Trucking experts are not quiet about the technological disruption happening in the industry – from the move to alternative fuel powertrains to self-driving big rigs, digitally tethered to one another in specially designated lanes.
One gear in particular will set this future in motion: logistics.
Logistics delivers a $6 Amazon purchase from warehouse to doorstep in two days. It moves a new car from a lot in Las Vegas to a driveway in Southern California. It moves tomatoes from farms in Mexico to grocery shelves in New York.
The industry is also undergoing a digital evolution headed by tech companies seeking a cut of the $700 billion in revenue generated by logistics in 2014 and 2015.
Investment deals with trucking startups reached a record high of more than $750 million in 2016, CB Insights said in a recent report. Through the first half of this year, trucking tech startups have already raised $478 million, and the research firm expects funding to surpass last year’s total.
It’s a good time for tech companies to start up and get a piece of the pie, said Somil Desai, chief executive and co-founder of digital freight quote marketplace ShipLync.
Incorporated in 2016 and based out of Columbia, Md., ShipLync only has five employees. The company is self-funded and has been “bootstrapping everything” so far this year, Desai said.
But he already has more than 2,000 users – a mix of brokers and truckers – signed up to use the on-demand freight platform he created from scratch.
Here’s what Desai had to say about the industry his company is trying to change.
Why is the logistics industry so ripe for disruption?
The logistics industry is a very antiquated, paper and pen industry. It still relies heavily on relationships – sending emails, sending faxes. The booking process after a deal is confirmed is very tedious. There are a lot of people involved just to make a scheduled load succeed. And it starts with getting a freight quote, which usually takes a lot of time – a few hours or a day. If you’re a shipper cold calling around, it could be a very frustrating process. Knowing that there are new tools in the market to make logistics jobs ten times easier is where the disruption is going to happen.
Is there a specific area within the logistics industry that is more vulnerable to tech disruption?
It depends on what part of logistics a tech company wants to go into. If you’re getting into the freight quote marketplace, there are many segments: long-haul trucking, short trucking, export, port drayage, rail, air freight. It depends on what niche a certain tech company likes, what they find there and aggressive growth.
How long will it take for logistics to go fully digital?
Between two and seven years. A lot of the old “mom and pop” trucking companies still do business the old-fashioned way, and they may be slow to adapt to technological changes in the industry. As we are advancing over the next five to seven years, ultimately, they will be forced into that direction.
How does ShipLync differentiate itself from its competitors?
I get this question a lot. We are different because we are a freight quote marketplace, we are not a broker, we are not a freight agent, or a freight forwarder service. A lot of the other competitors – such as TransFix, Cargo Chief, LoadSmart or a lot of the other startups – we are partnered with them. They use our service as a way to retain incoming leads from shippers.
Why do they need to use your marketplace?
Our platform is specifically designed for direct shippers who are owners of the product – and shipping the product they own – to receive real-time freight quotes on demand from all of these service providers, whether it be TransFix, C.H. Robinson or XPO Logistics. All the way from the startups to the billion dollar players. These guys are always looking for new leads, and they are able to bid on different freight movements, or lanes, for free – lanes that they like and they know they can service properly. They can give cost-competitive quotes that the shipper is able to see and dissect from a multitude of other freight brokers in real time.
Does excluding shippers from the bidding process create a problem with pricing transparency?
Of course. When shippers can ultimately see real-time freight quotes coming in from 10 to 15 brokers and compare it to what they’re used to paying, they’ll know if they’re getting ripped off by 25 percent or if they’re paying more than they should. And cheapest is not always the best, but at least they have the data and they have the option to see what is truly out there.
Is there a possibility that this technology will eliminate the need for brokers?
It is a possibility. But for us, it’s not our goal. The broker plays a very important role in the logistics industry. They have all the insights and the connections to multiple carriers. A lot of startups in the field are looking to cut off the middle man. We want to team up with them. A lot of direct carriers only want to deal with the brokers because they don’t have the tech knowledge to jump on the sites. We do not want to cut them out. We want to keep them in the middle.
What is your biggest challenge?
The biggest challenge is always going to be educating the shippers on the platform – showing them how to use it. They are used to dealing with a few guys and that’s it. Educating them on the market, what’s changing, what options they have available to them, what they could use it for and how it could benefit the company in the long run. Also, there are so many other tech companies popping up on the grid, so having the options available and knowing what freight marketplace or tech startup to try to integrate or team up with.
Who are your biggest supporters?
The service providers. We’ve gotten good feedback from them. They love that a lead can come to them directly and they can deal with the shipper as opposed to dealing with another broker in the middle. Our platform also gives them the opportunity to create additional revenue for themselves.