This model gets materially better with scale, using technology to address the industry’s existing limitations and the reasons that trucking remains so fragmented. Hybrid carriers have a digital truckload marketplace, a universal pool of trailers, online drivers and equipment, and broad industry integrations, all running on a technology platform that uses data and AI to orchestrate everything, manage carrier quality, and generate actionable insights for shippers. By removing silos around truck and trailer capacity, these truckload platforms will benefit from network effects and other economies of scale, making them better and cheaper at scale and giving shippers compelling reasons to consolidate their freight spend for the first time.

At the end of the day, there is a reason that trucking is so fragmented and hasn’t seen benefits of scale. Here we dive into why this is and why it is now changing.

The problem: bringing economies of scaling to the truckload industry

In most transportation and delivery businesses, economies of scale, including network effects(1), allow the leading providers to gain cost and service advantages for their customers, causing the market to consolidate around them. The parcel and less-than-truckload (LTL) delivery businesses are good examples of this. No single package takes up an entire truck or trailer, so each customer that ships something helps cover the cost of the delivery for everyone. The more participants, the more economical it becomes. Additionally, with more customers and packages, the shipping service can add more deliveries per day, making it even more convenient for everyone.

This has not yet happened in the truckload industry(2), where limited advantages of scale have allowed fragmentation to persist as a viable sourcing strategy. Shippers work with dozens or even hundreds of truckload carriers and brokers who compete for their business. This is currently the best strategy for shippers to get competitive coverage, pricing, and service, but it leads to a transitory or what-have-you-done-for-me-lately mentality that limits the opportunity for each individual provider to think long-term, and it prevents big bets that could lead to step-function improvements in service and cost. For this to happen, shippers need to be presented with a fundamentally new model.

This persistent fragmentation in truckload is unusual. Most of the time, when companies source services, they choose just one or a few providers, not dozens or hundreds. They want to reduce the overhead of managing vendors and gain the volume discounts and priority service of top customers. For example, companies pick one payroll processing system, hire one partner for warehouse logistics, and contract one food services vendor to manage their cafeterias. The leaders gain advantages as they get bigger and customer growth accelerates.

Metcalf’s law says that a network’s value is proportional to the square of the number of participants (n^2); said differently, its value increases exponentially as its users or participants grow. These models clearly benefit from this effect. Why not truckload?

Why do network effects exist in these areas but not truckload?

Unlike in the parcel or LTL examples, each truckload delivery is financially viable on a standalone basis. Its cargo fills the entire truck on its own, and it moves point-to-point along a single route, so its success does not rely on any other participants in the network. For this reason, the barriers to entry are also very low. Nearly anyone can buy a truck or fleet and start hauling freight on similar footing to the rest of the industry.

Therefore, the network effects in truckload come not from optimization at the individual truckload shipment level but rather primarily at the system level. In parcel, wasted “space” creates the primary inefficiency to solve. In truckload, it is wasted miles (driving empty) and wasted time (waiting to load/unload) that creates the primary inefficiencies to solve. For example, combining multiple shippers’ freight networks to identify the best combinations of loads (routes, backhauls), optimizing appointment times and drop-and-hook programs to reduce waiting time, and ensuring that the best-located truck is matched to each run to reduce empty miles.

Unfortunately, many of these truckload networks are walled off from each other today. For example, the business model of the market makers who are in the best position to orchestrate the industry today – large truckload brokers – often operate on a load-by-load basis and fragment their own network of trucks and shipments into many small marketplaces, each managed by a carrier sales rep with a portfolio of carrier relationships. Naturally, carrier reps are reluctant to share their trucking relationships with others, which blocks a true network from forming as the brokerage scales.

Asset carriers face challenges in scaling and optimizing stitched-together networks

On the other hand, asset-based carriers run businesses predicated on effective network planning, which shouldn’t come as a surprise. While a typical broker is “asset light” — their primary cost being wages to employees who earn a commission for sourcing loads from shippers and finding trucks to do them at a lower cost — an asset carrier’s primary costs are their assets (trucks and trailers) and fixed driver costs. Not only do they need to be smart about making enough money to cover their variable costs, but also to cover their cost of capital for the assets they own. Thus, their focus is on asset utilization. They consider how different shippers’ networks overlap, and they attempt to stitch together a balanced portfolio that maximizes the utilization of their assets. For example, in an ideal situation, a carrier would find a backhaul or other symmetrical route between two companies that ship in different directions, creating an efficient loop for their drivers. In another case, they might start with a pool of trailers at one facility that ships to several destinations and, over time, fill in backhaul contracts to recover the empty returns.

However, as things move from planning to execution, it becomes clear that forecasting is often more art than science. Trucking is messy; the allocated pool of trailers and dedicated drivers are more fixed than daily or weekly fluctuations in demand, the necessary appointment times for live-load scenarios aren’t always available, and facilities, trucks, and drivers get delayed. And if something goes wrong, changing the appointments and driver schedules is cumbersome. The asset model is rigid by design, making it hard to be resilient when the unpredictable inevitably happens. Holiday weeks are a typical example of this. For example, leading up to Labor Day weekend, load volume spikes and outstrips trailers, leaving shippers to fail over to find the live-loaded trucks on the spot market. During off weeks, when volume dips, they pay trailer underutilization fees.

Adding or removing trailers quickly is expensive and operationally difficult. Trailers are committed, and the drivers have a system. Thus carriers manage a constant tension between service levels to shippers on the one hand and asset utilization on the other hand. And even though most asset carriers also run a traditional truckload brokerage to gain flexibility – re-brokering up to 40% of their freight to other carriers (3) – it is not seamless with their own operations, and its costs and service levels often don’t hold up to the commitments they’ve made.

All of these dynamics reduce service flexibility and lead to local optimizations and sub-scale marketplaces that lack network effects.

A lack of scale effects is also evident in that trucking brokerages and carriers do not gain operating leverage or performance advantages from scale

For example, you can see below that for several top national brokers, every incremental $ of net revenue requires proportionally the same investment of additional operating expenses. In other words, these businesses operate linearly, without major network or scale effects.

This doesn’t change as brokerages or carriers get bigger. In 2018 I listened to a panel discussion on trucking at a conference. A new-to-truckload executive shared that after looking at the financials of over a dozen public and private brokers, he had a discovery to share — all of them, from sub $100M to several billion in revenue, had roughly the same unit economics. The large, national players could cover the largest shippers across more regions, but they didn’t do it better. Others in the room echoed this for asset carriers, and others shared that in some cases, they became slightly worse with scale because their overhead increased, and they struggle to maintain the same quality standards, pricing controls, and network balance.

It isn’t that brokers and carriers don’t get better as they learn a facility’s operations or build density on a lane. They do. However, the financial improvements are localized to that specific opportunity and quickly reach a plateau. Similarly, those that add offices and employees to gain national scale are able to service larger national accounts, but as they grow, each incremental shipment costs about the same to support.

Finally, in most cases, shippers need multiple providers to meet their needs. Some of their freight is predictable and runs drop & hook, best for asset carriers, and some is less predictable and benefits from a broker’s flexible capacity. For national shippers, there isn’t one carrier or broker that is “best” in all regions of the country. And at the end of the day, because they can’t precisely forecast their volumes unless they pay for fully-dedicated capacity, shippers can’t count on their carrier or broker partners to reserve capacity for all scenarios. They simply need redundancy, opening the door to many providers.

All of the above conditions across asset carriers, brokers, and shippers’ truckload networks have created antibodies to consolidation. The Vice President of a major national U.S. retailer summarized this to me by saying, “We have hard caps built into our system. I can tell you that whenever we relax this and give a huge award to one carrier, even a carrier-of-the-year winner, it backfires, and their service drops the next year, and we move them back out.”

To date, a model that gets more efficient and better for shippers as it scales has not existed. As such, the conditions for significant industry consolidation and simplification have not existed previously, but that is now changing.

Enter the hybrid carrier, creating the path for economies of scale

A hybrid carrier brings together the best of asset carriers and truckload brokerages, using technology and open capacity marketplaces and shared trailers to get better and cheaper with scale in a way that we have not seen in the truckload industry. Over the next decade, a handful of hybrid carrier-enabling platforms will emerge and scale as they power this transition, giving today’s brokers and carriers the opportunity to deliver a broader set of service offerings with higher performance, better cost structure, and more data-driven insights for their customers.

The key ingredients of a hybrid carrier include:

1. Universal pool of trailers, all sensor-enabled and available to the carrier network for both live and drop-and-hook loads. 

The shared trailer pool is not tied to a given facility or route, so it can quickly grow or shrink with weekly volume changes faster than traditional carriers. This allows backup and spot loads to run as drop & hook as well. Any carrier on the platform can move a pre-loaded trailer, rent an empty one, or keep it after a delivery to use for other off-network jobs before later returning it. The return locations and times are designed to get trailers to where they are most needed on the network (or predicted to be needed by AI). This flexible return and rental program reduces relocation costs and allows carriers to find more backhauls. The platform maintains the pool.

2. A single digital marketplace for truckload volume and capacity. 

Hybrid carriers have access to vast pools of carriers and owner-operators. To drive network effects, they need to know that their path to getting access to the best freight at the best rates is via the digital marketplace, not negotiating over the phone. If their ideal job is out there, they can get it. This brings energy to the marketplace, which includes single jobs, batches, dedicated runs, and more. The variety of options allows for a trade-off between performance and cost. This results in asset-like visibility, availability, and performance, even with minimal lead time.

3. All drivers are online and connected throughout the job workflow.

It isn’t enough to have some of your carriers/drivers do some of their tasks online. To give the hybrid carrier the greatest opportunity to harness efficiencies and find opportunities, all drivers and trucks need to be online, when on the clock, for all the steps. Drivers share data and documents, offer visibility, handle detention and accessorials, manage payments, self-service exception handling, and more. The tech helps drivers keep moving to make more money and get paid faster. The visibility helps the platform learn and become more efficient. Today, the trucking companies most likely to use the app have < 10 trucks.

4. Digital integrations with shippers for seamless communications and data sharing.

Hybrid carriers have digital connectivity into a broad range of shippers via TMS and other EDI or API integrations. These allow for automated tendering, routing guide updates, spot load bidding, appointment scheduling, and financial processing.

5. Technology platform to orchestrate supply & demand AND load execution.

A hybrid carrier is too complex to run only by hand. The platform orchestrates the pricing and matching, provides self-service tools for brokers and carriers, tracks and manages carrier compliance, monitors and repositions trailers, and supports workflows for tendering, load creation, appointments, visibility tracking, payments, insights, sustainability reporting and accounting (e.g., GLEC framework).

Over the last decade, billions of venture dollars have gone into the truckload freight industry on the promise of digital transformation. That investment spurred, amongst other important innovations, the first generation of universal trailer pools and digital platforms for truckload brokerage, including many of the capabilities listed above. These platforms have remained proprietary, but this is changing. In the coming years, we will see some or all of these platforms open up, and the next wave of innovation will be built on top of them, enabling today’s brokers and carriers to become tomorrow’s hybrid carriers too.

As this happens, the leading platforms will only get better, leading to increasingly better cost, service, and insights for shippers. For the first time, shippers will have a compelling reason to consolidate their freight onto fewer providers.

The proof, as they say, is in the pudding. While it will take years to know exactly how this plays out, Convoy is one of the companies that has invested in building a hybrid carrier platform already. The results that we have seen from our V1 are very promising, and here are a few examples.

Consolidation leads to lower operational costs per load and better performance

There are material operating cost advantages when shippers consolidate more of their freight onto one hybrid carrier. The example below shows this for Convoy’s current offering, which is powered by our hybrid carrier platform. In addition to cost reduction, we also see improvements in on-time service performance.

More density continuously delivers more efficiencies and lower trucking costs

As the volume of loads and trucks in a market grows, network density increases, and the odds that a carrier finds their ideal load(s) (ideal timing and route) increase, reducing waste and costs. This phenomenon isn’t new; however, in most cases, brokers see the gains tap out and plateau relatively quickly. Instead, Convoy sees the gains come in waves with each efficiency, including overall density, load batching, appointment time optimization, flexible trailers, etc. The system continues to improve as it scales.

Flexible drop & hook matches reality of shipper demand, allowing continued service 

Hybrid carriers enable flexible drop & hook, which we have observed to successfully handle rapid changes in freight demand without needing to failover to live spot or paying underutilization fees.

An efficient, digital marketplace absorbs spikes in demand without spikes in staffing or compromising service quality

Hybrid carriers can handle volume spikes with minimal impact on service quality because of the scale and automation of the marketplace.

This pattern was maintained through the volatility of COVID. The efficiency of a hybrid carrier-style network provided elastic capacity with high tender acceptance rates and helped maintain superior on-time performance relative to the industry across market cycles.

The truckload industry has long been held back from enjoying the efficiencies and service benefits that come from economies of scale…but that is changing and changing fast. After proving to ourselves, our shippers, and our carrier network that there is a new way to manage truckload that DOES, in fact, get better with scale, we have begun to open up our platform to the broader industry.

Our goal in doing this is to accelerate the trucking industry’s transformation towards a more efficient future. That is only possible by breaking down the walls that exist across the industry. These walls that exist within and across shippers, within and across brokers, and amongst carriers’ assets are impeding the tremendous benefits that can come from network effects and other economies of scale within any single broker and across the entire industry.

Fortunately, the walls are already starting to come down. Within Convoy, our marketplace for truckload carrier capacity is unfettered by individuals’ various books-of-business, and our trailers operate in a universal pool across facilities and carriers. We recently opened this platform up for other carriers and brokers to use as well, alongside our first party truckload business. The nearly 20 brokers and carriers that are using it today save an average of 15% when they find a more efficient truck on our platform than on their own. And as we release more features and capabilities into this externalized, standalone platform, it will only get better, and momentum will only build further.  

As the now famous quote, most often attributed to William Gibson, goes, “The future is already here.  It’s just not evenly distributed.”  Never before has that been more true than it is today in the US trucking industry.

To learn more, inquire at info@hybridcarriers.com.

1. The Network Effect in Supply Chain and Logistics
2. Economies of scale in truckload exist mostly for the individual truckload and the efficiency gained by hitting the maximum weight or filling all of the space inside the truck (“weighing out” or “cubing out”).
3. Latest SEC Filings Reveal Major Trucking Companies Still Outsourcing Vast Amounts of Freight

The post Driving change: how hybrid carriers will finally unlock economies of scale in trucking appeared first on Convoy.

At North America’s largest tech conference, Collision, I was asked the question “Is this the end of globalization”?

Globalization is not close to being dead, but the risk premium of being dependent on a global supply chain to run your business is higher than it has been in decades. 

Why is globalization sticking around despite all the challenges? At the most fundamental level, natural resources, education, and labor costs are not spread evenly around the world, and most of the products and foods that we enjoy flow through multiple regions or countries from source to consumption. We would have to greatly alter our habits and lower our quality of life if we did not source and produce goods around the world, and generally people do not make that choice. For example, a ballpoint pen’s steel tip, plastic tube, and ink are all sourced from different countries before being shipped for manufacturing in France or the U.S., and then shipped yet again to a retail store or distributor. People want ballpoint pens. A quick trip to the supermarket offers grapes from Chile, avocados from Mexico, peppers from Peru, spices from India, and tilapia from China. A single package of Lipton tea includes leaves from dozens of countries and production occurs in lower cost regions. Without major changes to what we buy, we simply can’t source, produce, and consume everything we rely on from just one region or country.

Improved quality of life isn’t just for developed countries like the United States. Global trade and production of goods have caused money to flow into a wider range of producer countries and enabled us to generally increase the average well-being of people around the globe (the economist), including higher average incomes and better local infrastructure.

The power of so many countries’ with trade dependencies led to relative stability in global trade, even in spite of ideological differences between countries. This stability led to predictability and confidence that global product investments would pay off. The general reliability of the system, e.g., producing goods in China for US consumption, allowed companies to plan around a global sourcing strategy with confidence that raw materials, manufacturing, and global shipping would deliver on time. This led to the “just in time” production and shipping mindset, and low inventory levels that are more capital efficient. 

Supply chains worked well enough to be boring. 

Then, things stopped working. With COVID, swings in consumer spending driven by stimulus and shutdowns, imbalances in the supply and demand of freight transportation, port and policy-led delays, spiking shipping costs, the Ukraine war disrupting food and fuel, and more, made the global supply chain slower and less reliable with more volatile costs. Sourcing from overseas went from feeling like a smart no-brainer, to a risky proposition. 

The effect of this is that companies are examining the stability of their own supply chains and considering changes to reduce risk. We see more companies looking to move their production plants to Mexico (near-shoring) while also implementing automation in the U.S. and launching new exploration for natural resources, or investing to find locally available substitutes. Leaders are switching from “just in time” to “just in case” to solve for predictability in the long term.

In the coming years we expect to see a new wave of investments (and startups) building alternative stable-chains that optimize for stability and predictability over cost alone. While at the same time the incumbent supply chains will recover and return to relative normalcy. Now that companies have seen how painful things can get when they go wrong, the door will be open for considering change.

Lastly, in any supply chain setup, using data and technology to run things more efficiently will be instrumental for improvement. This is table stakes for building a more compelling and productive system, and it will be critical no matter how the freight is flowing.

Watch the full panel.

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Autonomous trucking continues to be one of the hottest topics in freight. The most practical way for self-driving to work in trucking is for the driver to stay in the truck throughout the job, handing driving responsibilities to the autonomous truck on highways in order to rest and reset their hours-of-service, just like team-driver pairs do today. Here’s how.

In late 2019, the cost to ship a truckload of boxed macaroni and cheese from Los Angeles to Seattle was about $2,100. Today, that same delivery costs $4,500, up 115% in two years. This is because demand for physical goods has surged during the pandemic, but there aren’t enough available drivers or trucks and trailers to fulfill this demand. According to the American Trucking Association, the United States is short 80,000 drivers today. Adding to this challenge is that the production of new trucks and trailers is only meeting about 70% of orders due to materials and labor shortages, according to manufacturers. Whatever the numbers, trucking capacity is constrained today and will be again in the future.

The immediate way to create capacity is to orchestrate the system so that truck drivers are as productive as possible. Today, about one-third of the time trucks run empty, and drivers sit idle at facilities for hours because of congestion, suboptimal appointment times, or warehouse constraints on loading or unloading. Additionally, life as a truck driver can be stressful, from slow or delayed payments-for-work to the daily challenge of finding overnight parking. These issues hurt productivity, increase costs, and make trucking less attractive for drivers. These are the problems that Convoy is working on today.

Self-driving is the next major opportunity to address these issues. First, it will increase capacity. The U.S. Department of Transportation’s (DOT) hours-of-service (HOS) regulations keep the roads safer, but these laws limit truck drivers to 11 hours of driving per day. Autonomous trucks, without these HOS constraints, could make deliveries in half the time, doubling productivity, reducing costs and nights on the road, and adding capacity to the freight industry. 

Second, self-driving technology can improve driver retention. Driver-assist technology is already reducing stress on drivers, and with Level 4+ autonomy, drivers will be able to multitask in the cab and expand their roles into maintenance planning, customer service, etc., creating new career paths. Additionally, with more trucks able to run autonomously at night, overnight parking capacity will increase, making it easier for those who need parking to find it and removing a major source of anxiety for drivers.

Self-driving has been touted as the future for a decade now, so how is this different? Most of what happened before was related to ride-sharing and robo-taxis in and around cities, which are very difficult for autonomous systems to reliably navigate. Conversely, for trucking, most jobs have a major on-highway portion to them. There is enough upside in trucking that it is worth investing in solutions for the highway leg of the trip alone. In these trucking scenarios, humans will drive the first- and last-mile portions of the run, navigating urban areas and people at warehouses and other facilities, and the truck will drive itself on the highway. Therefore, the key is to build a system that supports hand-offs between autonomous trucks and human drivers. 

There are a few ways that this could happen, each with its own set of regulatory requirements and operational challenges. How this plays out will impact whether or not we realize the benefits of self-driving anytime soon or not. Let’s get onto it.

The transfer hub model

Conventional thinking is that in order for self-driving trucks to reduce the cost of trucking, there shouldn’t be a paid driver onboard for the autonomous portion of the trip. This leads to the plan for self-driving that we hear most often: the transfer hub model. In this model, a local driver drops a loaded trailer at a “hub,” typically located outside of a city by the highway. A self-driving truck transports that trailer autonomously along the highway portion of the run, dropping it off at a hub near the destination city. From there, another local driver picks it up and takes it to the final delivery location. 

The benefit of this model is that for very long highway runs, the cost savings of not paying anyone to be in the cab could offset the additional infrastructure cost of building and operating hubs and running local deliveries. Additionally, with high levels of consistent volume, the network could become very efficient and halo effects may emerge, such as local drivers becoming experts on local routes.

However, there are several practical reasons why this model isn’t the best place to begin.

1. It would increase the chances of delays and operational disruptions, especially before autonomous trucking is widely adopted.

• Every additional stop and every trailer handoff during a job increases the risk that the delivery will not be made on time. The transfer hub model has double the stops and hand-offs of a point-to-point job.
• The requirement to visit a hub on each end of the journey reduces route flexibility and the options for a driver to navigate in the most efficient way possible. 
• Even on highway portions, a driver may still be needed to navigate off-highway detours, inclement weather, construction zones, weigh stations, etc. Do the trucks just pull over and wait for an emergency operator to arrive? 

2. It will take a lot of upfront capital and coordination to set up an efficient, bottleneck-proof operation with route flexibility.

• To allow trucks to avoid traffic or delays at a facility, each region will need many shared transfer locations. 
• A single carrier running their own transfer hubs will need less capital and be less operationally efficient than 3PLs operating shared hubs. Shared hubs will require coordination between competing carriers.
• Without shared hubs, hundreds of thousands of small carriers and owner-operators won’t be able to engage.
• These hubs would be expensive to set up and operate. 
• Hubs would become a new potential chokepoint for the system.

3. It requires that logistics planning teams switch to a new model with new risks. 

• It is a new model with a cold-start problem. It is harder than using autonomy to enhance the existing point-to-point system.
• The industry is fragmented so it will be hard to coordinate a broad transition to this model. Proving it works sub-scale will also be a challenge.
• It will require a lot of paperwork and risk management. Today, a single carrier is responsible for moving each load end to end. In a transfer hub model, at least three different drivers would take possession of the freight, creating additional liability and requiring additional approvals.

There is a better way to launch autonomous trucking that fits the current framework, does not require scale, and allows America’s millions of small carriers, owner-operators, and truck drivers to participate at the same level as larger carriers. This way delivers nearly all of the benefits of the transfer hub model without the issues. It is also compatible with today’s system of point-to-point truckload deliveries and is based on the existing team-driver model.

We are calling it the autonomous tag-team model.

The autonomous tag-team model

The DOT’s HOS regulations limit truck drivers to 11 driving hours after 10 consecutive hours off duty. Today, when a load needs to be delivered more quickly, two-person driver teams work together, alternating who is driving and who is offduty, so they can refresh their hours en route and cover nearly twice as much ground per day as a single driver. This is more expensive, but it allows for much faster transit times (HOS rules summary).

We propose that this model, with one of the drivers in the team being the autonomous truck, is the safest, fastest, most driver-friendly way to quickly realize the benefits of self-driving trucks once the technology is approved. This is similar to an airplane’s autopilot system partnering with a human pilot. The truck would navigate the highway portions, during which the driver would be off duty, resting and resetting their HOS. For the first- and last-mile portions of the run, or whenever the truck is unable to operate autonomously on the highway, the driver would take over.

This is a practical, walk-before-you-run model. It can start without any changes to the existing point-to-point routes that drivers use today and will allow regional and long-haul runs to be completed in nearly half the time. This would quickly add a large amount of new trucking capacity to our economy while helping drivers make more money, stay productive, and maintain their livelihoods. 

Approval of this model should happen in parallel to when DOT and state regulators deem self-driving trucks safe enough to operate on public highways around other vehicles without a driver onboard. At that point, by definition, it will be safe for an off-duty driver to be inside the truck. This is exactly the same as today’s team-driving model, with the truck filling the role of the second driver. 

Cost comparison

The autonomous tag-team model has fewer operational hurdles, but is it more expensive? The short answer is no. It is less expensive for runs under about 1,500 miles and for very long distances, the costs are similar.

Consider this scenario: A 900-mile dry van run pays the trucking company $2,700. A single driver could complete the run in two days and would be paid about $500. Done with an autonomous truck, the run could instead be completed in just one day. How do the different approaches stack up to this?

Transfer hub: In the transfer hub approach, no driver is paid for the highway portion. However, paying the hub operator for local pickups and deliveries would likely add $200 each, or $400 total.

Autonomous tag team: For a one-day run, the tag-team driver could make about $300, a bit more than the per-day rate of a traditional, manual job. This model costs $100 less than the transfer hub approach for this job, not including additional miles driven.

If the job were longer, say 2,000 miles paying $5,000, the greater highway distance makes the no-driver transfer hub model lower cost, but only by about $170, or 3% of the total job. That said, this does not factor in other hard-to-predict costs such as roadside assistance for when the autonomous trucks need human support, extra miles driven to the transfer hub, or any additional delays that result from the trailer being transferred twice versus running straight through. These would potentially offset any cost advantage.

Net-net, the autonomous tag-team approach is the best approach. It offers the same speed-of-delivery advantages without the operational complexities and service risks of a transfer hub, for about the same cost. It also keeps drivers in the truck, supporting their livelihood and allowing drivers’ roles to expand as broader freight operators on the road.

And because of the existing team-driver model, as long as trucks are allowed to operate fully autonomously, human drivers should be able to team-drive with them as soon as the technology reaches Level 4, with minimal new regulatory work or operational changes to allow that to happen.

Closing

We hear questions from industry executives and regulators about how self-driving will take shape. In the long run, these two models will likely both exist and complement each other based on different delivery scenarios, e.g., trading off speed, distance, and cost, but the tag-team model is the right one to start with. 

This is a list of things that will need to be clarified for the tag-team model to work:

• Autonomous technology must be ready for general use by trucks on public highways (i.e., under what conditions will trucks be allowed to run without an engaged human behind the wheel, and who decides this at what level, etc.)?
• Is the human team member off duty when the self-driving technology is operating the vehicle, just as if another human were driving?
• Where can the driver be during this period, in the front seat, cab, etc., and what other limitations exist (e.g., like the split sleeper berth rule)?
• Can a driver refuel their truck (or plug it into a charger) during off-duty hours? 
• Under what circumstances can the autonomous truck request the off-duty driver’s assistance without interrupting their off-duty hours? 
• What, if any, transfer of risk and liability from carriers and drivers to the self-driving technology company will be needed when the truck is in autonomous mode?  

No matter which model is used, as self-driving trucks enter the market, we will see years of mixed fleets containing traditional and autonomous trucks of varying degrees, as well as mixed rules and regulations for fleet operators to follow. Whether a truck can drive autonomously will vary by its technology, location, current weather conditions, traffic situations, etc. Today, every truck has the same hours of service, but in the autonomous world, it will vary based on these and other factors, making it more difficult to match the right load to the right truck. Doing this effectively will require technology and machine-learning based systems to consider all of the new variables and optimize trucking. In short, things will get more complicated before they get simpler, and it will take digital, AI-driven freight platforms to make sense of all these new variables and optimize this more complex system. This will provide a big opportunity for technology platforms such as Convoy. 

This story originally appeared in Convoy’s “The Future of Freight,” featuring 40 thoughtfully curated pages on supply chain disruption, freight procurement, market volatility, and more.

The post The Fastest Path to Autonomous Trucking appeared first on Convoy.

Since Convoy started seven years ago, I have challenged our teams to use technology to improve trucking and shape the future of freight to benefit carriers, truck drivers, shippers, and the environment. I believe that technology, alongside capable operators, has the power to deliver this type of win-win-win. Over the last decade, connectivity has become ubiquitous, matched with cloud technology that effectively removes data capacity, processing power, and scale limitations. As we’ve applied these capabilities to instrumenting, coordinating, and automating freight across millions of truckers, we’re increasing productivity, facilitating industry collaboration among shippers, carriers, and brokers, and eliminating the empty miles so prevalent in historical freight methods. 

We are in the early days of technology improving trucking — our work is only just getting started. Here’s to seeing what problems we can work together to solve next.

1. True elastic capacity

The only supply chain constant is volatility. Whether it’s a backed-up facility, a swing in demand, moves outside normal patterns, or a full-on market swing, transportation teams are constantly fighting to maintain service levels.

We have invested in creating this elasticity — the real-time ability to dynamically activate trucks, trailers, and drivers to match needs — to provide a high level of service to customers and absorb the swings they experience in their business. For example, over the past several years, our Convoy Go program has become the most flexible trailer option on the market. To achieve this, we use technology to continually analyze the number of trailers customers need at a given facility to satisfy upcoming loads. Our systems automatically route and rebalance thousands of trailers and trucks across a geography to ensure customers always have what they need. This elasticity lets facilities operate at peak efficiency, despite unexpected levels of demand.

2. Guaranteed coverage

In a fragmented industry where capacity and service levels are inconsistent, shippers maintain relationships and solicit bids from dozens or even hundreds of carriers in order to have redundant options, even in a small region or on a particular lane. Despite this significant undertaking, coverage can still be unreliable, and reacting to routing guide failure is a regular challenge for every transportation team. 

Guaranteed coverage will become a reality for shippers, and they will receive game-changing benefits. Coverage failures will become rare, dramatically simplifying procurement and operations. Systems will become more tightly integrated, and processes at facilities like dock scheduling and loading will be optimized. All of this results in significant savings on the total cost of freight.  

At Convoy, we operate a network that reaches tens of thousands of owner-operators and small trucking companies every day — fully automated and larger than the traditional approach. Through this network, Convoy can match the needs of our customers in any market condition. Customers adopting Convoy’s Guaranteed Primary program are already receiving these benefits today, including keeping products on shelves, transparent pricing, and cost savings. 

3. Connecting all freight with all drivers

90% of America’s truck drivers are owner-operators or employed by small businesses with fewer than six trucks. These entrepreneurs are the backbone of the American supply chain, yet they face challenges not shared by larger counterparts: lack of access to quality loads from large shippers, uncertainty about consistent work, and unfair financial treatment. 

As the industry continues to adopt new technology, small carriers will have access to the same protections and opportunities as large trucking companies.

Convoy’s app empowers drivers to service loads from the largest shippers, proactively plan their routes to know when they’ll be home with their families, and create schedules that keep their truck full and earnings predictable. Even at seven years in, it’s still very early, with much more potential to better learn preferences to help drivers and small businesses make decisions on the most impactful options.

4. New frontiers to drive down total costs

Transportation is no longer just about getting trucks. Transportation teams increasingly rely on insights gathered from analyzing tender practices, facility operations, driver feedback, and more to increase efficiency and drive down costs. There’s still a lot to do to make this data easily accessible, and this is just the tip of the iceberg.

Traditionally, fragmentation in freight has made it one of the most challenging links to integrate in supply chain management. Digital freight networks like Convoy have systems orchestrating every step of the shipment lifecycle with real-time connectivity from tenders and spot boards all the way to the inside of trailers and the cab of each truck. There is incredible potential to optimize inventory, warehouses, orders, and more by providing signals into shipper systems delivered through real-time APIs, not humans. Today, some of Convoy’s customers run their daily list of orders through our systems, where we are using our signals to consolidate orders into fewer trucks and more efficient routes with lower total costs. This is one benefit of dozens we will discover in the years ahead.

5. Self-driving trucks team up with human drivers

The adoption of self-driving trucks will take many years to be fully realized. I believe one of the first places we’ll see this applied is expanding the 11 hours of service drivers get today. As autonomous driving technology matures, drivers will be able to hand off navigating the highway portions to the vehicle so that the human driver can go off duty, rest, and reset their hours of service.

As self-driving trucks enter the market, we will see years of mixed fleets containing traditional and autonomous trucks of varying degrees, as well as mixed rules and regulations for fleet operators to follow. Whether a truck can drive autonomously will vary by its load, technology, location, current weather conditions, traffic situations, etc. Doing this effectively will require technology and techniques like machine learning and AI to consider these variables and optimize. This will be a big opportunity for Convoy and an exciting area to partner in.

6. No empty miles

Waste benefits no one — it’s bad for carriers, shippers, and the environment. Today, 90% of S&P 500 companies invest in and report annual corporate sustainability goals, up from 20% a decade ago. In March, the SEC announced a climate disclosure proposal tying greenhouse gas emissions and indirect emissions to risk management. As sustainability continues to gain momentum in modern business practices, freight logistics represents a massive, largely untapped opportunity in sustainability. 

With 35% of all heavy-duty truck miles still being driven empty, technology-driven freight operations will become a meaningful and measurable contributor to companies’ sustainability goals. If the industry can achieve the same efficiency improvements that Convoy has seen on bundled shipments, it would reduce carbon emissions by 40 million metric tons annually. That’s the equivalent of taking more than 8.6 million passenger vehicles off the road for one year, or planting 661 million tree seedlings that grow for 10 years.

If you’re reading this, I hope you’ll push to make sustainable logistics procurement a first-order priority and put an emphasis on any freight companies eliminating empty miles. 

This story originally appeared in Convoy’s “The Future of Freight,” featuring 40 thoughtfully curated pages on supply chain disruption, freight procurement, market volatility, and more.

The post The Road Ahead: 6 Ways Technology Will Enable the Future of Freight appeared first on Convoy.

Over the next decade, the $1 trillion that companies spend each year to truck freight around the country will shift from traditional, offline approaches to digital-first strategies. These smart systems are easy to use, full of rich data insights, and optimized by machine learning algorithms. This pattern of digitization has played out in nearly every other industry, and it’s happening in trucking right now.

The trucking industry links more than 100,000 shippers across the domestic supply chain with a diverse base of more than 1 million carriers and 3 million drivers. It operates in silos with minimal data, opaque pricing, millions of empty miles, and lots of waiting around. This system no longer keeps up with the dynamic requirements of a healthy supply chain.

Trucking is shifting to connected, transparent, and data-rich systems that efficiently orchestrate across shippers, carriers, drivers, trucks, trailers, docks, yards, and more. Carriers and drivers experience higher truck utilization, fewer empty miles, and less wasted time. Shippers benefit with better reporting, more visibility, and real-time pricing and decision-making at lower total costs.

Freight Trucking in the New Digital Supply Chain

Convoy has spent the last seven years building this future of trucking for our customers by connecting small carriers and owner-operators onto a digital platform. This unique access to capacity and a rich stream of data for every load allows us to rethink how we run our trucking services and leads to countless innovations. We aren’t letting up anytime soon, and our recent announcement shows that some of the best investors in the world are behind us. Here are six critical areas in the transition to digitally-driven freight solutions.

1. True elastic capacity
2. Guaranteed coverage for contract freight
3. Democratizing access to freight to maximize efficiency – all carriers and owner-operators available for all freight
4. Reducing total costs with the data and insights generated from transportation
5. A ‘No empty miles’ mindset
6. Self-driving trucks teaming up with human drivers

1. True elastic shipping capacity

The one thing we can always count on in a complex supply chain is volatility. Whether it’s a backed-up facility, a swing in demand, moves outside normal patterns, or a new phase of the freight market cycle, transportation teams are constantly working to maintain access to high-quality service, reliable capacity, and fair prices.

We have invested in creating true elasticity — the real-time ability to dynamically activate trucks, trailers, and drivers to match needs — to provide a high level of service to customers and absorb the swings they experience in their business. For example, over the past several years, our Convoy Go program has become the most flexible drop & hook trailer option on the market. To achieve this, we use technology to continually analyze the number of trailers customers need at a given facility to satisfy upcoming loads. Our systems automatically route and rebalance thousands of trailers and trucks across a geography to ensure customers always have what they need. This elasticity lets facilities operate at peak efficiency, despite unexpected levels of demand. 

The investments we’ve made over the last seven years – in more than 50 machine learning models, predictive trailer routing, and automated backup and spot services for drop freight – provide the foundation for this future, enabling transportation teams to quickly flex their capacity in ways never before possible.

2. Guaranteed coverage for contract freight

In a fragmented industry where freight capacity and service levels are inconsistent, shippers maintain relationships and solicit bids from dozens or even hundreds of carriers to have redundant options, even in a small region or lane. Despite this significant undertaking, coverage can still be unreliable, and reacting to routing guide failure is a regular challenge for every transportation team. 

It’s critical that guaranteed coverage and its game-changing benefits become a reality for shippers. Coverage failures would become rare, dramatically simplifying procurement and operations. Systems would become more tightly integrated, and processes at facilities like dock scheduling and loading would be optimized. All of this would result in significant savings on the total cost of freight.  

At Convoy, we operate a network that reaches tens of thousands of owner-operators and small trucking companies every day — fully automated and more extensive than the traditional approach. Through this network, Convoy can match the needs of our customers in any market condition. Customers adopting Convoy’s Guaranteed Primary program are already receiving these benefits today, including keeping products on shelves, transparent pricing, and cost savings. 

Over the last 18 months, market volatility in freight RFPs has accelerated the shift toward this future state. Freight providers increasingly offer alternatives to the standard freight RFP tools and processes, and shippers are adopting dynamic pricing programs with guaranteed coverage, including Convoy’s Guaranteed Primary and Dynamic Backup.

3. Democratize access to freight to maximize efficiency – all carriers and owner-operators available for all freight

90% of trucking companies have fewer than six trucks and hundreds of thousands of drivers are owner-operators of their own rigs. These entrepreneurs are the backbone of the American supply chain, yet they face challenges not shared by larger counterparts: lack of access to consistent freight and high-quality, high-volume loads from national shippers, an inability to secure efficient drop and hook freight, or attractive dedicated or contracted runs, and opaque or unfair financial treatment. 

As more small carriers and owner-operators use technology platforms to plug into freight opportunities and plan their schedules, they will gain access to the same opportunities and safeguards as large trucking companies. Convoy’s app empowers drivers to service loads from the largest shippers, proactively plan their routes to know when they’ll be home with their families, and lets drivers create schedules that keep their truck full and earnings predictable. It’s still early; there is much more potential to help drivers and small businesses make decisions on the options that impact them most.

Since 2015, Convoy has been building toward this future. Programs like Convoy Go provide small carriers with access to more efficient and lucrative power-only loads. Hassle-Free Detention and QuickPay help carriers get paid quickly and easily. TruckYeah Savings provides financial economies of scale that enable carriers to save on fuel, factoring, and equipment. And through Convoy for Brokers, carriers have more ways to maximize utilization with loads from other 3PLs that have adopted Convoy’s platform to cover their demand. 

4. Reducing total costs with the data and insights generated from transportation

The data and insights generated through freight transportation create substantial value beyond the transportation of goods. Transportation teams increasingly rely on insights gathered from analyzing tender practices, facility operations, driver feedback, and more to increase efficiency and drive down costs. These insights are just the tip of the iceberg.

Digital freight networks like Convoy have systems orchestrating every step of the shipment lifecycle with real-time connectivity from tenders and spot boards to the inside of trailers and the cab of each truck. There is incredible potential to optimize inventory, warehouses, orders, and more by providing quick and accurate signals through real-time APIs, not human transcription. 

Today, some of Convoy’s customers run their daily list of orders through our systems, where we use our signals to consolidate orders into fewer trucks and more efficient routes with lower total costs. This is one benefit of dozens our industry will unlock in the years ahead.

5. Support sustainability in freight transport with a ‘No empty miles’ mindset

Waste benefits no one — it’s bad for carriers, shippers, and the environment. Today, 90% of S&P 500 companies invest in and report annual corporate sustainability goals, up from 20% a decade ago. In March, the SEC announced a climate disclosure proposal tying greenhouse gas emissions and indirect emissions to risk management. As sustainability continues to gain momentum in modern business practices, freight logistics represents a massive, largely untapped opportunity in sustainability. 

With 35% of all heavy-duty truck miles still being driven empty, technology-driven freight operations will become a meaningful and measurable contributor to companies’ sustainability goals. If the industry can achieve the same efficiency improvements that Convoy has seen on bundled shipments, which was shown to reduce the average empty miles of participating carriers from 36% to 19% (a 45% reduction), it would reduce carbon emissions by 40 million metric tons annually. That’s the equivalent of taking more than 8.6 million passenger vehicles off the road. 

Since our founding in 2015, Convoy has been a pioneer in sustainable freight. We’re leading the transformation toward a more sustainable future of freight through investments in technology like automated reloads, multi-load batching, and efficient appointment windows.

6. Self-driving trucks team up with human drivers

The mainstream adoption of self-driving trucks is many years away. As autonomous driving technology matures, the first way this technology will benefit the industry is by allowing trucks to run longer than the current limit of 11 hours of service per day that drivers must follow. Drivers will remain in the truck, but be able to hand off navigating the highway portions to the vehicle so that the human driver can go off-duty, rest, and reset their service hours (read more about my thoughts on self-driving trucks and human drivers here).

As self-driving trucks enter the market, we will see years of mixed fleets containing traditional and autonomous trucks of varying degrees, as well as mixed rules and regulations for fleet operators to follow. Whether a truck can drive autonomously will vary by its load, technology, location, current weather conditions, traffic situations, etc. Doing this effectively will require technology and techniques like machine learning and AI to consider these variables and optimize. This will be a significant opportunity for Convoy and an exciting area to partner in.

This shift in fleet management is a natural fit for digital freight networks like Convoy. The machine learning investments we’ve made in automated brokering and asset rebalancing are the foundation to managing the mixed fleets of the future.

The road ahead

This change is happening today, and I’m grateful for all our stakeholders’ involvement. To our drivers, dispatchers, transportation planners, logistics managers, procurement officers, supply chain executives, brokers, and partners – your insights and feedback continue to drive the work we do every day. 

The post America Needs a Digital Supply Chain and Trucking is Next appeared first on Convoy.

a significant challenge for the freight industry has always been having contract pricing tool for freight RFPs because neither party, the shipper or the carrier/broker, is financially obligated to deliver on what was agreed to at the time of the contract. This lack of obligation occurs because shippers can’t perfectly predict the number of loads they will need to move when, and carriers and brokers can’t predict truck and labor prices. COVID provided a perfect example of this challenge. 

Volatility in Freight Contract Pricing

When COVID first hit, truck rates were highly volatile as consumers stockpiled goods and different states and sectors of the economy turned off and on again. Then, rates increased rapidly for over a year, causing many of these annually contracted truck rates to become outdated. Some of these contracts began to unravel – shippers needed more capacity in different places than they had forecast and trucking carriers and brokers either struggled to find capacity at the contracted rates or opportunistically went after the then-current higher rates. Having seen this pattern in other boom and bust freight cycles, Convoy created a new type of contract pricing program to handle volatility without compromising service. 

Dynamic Contract Pricing for Freight Shippers

Guaranteed Primary launched in September 2020, allowing our customers to participate in a dynamically priced contract agreement that guaranteed tender acceptance. The first program of its kind, it also enables users to see rates at the shipment level before tendering through a predictive pricing algorithm and provides complete transparency into our costs every month through reports and business reviews.

To say this caught the industry’s attention is an understatement. One of our employees’ LinkedIn posts about this innovation became the epicenter of an industry debate on how to approach the problem. Many 3PLs and carriers were skeptical that it could work or be better than the status quo. However, many others saw something they liked.

It turns out that both were correct.

Dynamic Contract Pricing Solves Different Problems with the Freight Industry’s Traditional RFP Process

Freight is complicated. Each shipper, each lane, and each market condition present different problems that can be solved with different types of contract pricing. In some situations, Guaranteed Primary wasn’t the best fit, but it turned out that in many situations it was. The first set of shippers to adopt the new program were urgently trying to find stable trucking support, and Guaranteed Primary offered an efficient solution. Many others also wanted to secure a contract that would adjust down as the market softened, as it is doing today. Here’s what we’ve seen so far:

• 18 months after launch, every customer we’ve onboarded to the program is still using it today. 
• When the industry tender rejection rate hovered around 25% in Q3 2021, Convoy accepted 99.997% of Guaranteed Primary loads.
• Demand is accelerating for the program from both new and existing customers – with load volume nearly quadrupling and the number of lanes serviced doubling in the last year.
• Guaranteed Primary is an excellent fit for shippers with high rejection rates, low safety stock, out-of-stock, and just-in-time manufacturing or inventory scenarios – especially in tight markets.

Over the past year, I’ve spoken with several Guaranteed Primary customers to better understand their experience.

Benefits of Dynamic Pricing vs. Contract Pricing

1. Dynamic contract pricing drastically improves service levels and helps avoid out-of-stock scenarios.  One of our large retail customers struggled to keep their products in stock, with a typical tender acceptance on surge freight at 15%. When they began utilizing Guaranteed Primary, tender acceptance shot up to 100%, allowing them to realize millions of dollars in revenue by keeping shelves stocked. Additionally, they saw on-time pickup improve from 14% to 86% when combined with our drop program.
2. Digital freight networks deliver excellent coverage for low lead time freight. Some of our customers don’t have the luxury of advanced planning due to their supply chain operations. Despite having an average lead time of only 24 business hours, we eliminated the need for spot and service over 350 problematic lanes for a multinational auto manufacturer. They were previously experiencing rejection rates of up to 30%. But with our elastic carrier network, we have covered 100% of loads while meeting the strict OTP/OTD requirements inherent with the coordinated relay/handoff nature of just-in-time manufacturing.
3. Everyone benefits from transparency, fair prices, and guaranteed capacity. When the market swings after the ink has dried, traditional contracts result in a winner and a loser – one reason why they’re so often broken. By providing transparent reporting and detailed reviews with our customers, we can grow a healthy business with positive margins, provide a fair price to our shippers without the hassle of tender rejections from broken contracts, and keep our carriers earning competitive wages.
4. Cost savings for shippers are real, even in tight markets. Our customers have done the math. They’ve compared our rates to industry averages at the lane and shipment level, and we’ve been able to save them money in real-world scenarios. One customer recently told me they’d saved 16% in truck costs with Guaranteed Primary and an estimated $90,000 savings on administrative costs by avoiding the spot market.
5. A new set of award criteria is emerging. Previously, shippers haven’t had easy access to additional data to evaluate incumbent providers against new providers. It’s been a game of “the asset or broker you know vs. the one you don’t,” but that isn’t the case anymore. As technology becomes a core part of the industry, shippers can pinpoint areas that matter most to their business: where our network has the strongest overlap, our performance on lanes and facilities they ship into and out of (or similar), and where they are best served with traditional contracts vs. dynamic pricing, as well as live or drop. I am grateful that our technology can support these asks and speed award decisions as we partner with our shippers to become more efficient in planning cycles.

Overall, we see positive shifts in the market, indicating a collective effort to modernize contract freight. Mini-bids are more common. Technology is making traditional RFP processes less cumbersome and manual. We’ve even seen other players evolve existing cost-plus programs to more closely mirror what we created. I believe we’ll soon see dynamic contract pricing programs take substantial volume out of the spot and traditional contract markets to create more balanced portfolios that benefit all players.

Today our customers are putting more volume into Guaranteed Primary, anticipating even more cost savings as the market softens. They’ve also told us the service improvements alone were enough reason to make the switch. We’re still in the early days of this monumental shift, but I’m excited as ever about the opportunity and the road ahead.

The post 5 Ways Dynamic Contract Pricing is Helping Shippers appeared first on Convoy.

As a kid growing up in the Pacific Northwest, I was surrounded by nature. My family embraced this and most of the vacations and adventures we went on involved camping, backpacking, or road trips to visit national parks. We had the opportunity to enjoy what had been preserved by previous generations, and while I didn’t understand the broader concepts of sustainability at that time, I knew that it was important that we didn’t lose what we had.

The first time that I started to get invested in this was in the 5th grade. For my science class, I developed an independent project to test the water quality of streams around Seattle, including taking samples and conducting an analysis of the water using cultures to see what bacteria it contained. Later that same year I asked my parents to take me to Seattle City Council debates in advance of an election, so that I could hear the environmental policies of each candidate.

As an adult I began to understand sustainability in a different way. I realized that it isn’t just about preserving what’s in front of me right now, for me to use in my life. What matters is ensuring that our planet stays healthy overall so that people everywhere can continue to live and thrive for generations to come. The earth is resilient, but not invincible. Recent weather events have emphasized how fragile the balance is.

When Grant Goodale and I started Convoy, we saw an opportunity to make the industry more sustainable by creating efficiencies and reducing waste. We wanted to create a great business, but we also wanted our careers to be part of a greater storyline about changing an industry for the better. There were two areas that we had in mind. The first area was eliminating environmental waste, specifically carbon emissions, by reducing empty miles and time spent burning fuel while idling at a facility. The second was making the trucking industry more sustainable for truck drivers with faster payments, more security, and better conditions on the road. If we were successful in doing both of these, we knew that we could make a difference and create an extremely valuable business at the same time. 

That same opportunity is still huge today. I believe that it’s our responsibility to realize the potential of what’s possible. That’s something that’s core to our business today, and something that we want to inspire others in our industry to also see.

Introducing #NoEmptyMiles

Today, about 35% of the time when a truck is running down the highway, it isn’t pulling a load. Addressing this can be a win-win-win for all sides of the industry: it cuts down on environmental waste, saves money spent on unnecessary miles, and reduces wasted time for drivers, helping them be more productive when away from home.

I’m excited to announce that today Convoy is launching a new, sustainability focused campaign called #NoEmptyMiles. 

The goal of this campaign is to start new discussions around waste in the freight industry. We chose #NoEmptyMiles to represent our sustainable impact because it’s a problem that every company has today – and can take action to solve – but we all need to be part of the solution. 

It’s my hope that #NoEmptyMiles draws attention to the greater problem of waste in freight, the importance of sustainability in the supply chain, and the possibilities that exist in a zero waste world. 

Taking Action Together

“Perfection is the enemy of progress.” – Winston Churchill 

This is a problem that we can tackle together. The best way to reduce empty miles is to start measuring them and setting goals against them, even if done in a completely imperfect or imprecise way. Start by writing down two or three specific areas where your operations generate empty miles directly or via your suppliers. For each of these areas, determine how you will measure, track, and report progress. Let your team know that it is rough, and maybe only a proxy for actual empty miles. The next time you set out to plan your goals and priorities, inspect what you’ve done and challenge your team to think about how you can do better. Eventually, you’ll discover new ways to measure the impact you’re having, and soon you’ll be ready to share your goals with your partners, customers, etc. This process was definitely true for Convoy when we started focusing on empty miles. We didn’t know how to measure our progress at first, but setting a goal forced us to learn, and eventually build technology to help us get better in achieving it. Five years later, we released Ship Responsibly, our first sustainability report, and we’ve since set our most ambitious goals for the future.

Reducing empty miles is an area where all of our environmental and business interests are aligned, and that alignment increases the chances that we can come together to make quick and broad progress. At Convoy, we have an incredible team that thinks a lot about sustainable networks and programs. We’re always happy to talk to companies about steps they can take themselves, or how we could work together in pursuit of this common goal. 

I hope you’ll join us in our pursuit of #NoEmptyMiles in trucking. Together, we can create a new era of sustainable freight.

The post The Importance of #NoEmptyMiles appeared first on Convoy.

Our path began in early 2015, when my co-founder Grant Goodale and I were researching the supply chain, an area we’d come to appreciate from our days at Amazon. Our real exploration began when I was visiting truck stops and warehouses in the Pacific Northwest. We heard firsthand about truckers’ frustrations and their fears. I was struck by how open and collaborative the freight industry was – it seemed everyone we met was willing to share their knowledge and insights. Truckers shared their challenges with the long-standing brokerage system, difficulties of life on the road, and the uphill battle they faced to make ends meet. Shippers shared how hard it was to locate and secure trucks, as well as a variety of challenges associated with tracking their goods.

The more we learned, the more we believed we could bring about positive change and deliver efficiencies that would change lives for the better. The industry’s problems were big and inspirational, and from our experiences in tech, data, and software, we could see that there were cutting-edge solutions that no one was thinking about trying.

After three months of research, we founded Convoy as a local-only, same-day “rolling LTL” trucking service doing work around the Puget Sound region of Washington state. This was our launching pad, and we quickly evolved and grew into the company behind an inspirational mission: To transport the world with endless capacity and zero waste.

Today, we’re focused on solving the toughest problems of waste and inefficiency in the trucking industry. Our vision and direction is shaped by the information and guidance we receive from truckers, shippers, and freight professionals. Every day we learn and we adapt.

We’ve made progress we’re proud of, optimizing how thousands of truckloads move around the country each day and solving the most pressing problems for truck drivers and shippers. For example, we were the first to fully automate the freight brokerage process, this includes matching loads to carriers and automating pricing. This was the crux of inefficiency in trucking and, by automating this process, we eliminate hours of manual effort.

We were also first to guarantee automatic detention using mobile technology, meaning that truckers no longer had to wait weeks and sift through piles of paperwork to collect the late fees they were due. Another first was with the launch of automated reloads which batches multiple loads into a single trip for truck drivers, eliminating 45% of empty back-haul miles. This allows drivers to earn more while reducing the impact on our environment from carbon emissions tied to empty miles. Our nationwide launch of Convoy Go in 2019 enables any carrier to have access to preloaded trailers, something previously only available to larger asset-based carriers. For our shippers, we’ve introduced programs that bring increased efficiencies to managing transportation systems including Dynamic Pricing and Convoy TMS.

When we look ahead, we see a world where trucking operates more smoothly – shippers have less worry and have moved with us to the next leg of the supply chain; drivers have full trucks, are paid quickly and we’ve removed most hassles from their day-to-day; we’ve moved beyond the opaque aspects of trucking (a “black box”) and into full transparency and efficiency of a Digital Freight Network.

We’ve come a long way, and yet we’re still in the early miles of our journey, with many, many more to go. Today, as the world is in turmoil around us, the supply chain is in the spotlight. We are humbled to be part of an industry that is the backbone of our society and that keeps this country running in good times and in bad. We are thankful to work with our shippers who produce and supply essential goods, and we are appreciative of every carrier who spends long days out there on the road.  

Thank you to our shippers, to carriers, and to our community for being a part of this movement.

Dan

The post 5 Years of Convoy: Our Growth and Vision appeared first on Convoy.

In 2015, Convoy started a movement in efficient freight. Our mission – to transport the world with endless capacity and zero waste – underpins everything we do and represents the types of evergreen problems we love to solve. We believe this mission is worth chasing as it will have a lasting impact on thousands of shippers, millions of truck drivers, and our planet. 

Today, we use technology and data to optimize how thousands of truckloads move around the country each day via our Digital Freight Network. We’re committed to reducing waste for shippers and carriers and driving down inefficiency in the $800B trucking industry, which generates over 72M metric tons of wasted CO2 emissions per year from empty trucks. 

We have been humbled and inspired by the investors who share our vision, and today we are excited to announce that we’re accelerating our work with $400 million in funding co-lead by Generation Investment Management and T. Rowe Price Associates. We are excited to welcome Generation Investment Management to Convoy and thrilled to see T. Rowe Price Associates investing again in this bright future.

“Generation’s investment in Convoy is rooted in many years of deep research into the future of logistics. We are seeing Convoy drive the next evolution in efficiency across the industry, through its use of sophisticated data science techniques to continuously optimize its growing network of carriers. This is a true win-win opportunity for the industry – driving a reduction in carbon emissions, while simultaneously increasing take-home pay for carriers and service quality for shippers.”

Joy Tuffield, Partner in Generation’s Growth Equity team

This is a significant moment in time for Convoy and the industry, and our efforts represent a very real win-win-win opportunity. Today our digital freight network is lowering the cost for shippers to move their freight, improving the lives of truck drivers by helping them earn more with less hassle, and helping create a sustainable future for all of us through the reduction of carbon emissions. 

I’m proud of our progress and inspired that after just four years of operations leading shippers, quality carriers, and industrious owner-operators around the nation are betting on Convoy by plugging into our digital freight network. We are excited to serve them today and to be their partner in innovation for years to come. 

For carriers and drivers, Convoy is methodically chipping away at the daily hassles that make these jobs hard and empowering truckers to earn more with innovations like free Convoy QuickPay, one-click automatic detention requests, and instant bidding. And for our planet – the most significant stakeholder – Convoy’s Automated Reloads program is already reducing miles driven without cargo from the industry standard of 35% to 19% by bundling shipments into a single job for a driver. If the industry as a whole is able to achieve the same efficiency improvements that Convoy has seen on our bundled shipments, it would reduce CO2 emissions by 32 million metric tons, which is the same as taking 7.2 million passenger vehicles off the roads for a year.

“Our partnership with Convoy has helped P&G reduce costs and improve service by looking at transportation differently. We value Convoy’s commitment to transparency, innovation, and sustainability, underpinned by a culture of operational excellence.”

Andy Butler, Associate Director – North America Market Operations Purchases, The Procter & Gamble Company.

We are in the early days of technology improving trucking, and in fact, we’ll never be done. There will always be new problems to solve and new, better technologies and innovative ideas for us to pursue, making things better and better for our customers and partners. There is no destination to get to, just a journey embracing that we can be better. That is our culture and why we are so excited to be working on this incredibly vast problem. 

Below I have shared our Convoy values which represent who are as a company and how we show up every day to serve our customers and partners. I wanted to include them with this post because our values have as much to do with our progress as anything.

I want to thank everyone at Convoy and in our industry who have supported us and who believe in what we’re doing. Your dedication has given us the opportunity to make such an incredible difference in the world already, and I couldn’t be more proud. I’m excited to see what problems we get to solve next. 

— Dan

The post Transforming the way we transport freight – the road to endless capacity and zero waste appeared first on Convoy.

We wanted to share this unique solution and encourage others to adopt this practice.

Need space for your employees’ 1:1s? Some place to prep before a meeting? A team huddle? Building on Convoy’s popular marketplace flywheel design, bookable Meeting Circles provide a convenient alternative to conference rooms and are easy to book:

• We’ve started with one multi-purpose Meeting Circle on each floor
• We don’t lose productivity between floors with the Elevator Circle
• Each Circle fits 1, 2, or even 5 people at a time
• You can face in any direction!

How it works (see images below):

• Just add the meeting circles to your company calendar system. We started with, “Meeting Circle-15”, “Meeting Circle-25”, “Meeting Circle-2”, “Meeting Circle-Elevator”
• Show up on time. If you are 5 or more minutes late, you forfeit your circle.
• Exit the circle when your time is up.
• Best practice is to not shove if someone is delayed vacating your circle. After a few minutes, use a company-approved prodder (examples below).

Get started with your Meeting Circles today!

Editor’s note: This is an April Fools joke. 

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