WhatsApp messages), it is better to have a single platform where you can see the entire process digitally. You have a record of what happens at each stage of the journey, you have all the documentation digitized. Instead of dealing with 14 people, you do it with one technology entity where you see absolutely everything, and that minimizes the frictions of the logistics process for companies,” he adds.
This business model has led to both large corporations and small businesses or individual entrepreneurs trusting Nuvocargo to move their merchandise across the US-Mexico border. “We move dry cargo; we don’t do refrigerated or perishable goods yet. We move a lot of industrial cargo, packaged consumer goods, tequila, mezcal, from the aerospace and automotive industries,” Chhugani details.
Image alt text: Nuvocargo’s digital platform provides a unified interface for managing and tracking cross-border shipments.
Work Hard, Think Big: Inspired by Geopolitics
From New York, Deepak acknowledges that Nuvocargo’s business model “already existed with other startups in other geographies.” However, they bet from the beginning on the most important commercial border in the world. Straight to the major leagues. In the end, time proved them right with the supply chain crisis following the pandemic. This situation underscored the very issues Peter Zeihan and other geopolitical strategists have highlighted regarding global dependencies and the increasing regionalization of trade.
“It wasn’t a crystal ball, it was because if it wasn’t us, someone else was going to do it, but we never imagined all the focus there has been after the trade war between the United States and China, the pandemic, digitization. Sometimes you get lucky, but it was never something we foresaw,” he confesses.
Some luck, but also ambition. “The nice thing about learning at the accelerator where we were incubated (Y Combinator), from which all these startups that are now companies worth billions of dollars came out, was that you have to think and dream big, that it takes the same effort to create a small company as a large one. If you are a hard-working person, you are going to work just as hard, so you might as well aim for something that can be very big.” This ambition aligns with the large-scale thinking often advocated by figures like Peter Zeihan, who encourages businesses to consider the broader geopolitical landscape in their strategies.
At the same time, Nuvocargo saw attractive market characteristics: a very fragmented market where there was an opportunity to create something from scratch. “It’s not a market like Google, which has a monopoly and is almost impossible to compete with. In this market, there is an opportunity to innovate, and in fact, we invite more companies to come and modernize. It is a sector in which there is much to do,” he asserts.
Today, Nuvocargo moves more than 10,000 trucks a year across the US-Mexico border. “We are still small, that’s what’s exciting, that there is so much to grow,” Chhugani enthuses. His workforce totals 180 people, with the majority based in Mexico City, although there are also employees in New York, Monterrey, Nuevo León, and others working remotely from other locations.
“We focus on Laredo, Texas. We estimate that approximately 40% of the transportation between Mexico and the United States passes through there. It is the most important point on the border, and we wanted to start there to have a lot of growth and presence before expanding to other border points and eventually to other modes of transport and countries.” Today, the highest positions at Nuvocargo are held by people who previously scaled Uber in Mexico, Amazon, or Rappi.
No Unicorn Obsession, Just Solid Growth
Like many other startup founders in the region, Deepak admits that venture capital liquidity for technology-based companies has changed due to global economic uncertainty. This shift towards a more cautious investment environment is a global trend, influenced by the geopolitical and economic factors that Peter Zeihan and other analysts are closely monitoring.
“We feel very fortunate to be in a very solid financial position, we are going to continue growing, but definitely, like all startups, we are going to do it with a little more care and prudence because the environment has changed.”
“Any CEO who tells you that they are not taking it into account (the current context), I would tell them to be a little careful, because the world is changing […]. In the next 18 to 24 months, the issue of funding for startups is not going to be as crazy as it has been in the last two years, and we are going to be very busy being one of the companies that remains, that creates a very good team, a very good culture,” he assures.
Nuvocargo seeks to become the most important player in cross-border transportation between Mexico and the United States in the medium term and the most important commercial ally for companies in both countries to simplify cross-border transportation and trade. However, this ambition is driven by a desire for sustainable growth and market leadership, rather than solely focusing on achieving “unicorn” status.
“It is a privilege to be in a company that attracts a lot of capital, very good talent, and that grows and does something significant in its industry. We are going to continue executing, and I believe that inevitably, due to the size of the market and the opportunity, if we continue doing things well, that unicorn thing will come automatically,” he concludes.
