Armstrong, president of Armstrong
& Associates, a consultancy that
specializes in the third-party logistics industry, said that while an
Uber-type app for commercial
transport might work for less-than-truckload (LTL) or small-package
services that have well-defined
operating networks, it “would
be hard to have confidence in an
application as limited as Uber” for
truckload transportation. “You
need somebody who can executionally work out exceptions such as
truck breakdowns, and I don’t see it
being done in an Uber app without
some additional functionality and
human support,” Armstrong said
in an e-mail.
An executive of another national
broker, who asked not to be identified, said the new players would
find it tough to compete across a
wide geography because they lack
the traffic density of the big boys.
However, the executive said, such a
model is a great fit for local markets,
“and those markets are huge.”
The three new companies share
other common ground. They will
work almost exclusively with small
truckers, which handle about 80
percent of local deliveries. And they
will endeavor to pay drivers with-
in a one- to three-day period of
the invoice’s being cut. However,
Rhyan breaks from Parker and
Stanzione by not entirely casting his
lot with the short-haul market. He
said a “sharing” model can succeed
on a national scale, claiming it has
relevance wherever there’s a need
to match capacity—especially on
the backhaul—with available loads.
Referring to a certain well-known
national and regional LTL carrier,
Rhyan said, “YRC has 4. 4 million
empty miles [over-the-road and
intermodal trailers] in its network
each month.” ;
to move the loads, launched operations
with backing from Google Inc. Chairman
Eric Schmidt and from UPS Inc., among
others. Two weeks before that, Lalamove, a
Hong Kong-based “Uber-like” service that
serves six Asian markets by hiring anyone
with a car and valid driver’s license to be
a driver, raised $10 million in capital from
various firms to further penetrate China (it
now serves Guangzhou and Shenzhen) and
expand into more Southeast Asian markets. On Jan. 29, Cargomatic announced
it had raised an additional $8 million in
venture capital, bringing its initial kitty to
$10.6 million.
But referring to 10-4, Cargomatic, and
BoxSmart simply as “Uber-brokers” looking to “app” traditional brokers out of
existence by enabling shippers to find carriers on their own misses the nuance. None
of the models seeks to totally circumvent
brokers. BoxSmart comes the closest, but
even Stanzione’s model envisions a benefit
for traditional brokers because brokers
will migrate to the more transparent and
efficient shorter-haul segment, thinning
out the crowded longer-haul category,
where many brokers make their money
due to the lengths of haul. Cargomatic,
the most broker-friendly of the trio, will
help traditional folks find local capacity
for their shipper clients and free them to
focus more on the long-haul business.
Rhyan of 10-4 called brokers “
important assets.” However, he acknowledged
that many shippers view them as necessary evils. Rhyan said the legacy brokerage
model is already being challenged as truck
giants like J.B. Hunt Transport Services
Inc., Werner Enterprises Inc., and Knight
Transportation Inc. establish their own
brokerage networks to get a piece of the
action. Bringing new players like 10-4 into
the game may only amplify the upheaval. “I
imagine over the next three to four years,
there will be some interesting discussions
between brokers and 10-4,” he said.
For their part, two of the more high-pro-file brokers aren’t talking. C.H. Robinson
Worldwide Inc., the nation’s largest broker and a big third-party logistics service
provider, and XPO Logistics Inc., whose
acquisition-fueled strategy combined with
organic expansion has put it at number
two, declined requests for interviews. Evan
