According to the American Trucking Association, trucks move almost 70% of total freight in the US. At the same time, the gross revenue from freight trucking barely exceeds $600 billion annually. The old model works and it’s been working for quite some time, but it can be really inefficient. One reason for that is empty containers, the re-positioning of which is almost as costly as moving a full container. Read about what we called the ‘uberization’ of logistics and how it affects the industry.
To move empty loads that will not make any money on shipping; the industry has to spend on average, $16 billion per year, which accounts for 15% of all operational costs related to container assets. The longer the truck waits to be filled, the higher is the cost of maintaining and re-positioning it.
In a post-recession era of tight truck capacity, profitless truck movements, rising operating costs and endemic driver shortages, the transportation industry is searching for the means to pivot to more cost-efficient ways of doing business, whether through greater automation, shifting modes, or rethinking entire supply chains.
Last year, Schreiber and Brian LeVert co-founded ‘Dashhaul’, a web-based ‘virtual marketplace’ that they call uses Uber-like technology to help shippers and brokers uncover ‘invisible’ capacity and truckers, especially those who own their own rigs, to quickly find loads to haul at better rates and profit margins. The service went live on the Web in February, and a mobile app is being developed.
Another example is Transfix, which is also a digital freight marketplace that CEO and co-founder Drew McElroy hopefully but not naively calls the ‘Uber for trucks’. Last month, the company won the Six Minute Pitch contest for transportation start-ups held at the annual meeting of the Transportation Research Board. Transfix is already being tested by Barnes and Noble, Samsung, SuperValu and J.Crew, and cutting their ‘deadhead’ runs (time driving without cargo) in half or more, according to McElroy. Last year the company received $1.8 million in funding from Bowery Capital, Lerer Hippeau, Founder Collective, TriplePoint Capital and others.
If you would like to see how efficient Uber-like systems are in trucking industry, you can take a look at the map below. It shows 25 trucks in New Jersey traveling to pick up 25 loads of goods over the course of a single day using a traditional industry approach: one that manually pairs drivers and freight. A few matches are short and efficient, but many require drivers to go well out of their way. The result is 1,752 ‘wasted’ miles that create unnecessary traffic congestion and perhaps even lead to making those goods a little bit more expensive down the line.
Now the next map is the same day as managed by Transfix, which pairs drivers and loads using an automated matching system. Those 1,752 empty miles have been cut to 274. A driver in Port Jervis, toward the top, travels to nearby Sussex rather than trekking across the state to Wilmington. He’s less tired, the shipper can move onto a new load, commuters in the area face less traffic, and consumers across the region are happier.
Logistics industry is going to only benefit from having a mobile transportation app serve their needs. It will help to decrease expenses, improve visibility across company’s entire supply chain and most importantly, prevent the trucks from having to drive empty. Expand that efficiency to the two million or so commercial trucks traveling through cities and along interstates across the country every day, and you’ll begin to understand just how big this could be.