Convoy, a Seattle-based company that presents itself as "Uber for trucking"
This startup is trying to win the $600 billion industry that Uber didn't
Convoy, a Seattle-based company that presents itself as "Uber for trucking," launches today. The online service and app pairs shippers with available local carriers based on proper equipment, payload, capacity, and distance. Convoy gives pre-approved carriers the option to accept or decline a job based on the listed price, which eliminates haggling — a hallmark of the trucking business.But who cares about trucking? A lot of people, it turns out: the industry exceeded $600 billion in 2011, according to data from trade group American Trucking Associations (ATA). That’s a big number. And it’s been shockingly resilient to disruption, even as Uber takes over the taxi world.But the trucking infrastructure is more vast and complex. Convoy says there are 1.2 million trucking companies in the US, most of which have fewer than six trucks. Many of these companies send their drivers on hauls over short distances. A fair percentage of trucking business comes from the "spot market" — short-notice shipments that can drive the price of shipping up and down based on supply and demand.A hard industry to disruptThis space is where Convoy is aiming to grow its business as the go-to on-demand provider. "There’s a huge opportunity right now to change trucking," says CEO Dan Lewis. "We think of ourselves as regional and local trucking. For the work we’re doing today, our drivers should be home that night. Sometimes they may be driving a full day and sometimes they may take a job that lasts an hour, but they can be at home at night." Almost 40 percent of the total value of goods are moved less than 100 miles, according to the Federal Highway Department Transportation Bureau of Transportation Statistics.Trucking may not sound like the most exciting industry to disrupt, but you can see where Lewis got the bug: in college, he had a summer job working at his father and uncle’s office supply company delivering furniture, boxes, and palettes of paper. He went on to lead operations at Wavii, an informational app acquired by Google in 2008, and then ran a group developing new products for Amazon. His Silicon Valley ties have helped him build an impressive list of investors including Jeff Bezos, Uber co-founder Garrett Camp, and Mark Benioff. He co-founded Convoy with Grant Goodale, who serves as the company's CTO and worked at Amazon and founded game studio Massively Fun.Convoy’s goals are not small: it’s aiming to change an industry, in the same way Amazon Prime’s default two-day delivery changed consumer expectations of online shopping. The company has built an algorithm based on different types of loads that meet the requirements of varying industries. The app uses a dashboard to help oversee shipments and GPS tracking to monitor delivery status. In the Uber tradition, each party rates the other on job satisfaction. Initially, Convoy plans to target construction, manufacturing, and retail wholesale and distribution. It has built a modest network in the Seattle area to test out the concept prior to the official launch; next year the company plans to expand into other markets. Its current clients include Guided Products, a commercial print shop, and ACF West, a geotextiles distributor. While UberRUSH has broached the delivery market, it has not embarked on larger courier services.The trucking industry has automated itself more slowly than the car- and ride-sharing world has — a portion of the bidding is still traditionally handled by phone, where brokers can field up to 200 calls per day — but some sites have emerged in recent years: there’s Trucker Path, for instance, which is currently testing its marketplace app and allows users to make counteroffers. Slowly, these services are diminishing the reliance on phone calls; like Uber, Convoy will push out delivery notifications on email and text. The Convoy app is free, but the company will charge fees to use the service. Those fees haven’t been announced, but a company spokesman says that the margin is below what brokers take, which ranges from about 20 percent to as high as 45 percent for local and regional jobs.Convoy CEO Dan LewisInitially, Convoy will focus on appealing to small and medium-sized businesses, but Lewis says they plan to appeal to large corporations as well. They aim to service both large trucks as well as smaller courier businesses. "We’re focused on both. Our carrier partners have smaller trucks — known as straight trucks or box trucks — as well as larger trucks, semi-trailers. We decided to do this after talking with customers, and learning about the types of equipment we’d need to serve them well." Convoy is not planning on building its own fleet of trucks.If Convoy is successful, it may cause some of the upheaval that has followed Uber and Lyft in the taxi industries. While the impact of Convoy is too early to judge, ATA chief economist Bob Costello acknowledges that the trucking business is a large marketplace with room for growth. "I will agree with the premise that a lot of trucking is short hauls," he says. "It’s a huge industry and it’s got hundreds of thousands of players and 98 percent are considered small businesses. There’s room for a lot of different things in the industry."In order for the service to work, though, industry experts think Convoy needs a feature similar to Uber’s surge pricing. Without this function, Costello wonders if the service will work when there is a dearth of available trucks. "These things tend to be easy when there’s a lot of capacity and harder when there’s not," he says. It’s during these times that businesses like the flexibility of raising fees. "We see that all the time in the industry. You have to have a mechanism to account for the tightness in capacity." (At the time of writing, Convoy hasn’t said whether it’ll embrace the concept of surge pricing.)"The challenge is when one company’s busy, everybody’s busy; when one company’s slow, everyone’s slow."Some operators wonder how the app will be received in the shipping business, which can be cutthroat in heavily populated areas. Willie Rodriguez owns New York-based company Get Go Messenger. "For Uber, when people call, they have no relationship with the cab driver whereas in the courier business there is a connection. A lot of my clients, we’re on a first name basis," he says.Also, the app’s nature would change as supply and demand ebbs and flow. "Sometimes I’m so busy. The challenge is when one company’s busy, everybody’s busy; when one company’s slow, everyone’s slow." But if the potential for additional work is there, he’s open to the concept. "If it’s making things easier that we would normally wouldn’t connect with, let’s try it. You’re not controlling my drivers, you’re just giving me the work."