Traffic congestion is already severe in several metropolitan areas and will become more extreme: by 2040, 30,000 miles of US busiest highways will be clogged on a daily basis, with trucks as major contributors due to expected increase of freight demand 1<\/sup>.<\/p>\n Trucks are the most important mode of transportation in the U.S.: 80% of all cargo is transported by trucks 2<\/sup>. Most shipping companies do not own trucks, and renting trucks requires hours of work because trucking is a highly fragmented industry: 1.3M companies across the country, 97% of which operating with less than twenty trucks 2, 3<\/sup>. Matching local carriers with clients is typically done by brokers (15,000+ in the U.S.15<\/sup>), who usually operate over the phone, on paper, in a non-transparent, time-consuming system that takes up to 60 days to pay drivers 4, 5<\/sup>.<\/p>\n Conceptually, the optimal scenario could be a network of fully-loaded trucks that maximizes loads while eliminating the need of travelling empty on returning trips. In reality, however, imbalances in origin-destination demands as well as poor information sharing and scheduling among truck fleets limit the ability to run an optimal system, impacting negatively traffic congestion as well as freight\/delivery costs.<\/p>\n How could technology help lower transportation costs and ease the task of moving goods around?<\/p>\n Looking for opportunities to grab a slice of this billionaire industry, trucking startups have raised $478M across 21 deals in 2017 and are expected to top $1B by the end of the year 6<\/sup>. Several companies have been working on solutions to substitute brokers by connecting shippers and carriers directly, including Uber with Uber Freight.<\/p>\n Like Uber, the idea is to have an app for agile load matching based on location and equipment, providing real-time tracking, instant pricing, proof of delivery and seamless billing and payment 7<\/sup>. Besides reducing the 40% of trucks currently driving empty, those startups have a great potential to impact millions of lives \u2013 truck driver is the most common job in 29 states 8<\/sup>.<\/p>\n The challenge is to excel on both sides of the equation \u2013 shippers and drivers \u2013 mainly in partnerships with large-scale shippers and a strong network of individual trucking companies.<\/p>\n Convoy, a Seattle-based startup founded in 2015, is among the key players in the race, raised $62M Series B in July 5<\/sup>, and is backed up by strong investors, such as Bill Gates and Jeff Bezos 9<\/sup>.<\/p>\n With a team of over 160 employees from prominent tech companies, Convoy is ramping up with thousands of weekly truck shipments completed through the app 10<\/sup>.<\/p>\n The additional funding will help drive adoption and retention of truck drivers, a process that involves overcoming significant trust barriers, personal connections between drivers and brokers, as well as seasonality (several drivers do agricultural or retail work for part of the year 8<\/sup>).<\/p>\n While Convoy initially worked with small shippers in short routes in the West Coast, it has been successful in partnering with large shippers, like Unilever, fulfilling loads on longer routes with 300+ shippers. Convoy recently scored a multi-year partnership with Anheuser-Busch, in which both companies will work together to find innovative solutions for a large-scale chain that supplies 500M cans per year 10, 11<\/sup>.<\/p>\n With such flagship shipping partners and 10,000 trucking companies using the app 10<\/sup>, Convoy seems to be tackling successfully the key success factors and stay ahead in the race.<\/p>\n Convoy\u2019s biggest challenge is to remain competitive in a race that already is named under one of its key competitors \u2013 the race to be \u201cthe Uber of Trucks\u201d. In the next years, Convoy should:<\/p>\n Is Convoy\u2019s business model sustainable? How can Convoy be best positioned to compete or partner with large players that are dominant in either of the sides of the demand (shippers or carriers), such as Amazon? (Amazon gets to the last-mile \u2013 or to the customer, while Convoy focus upstream in the supply chain)<\/p>\n (780 words)<\/p>\n <\/p>\n Sources:<\/strong><\/p>\n Further reading:<\/strong><\/p>\n How Truck Tech will change a highly fragmented, aged, $700 billion industry?<\/p>\n","protected":false},"author":9679,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[3991,203,17,4025,1094,8],"class_list":["post-25834","hck-submission","type-hck-submission","status-publish","hentry","category-digital-technology-and-supply-chains","category-freight","category-supply-chain","category-truck","category-trucks","category-uber","hck-taxonomy-organization-convoy","hck-taxonomy-industry-transportation","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nTruck Tech<\/h2>\n
Convoy<\/h2>\n
Path forward<\/h2>\n
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Open question:<\/h2>\n
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