{"id":6784,"date":"2018-03-04T18:38:58","date_gmt":"2018-03-04T23:38:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/convoy-the-uber-of-trucking\/"},"modified":"2018-03-04T18:59:24","modified_gmt":"2018-03-04T23:59:24","slug":"convoy-the-uber-for-trucking","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/convoy-the-uber-for-trucking\/","title":{"rendered":"Convoy: the Uber for Trucking?"},"content":{"rendered":"<p><strong><em><u>Convoy:<\/u><\/em><\/strong><\/p>\n<p>Digital freight-booking startup <strong><em>Convoy <\/em><\/strong>seeks to shake up the <strong>$800B trucking industry <\/strong>by creating an effective platform\u00a0to connect shippers and carriers.\u00a0Convoy raised $62M in a Series B round led by Y Combinator in July 2017, and its financial backers include: Jeff Bezos, Bill Gates, eBay founder Pierre Omidyar, KKR CEO Henry Kravis, Reid Hoffman, Expedia chairman Barry Diller, and Silicon Valley\u2019s Greylock Partners<a href=\"#_edn1\" name=\"_ednref1\">[i]<\/a>. This makes Convoy the deepest venture-backed trucking technology startup in the United States<a href=\"#_edn2\" name=\"_ednref2\">[ii]<\/a>, but what exactly is it trying to do?<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em><u>A Platform for Freight:<\/u><\/em><\/strong><\/p>\n<p>The trucking industry is massive, but <strong>incredibly fragmented<\/strong>. Shippers can be anything from Fortune 100 companies to mom-and-pop retailers. On the other side, there are an estimated 586,000 different carriers-for-hire in the United States<a href=\"#_edn3\" name=\"_ednref3\"><sup>[iii]<\/sup><\/a>.<\/p>\n<p><strong>Freight brokers<\/strong> control this chaos by serving\u00a0as an intermediary between a shipper who has goods to transport and a carrier who has capacity to move that\u00a0freight. The important traditional brokers include C.H. Robinson Worldwide and XPO Logistics, among others. Their revenues run in the billions of dollars, but their legacy business models include a lot of phone-calls, paper trails, delayed payments, and other inefficiencies.<\/p>\n<p>Convoy, on the other hand, has built a <strong>platform for shippers and carriers<\/strong> to book loads through its website and mobile application. It argues it can connect shippers and carriers quicker and cheaper than the incumbent brokers.\u00a0Convoy <strong>creates value for shippers<\/strong> by providing instant pricing, reliable booking with its large pool of carriers, information transparency on load movement, and value-added services such as supply-chain optimization through its data-driven insights. It<strong> creates value for carriers<\/strong> by offering personalized load options tailored to their preferences, instant booking through its mobile app, 24\/7 support for help with problems encountered during shipment, and free electronic payment within 48 hours of completion, compared with up to 30 days with legacy brokers.<\/p>\n<p><iframe loading=\"lazy\" title=\"Digital Freight Matching\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/Sy24GGsQTEY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p>Convoy <strong>captures value<\/strong> the same way as traditional brokers, by charging shippers a commission. Yet, Convoy\u2019s asset-light model allows it to charge lower fees than the legacy players, benefitting shippers who experience lower costs.<\/p>\n<p>There are obviously <strong>powerful indirect network-effects<\/strong> in this model. More shippers on the platform will attract more carriers, and vice versa. Convoy wants to leverage these network effects to scale quickly and beat out the legacy brokers.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em><u>The Competition:<\/u><\/em><\/strong><\/p>\n<p>The trucking space is heating up quickly, as many consider it ripe for a <strong>winner-take-all platform<\/strong>. Other prominent startups competing to be on top include <strong>Transfix<\/strong><a href=\"#_edn4\" name=\"_ednref4\">[iv]<\/a> and <strong>uShip<\/strong><a href=\"#_edn5\" name=\"_ednref5\">[v]<\/a>, both having raised significant funding recently. <strong>Amazon<\/strong> is also reportedly developing a platform as well, perhaps to be rolled out as it competes head-to-head with UPS and FedEx<a href=\"#_edn6\" name=\"_ednref6\">[vi]<\/a>. Furthermore, the <strong>legacy brokers<\/strong> are investing heavily in building their own technology to beat the digital startups at their own game<a href=\"#_edn7\" name=\"_ednref7\">[vii]<\/a><\/p>\n<p>And, of course, <strong>Uber<\/strong> <strong>has entered the market as well<\/strong>. Uber launched \u201cUber Freight\u201d in May 2017<a href=\"#_edn8\" name=\"_ednref8\">[viii]<\/a>, aiming to use its brand name, deep financing, and truckloads of data to dominate the market.\u00a0Uber hasn\u2019t released any numbers yet, but there are many reasons to believe Convoy can still win this race. Uber has faced increasing public scrutiny recently for its ruthless corporate behavior and its squeezing of drivers\u2019 margins. This will perhaps give truckers pause before choosing Uber Freight as their preferred platform. Perhaps more significantly, Uber is widely associated with the future of autonomous ride-hailing. This gives startups like Convoy a competitive edge for truckers\u2019 platform adoption, as they have an interest in not accelerating the elimination of their own jobs.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Sources<\/strong>:<\/p>\n<p><a href=\"#_ednref1\" name=\"_edn1\">[i]<\/a> https:\/\/www.wsj.com\/articles\/freight-booking-startup-convoy-raises-62-million-1500966000<\/p>\n<p><a href=\"#_ednref2\" name=\"_edn2\">[ii]<\/a> https:\/\/www.joc.com\/technology\/convoy-and-uber-freight-take-us-truck-brokerage_20180208.html<\/p>\n<p><a href=\"#_ednref3\" name=\"_edn3\">[iii]<\/a> http:\/\/www.trucking.org\/News_and_Information_Reports_Industry_Data.aspx<\/p>\n<p><a href=\"#_ednref4\" name=\"_edn4\">[iv]<\/a> https:\/\/techcrunch.com\/2017\/07\/11\/transfix-keeps-on-truckin-with-42-million-in-fresh-funding-led-by-nea\/<\/p>\n<p><a href=\"#_ednref5\" name=\"_edn5\">[v]<\/a> https:\/\/www.wsj.com\/articles\/db-schenker-takes-25-million-stake-in-online-freight-booking-platform-uship-1487134860<\/p>\n<p><a href=\"#_ednref6\" name=\"_edn6\">[vi]<\/a> http:\/\/www.businessinsider.com\/amazon-building-uber-for-trucking-app-2016-12<\/p>\n<p><a href=\"#_ednref7\" name=\"_edn7\">[vii]<\/a> https:\/\/www.trucks.com\/2017\/08\/21\/freight-brokers-versus-startups\/<\/p>\n<p><a href=\"#_ednref8\" name=\"_edn8\">[viii]<\/a> http:\/\/www.businessinsider.com\/uber-launches-uber-freight-for-trucking-2017-5<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Can Convoy beat legacy brokers&#8230;and Uber&#8230;to become the Uber of Trucking?<\/p>\n","protected":false},"author":2373,"featured_media":6794,"comment_status":"open","ping_status":"closed","template":"","categories":[1885,1187,2030],"class_list":["post-6784","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-platform","category-logistics","category-trucking","hck-taxonomy-organization-convoy","hck-taxonomy-industry-transportation"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/growing-businesses-in-the-age-of-platforms-2018\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Convoy: the Uber for Trucking? 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