www.dcvelocity.com SEPTEMBER 2018 DC VELOCITY 37
company’s financial situation. (Convoy CEO Dan Lewis
was unavailable to comment.) Other startups like New
York-based Transfix and San Francisco-based Uber
Freight are struggling to gain profitable traction. The
companies holding themselves out as “digital marketplaces” have combined annual revenue of $450 million,
according to the person. That is a fraction of share
in a business estimated by consultancy Armstrong &
Associates at $167 billion a year in revenue. “Right now,
everyone is making nothing,” said the person.
An exception is Greenwich, Conn.-based XPO
Logistics Inc., which started life as a broker and could
be considered a newbie because it is just seven years old.
XPO has been making money hand over fist over the
past couple of years, and it invested massive amounts of
upfront money in information technology (IT). But all
that technology wasn’t put in place to disintermediate
incumbent brokers, according to Troy Cooper, XPO’s
president. “The key with digital solutions is to give
customers [the] confidence in choosing the company
behind the technology,” he said in an e-mail.
Gollapalli of Trucker Tools hints that startups may
have perceived brokerage as an industry lost in the IT
wilderness. “A digital broker is no different from a tradi-
tional broker using IT,” he said.
TECH HAVES AND HAVE-NOTS
In an industry populated with companies of all sizes, not
everyone can afford or feels they need the latest technol-
ogy. Many brokers still rely heavily on manual processes
and thus lack access to real-time data needed to find
a qualified and available carrier and to secure capacity
quickly.
The large legacy brokers, though, are certainly
IT-savvy. J.B. Hunt Transport Services Inc., the Lowell,
Ark.-based giant that operates four divisions including
brokerage, utilizes a platform known as “J.B. Hunt 360”
that is “years ahead of others” in terms of transparency,
scale, and the richness and precision of information,
according to C. Thomas Barnes, president of project44,
a Chicago-based logistics IT provider. Project44 recently
signed an agreement to be Hunt’s backbone for an application programming interface (API). API integrations
allow shippers, carriers, and third-party logistics service
providers (3PLs) to exchange data through a format that
directly links their databases rather than exchanging
information through a neutral format like electronic
data interchange (EDI).
Some companies that were both IT providers and
brokers have since relinquished their brokerage licenses.
Cargo Chief, a Millbrae, Calif.-based company founded
in 2012, surrendered its brokerage license in January
2017 (all brokers must be licensed by the Federal Motor
Carrier Safety Administration) to focus on IT services.
Kyle Wilson, one of Cargo Chief’s co-founders, said it
decided to go the IT route after hearing from brokers
and 3PLs that its technology was superior to anything
they could find elsewhere.
