Loadsmart has just moved its first fully automated shipment from booking to delivery: no human contact occurred between Loadsmart, the shipper, the carrier or the driver. First, the shipper hopped online and quoted the cost to ship on a 53’ dry van truck from Philadelphia, PA to Virginia Beach, VA. The system generated an instant price ($ 565.62 at the time) and the customer booked in just a few seconds. Through an algorithm our system automatically identified the best carrier to move the load – among thousands in our roster – and sent an electronic request to the carrier’s dispatcher (which we internally call a “live job”) with an offer at $525.00.

With one click the dispatcher accepted the job electronically and the rate confirmation was distributed automatically. The carrier’s driver was notified and downloaded the Loadsmart app. GPS tracking and driver updates followed from pickup to delivery, where the driver submitted the Proof of Delivery via the Loadsmart mobile app.

Loadsmart made no calls, wrote no emails and had no human contact with the shipper, carrier or driver. No sales or operation workforce was needed to capture the margin of $40.62.

This is a huge landmark in Loadsmart’s history. It demonstrates that technology can and will have a big impact on the industry. If you have read our previous posts about the fair skepticism about so-called “uber for trucking” startups, you know where we stand: Loadsmart is not your usual “tech broker”. We are a technology firm: an engineering and design-driven company that is researching, prototyping and building transformative technology for logistics. We are not focused on incremental changes; we have created a tech lab to re-imagine the whole truckload shipping flow – from booking to delivery.

Each of the automated steps described above contain a multitude of potential issues that had to be dealt with. For example, for a first-time driver to download the app in the Google or Apple store, without being contacted or trained by us, it took a huge amount of UX/UI design, feedback and iteration. We also have a a 24/7 operations team monitoring all shipments and ready to take over.

Loadsmart is still learning, tweaking and improving its system to make full truckload shipping seamless for both shippers and carriers. But this event tells us that we are in the right path.

We got here with a cohesive team by keeping focus and obsessing about transformative technology. This is just the beginning.

See the announcement video here and our Loadsmart Press Release – Aug 22, 2016.

Felipe Capella is co-founder and Chief Product Officer.

In the past couple of years several companies labeled either by themselves or by the press as “Uber for Trucking” have launched their products claiming to revolutionize the trucking and freight brokerage industry. Millions of dollars were poured into these start-ups by eager Venture Capitalists that saw the huge size of the market and the historical lack of technology as a good opportunity.

It is surely too soon for a broad diagnosis on whether these investments will bear the aggressive return that VCs usually expect. But it is time to recognize that things did not go according to plan for many of these companies. What happened? Are Uber-for-Trucking startups stalling?

Keychain logistics went off the air around February (although apparently their site is back up). Cargomatic sacked both the CEO and COO after laying off half their salesforce. There are unconfirmed reports of layoffs in other start-ups, mainly sales and operations departments. What happened?

To grasp the challenges of the new entrants, you have to understand how start-up funding works. In order to justify a sizable investment, companies promise a new and better technology-driven product and an aggressive growth rate in order to justify an ever higher valuation.

But what happens when companies overestimate the power of their technology and underestimate the market dynamics all while under pressure by unrealistic burn rates? They face two options: (1) fail or (2) focus on growth-at-all-costs in order to justify the next funding round.

When companies survive this scenario by focusing on growth they end up becoming what they had promised to disrupt: a traditional freight broker with 2/3 of their personnel composed of a sales force and an engineering team purely focused on maintaining the system with no bandwidth to work on innovation.

At Loadsmart we try our best to avoid this mistake. We are 100% focused on product-market-fit, which we define as a product that is ten times better than the current market solution. Half of our team is composed by engineers and designers. And we understand that introducing technology and automation into this industry is a marathon, not a sprint – and we plan accordingly.

Before entering “growth mode”, start-ups should focus on building transformative technology, not incremental features. That’s what Loadsmart is doing.

Felipe Capella is co-founder of Loadsmart and Chief Product Officer

In his latest blog post at Talking Logistics Adrian Gonzales raises an interesting point: Are Today’s Transportation Tech Startups the Uber of Trucking or the Tinder of Trucking?

I agree that moving freight is much more complex than moving people and that the freight industry will not be disrupted by an app only. It is a much more complex industry than people generally imagine. However, based on the three musts for start-ups to succeed, we have to consider the following:

• Critical mass: once a new startup offers a better way to deal with current industry issues, it only needs to demonstrate critical mass in a specific region, lane or market. That should be enough to generate a strong flow of investments, and that may be too late for incumbents to react. Remember when Yahoo made a $1bn offer to Zuckerberg in July 2006 – Facebook then was not profitable and was only 2 years old. Now Yahoo has just been just sold for $4.8bn and Facebook is worth $347bn. Incumbent 3PLs are nowhere as tech savvy as Yahoo, so when a similar movement happens on the freight industry the results could be even worse for the establishment. In summary, this may happen much faster than people think.
• Relationships: we believe this is currently true only due to the lack of other exterior signals of reliability. Relationships used to matter if you needed to sleep in another person’s apartment. Now the dual rating system of Airbnb is so reliable that you can trust a stranger to crush in your sofa. Once a strong and reliable online community is built, personal acquaintability should matter less.
• Quality: industry disruption will only happen once startups stop behaving like incumbents and start acting boldly. Each day companies that begun claiming to be “uber for trucking” end up with the same 2/3 of headcount composed by sales people. Same freight brokerage model with a better user experience and a lot of phone calls.

We are trying things that were never done before and we dedicate half of our headcount to software engineers and designers. What do you think start-ups need in order to succeed in the logistics industry?

Felipe Capella is co-founder of Loadsmart and Chief Product Officer

Erica Phillips from The Wall Street Journal brought the news that DB Schenker has entered into an agreement with uShip to use its technology in the European market as digital freight-booking platform.

Companies like XPO Logistics Inc. are spending millions of dollars to develop in-house platforms. Others have pursued acquisitions, including United Parcel Service Inc., which last year bought Coyote Logistics, a freight technology firm, for $1.8 billion. Deutsche Post AG took a €345 million ($383 million) write-off on a failed effort to create its own global freight forwarding technology platform.

These efforts by traditional 3PLs to “become a technology company” through massive investment in IT can make sense from a business perspective but will not create transformative innovation. Take XPO for example, which has focused on a great number of M&A deals to grow quickly and consolidate part of the industry. The number of different systems, competing softwares, conflicting APIs and isolated data is staggering. Combine that with the the fact that breaking down is not an option for them: there are thousands of shipments being moved every day and investors looking at revenues and profits constantly.

Therefore technology investment write-offs like the $383 million mentioned in the article should not be surprising at all. The reality is that incumbent 3PLs don’t have the risk appetite or the incentive to be aggressive on technology adoption, as still have to deal with legacy systems arising from decades of operations and recent acquisitions. Big technology spending disclosed by traditional players are more a PR stunt than an actual willingness to disrupt the industry. Coyote is another good example: it operates in an extremely similar manner to any other big 3PL: based on phone calls, an army of salespeople and a traditional brokerage model.

It will be interesting to see what happens with the uShip – DB Schenker deal. The european market has its own peculiarities, and uShip model looks more like a B2C than a B2B. But more importantly, uShip is focused on matchmaking freight with carriers and does not actually operate the shipment movement from point A to point B.

It looks like DB Schenker is looking more for a platform to manage its partner carriers and tender loads electronically than introducing an innovative business model on the shipper side.

Felipe Capella is co-founder of Loadsmart and Chief Product Officer.