Tech Start-ups Trying to "Uberize" Truckingby Jana Ritter - Published: 11/04/2015
Silicon Valley has been setting its sights on the trucking industry and major investors are seeing golden opportunities in a number of recent start-ups competing to be the “Uber” of the trucking world. Only that truck drivers still do the driving and these companies provide the smartphone app directing them to the nearest shipping loads. Basically, they're hoping to drive out the third party brokers and allow truckers to connect directly with customers. Something that could potentially shake-up the $700 billion industry - if truck drivers see more benefits to doing their own brokering. But will they?
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Hadi Partovi, who was an early investor in Facebook, Airbnb and Dropbox certainly thinks so. “I’ve never seen a larger market opportunity,” he says. Partovi has now put his money on Convoy, a Seattle-based start-up and most recent entrant to the game. Already Convoy has raised $2.5 million in seed funding from other major investors that includeAmazonfounder Jeff Bezos, eBay founder Pierre Omidyar and Uber Technologies Inc. co-founder Garrett Camp. Another leading candidate is San Francisco’s Trucker Path, the company had already raised $20 million as of last July and is aiming to reach a $1 billion valuation by next year. However, critics see the hopeful projections of these tech world players as wishful thinking and perhaps naïve about the trucking world itself. Firstly, analysts say that although these new apps might very well be effective at arranging local deliveries, its really only a small percentage of the market in the overall trucking industry. Not to mention the shipping companies not wanting the risk of contracting with individuals as opposed to more liable brokerage companies. Then of course, there is the question of how receptive truck drivers are to new technology. According to Jack Atkins, a transportation analyst with investment bank Stephens Inc.- it’s highly unlikely. “Truckers are very reticent to adopt the technological options that are out there. There are a lot of moving pieces, and I don’t see an app from a nonindustry player—just given the complexities of the truckload market—really coming in and having a disruptive impact,” he said.
But Convoy says its already proving successful and they're only looking to work on a localized scale. Companies seeking to ship goods locally, simply order a job on its website, get an instant price, and track the shipment in real time. Mike Williams, global supply chain director for World Vision, says that he’s already been using Convoy for two months and the service connects him to truck drivers within minutes as opposed to the hours it can often be with brokers. Another company based in Los Angeles, Cargomatic, has aimed their business at filling empty space in trucks by connecting companies wanting to ship items with truckers headed their way. CEO Jonathan Kessler says the two-year-old company has facilitated tens of thousands of shipments in New York and Los Angeles in just this year alone. Their aim is to apply principles from the “sharing economy” to local trucking. Dan Lewis, CEO of Convoy agrees and says their company empowers small trucking firms and independent truckers by giving them direct access to a steady stream of customers. “You can’t have 1 million small trucking companies without brokers, but they’re taking a hefty fee without adding much value. This makes it so much more efficient and truckers can make so much more per job.”