Silicon Valley has had its eyes on trucking for years; just last month, CapitalG (the PE branch of Alphabet) led an $185M round in Convoy, an on-demand freight app that connects truckers with customers who need shipping, at a $1B valuation. The trucking industry is both lucrative and notoriously inefficient due to scheduling problems, inefficient route planning, long warehouse load times, and a lack of collaboration between various carriers and their drivers. Despite these issues, the industry is responsible for carrying 14B tons of freight every year — approximately 250 pounds of goods for every single American every single day. Convoy is just one of numerous startups and tech giants looking to optimize this process using technology — and NewtonX spoke with former and current executives at several of these companies, including Uber Freight, Convoy, OnTruck, and uShip. These future of trucking experts outlined inefficiencies and opportunities in freight systems, and how various technologies and innovations can revolutionize the industry.
40% of Trucks Drive Empty; Here’s What Tech Companies Are Doing About It
The average truck is moving on the road for a mere eight hours each day. The other 16 hours are spent waiting for loads, waiting while drivers sleep or eat, or simply taking the day off until a freight request comes through. To boot, trucks run empty 40% of the time when drivers return home or drive to a loading dock, which is a colossal waste of resources — both in terms of fuel and in terms of driver time.
Recently, these inefficiencies have become a major point of interest for VCs and tech giants. For instance, Uber recently launched Uber Freight, an app that matches carriers with shippers to reduce cost efficiencies and eliminate deadhead miles. The company has posited a vision of the future of trucking in which drivers and autonomous vehicles hand off freights based on the type of driving required for different stretches of the journey (city vs. long haul).
Most companies, however, are focused less on automating trucks and more on automating the process of matching trucks/drivers with loads. That’s what Convoy is doing, and is also the aim of other international companies including OnTruck. uShip also helps carriers who have empty space in their trucks connect not only with businesses, but with consumers who may need to ship furniture or other personal items from point A to point B.
How the Technology Works, and What Disruptive Trucking Companies Are After
Underlying the various companies trying to revolutionize the trucking industry is an algorithm that matches drivers with goods. The efficacy of this algorithm and the companies’ abilities to onboard drivers and shippers is what will ultimately determine the success of the companies. Indeed, what spelled Uber’s success was its matching algorithm and its ability to attract drivers to the platform.
For Uber Freight, however, replicating this success has been difficult: the company is currently facing a shortage of drivers, and recently launched an incentive program offering discounts on fuel, tires, and financing for new and used vehicles. Part of the difficulty comes from competition from incumbent fleet management software that most large shippers use, such as Omnitracs. That said, there’s still a large market of small truck and fleet business owners who could benefit from the cost savings that Uber Freight and its competitors offer.
Not Just A Bet on Trucks
A prominent aspect of Convoy’s mission is not just optimizing the trucking industry, but also optimizing fuel consumption to reduce environmental impact. Every 1% improvement in truck routes equals 400M gallons of fuel from being consumed and 3B miles from being driven each year. Deadhead miles don’t just cost money, they also cost the environment, the economy and the time of shippers and carriers.
As environmental impact becomes a more pressing concern for regulators, prescient companies that find ways to reduce the carbon footprint of trucks while also improving the bottom lines of shippers and carriers will have a significant competitive edge.