Cargomatic wants to “Uberize” the local trucking market.
The 2-year-old Venice, Calif., company operates an on-demand shipping platform that is similar to Uber, except Cargomatic’s ride-sharing service is for freight rather than people. The company is one of several seeking to connect shippers directly with carriers, competing with third-party brokers in the process.
Jonathan Kessler, Cargomatic’s chief executive and co-founder, said his company ensures that carriers get a better price while enabling truck drivers to fill half-empty trailers with additional loads.
For now, the company operates in Los Angeles, New York and San Francisco. It hopes to expand “all over the U.S. and, really, internationally as well,” Kessler said.
Kessler talked with TRUCKS.com about how the business works and the impact that technology will have on the local trucking industry.
Q: What is your market?
A: We focus on the short-haul side. We’re just trying to aggregate all these different independent operators and make them available for the large shippers. It’s a big business. A lot of people are working it.
Q: What are the benefits of working with Cargomatic?
A: It’s capacity, service and price for the shippers. We give the ability to shippers to work with all these independent operators from the local level. We use technology to ensure the service is better. You can see where the trucks are. At any given moment you know where your shipment is. And because we’re connecting with so many of these different small trucking companies, we have very competitive pricing.
For the trucking companies and the carriers, we’re democratizing the technology. Everything we give, we give away for free. We give the ability to the small trucking companies to act like they’re big trucking companies. They get EDI [electronic data interchange] feed integration and the ability to take all the information associated with a shipment and pass it over to the customer. And of course we fill their space on the truck. So we are a marketing platform for them.
Q: How do you determine the price of a shipment?
A: We set the price for the shipper. The truck driver determines if it’s a good price. So if they are willing to take it, we know we’re priced well. If they don’t take it, that means we know Cargomatic has to change the pricing and make it better so that people take the shipment.
Q: Do you take a percentage of that amount?
A: Yes, we do. But we take it before we propose the price to the truck driver. Anywhere from 10 to 20 percent. We’re not looking to take too much; we just want to take enough to make sure that we can be a viable business and we can provide a good marketplace for people.
Q: Convoy is one of several start-ups offering an app and service similar to yours. What makes Cargomatic better?
A: We have more coverage than they do. We’re in more places and we’ve been doing it longer. We know more about the business. We’re a couple years ahead of where they are.
Q: What about other competitors?
A: Trucker Path, at this point, is really just an app for truckers to use to help find truck stops. I know they have aspirations to do more than that, but I don’t think they’re offering much as of yet. Cargo Chief is a technology-enabled long-haul broker. We don’t really consider ourselves that, but we’d love to work with a company like them.
Q: What will be the major sources of disruption in the local trucking market over the next five years?
A: It’s all about this idea of using technology to make the current infrastructure more efficient. That’s opposed to building new infrastructure, which is expensive and takes a long time to integrate. I look at it less as disruption, more as enablement.
I think the use of technology and transparency allows things to be more efficient. We have to do more with less. There is going to be more local deliveries; there’s going to be more goods that need to be close to the consumers. In order to do that, we need technology to help us use existing infrastructure and make it more efficient.
Q: What type of automation will seep into trucking and how will it be used?
A: First is the ability to see where the assets and capacity are at any given moment. And then we are going to be virtualizing the whole experience — I think that’s first and foremost. That will also allow us to get a lot of data and understand what the traffic patterns are, where the truck routes are and where the bottlenecks in the supply chain are. We can use things like machine learning and data science to give us additional efficiencies.
Also, technology systems will allow people to interact in a more efficient way. So it’s not phone calls anymore, and it’s not paper or emails.
Q: Truck drivers may be interested in Cargomatic, but not everyone in the industry is comfortable with using new technology. How do you overcome this issue?
A: We don’t have to be the only driver of that change. There are societal pressures pushing on people to adopt new technology outside of Cargomatic: Kids telling their parents that they’ve got to get smartphones. Or, just advertisement by Google and Apple. And we’re going to leverage off of that infrastructure as much as anything else. We just have to be at the right place at the right time.
Editor’s note: This interview was condensed and edited slightly for clarity.