Ubers for trucking? Not quite

By John Bendel, editor-at-large

A batch of new businesses soared onto the radar recently: companies like Transfix, Trucker Path, Keychain Logistics, and LaneHoney among others. In trucking media they have all been described in terms of Uber, and all have promised to bring big changes to the middleman space between shipper and trucker.

To make that happen they have automated the broker process and shrunk it into a smartphone app. Using one of these apps you can find your next load on your phone – just as Uber drivers find their next fare. Like an Uber driver, you can book the load, make the delivery, and get paid – all through the app and the service behind it. As with Uber, you should be paid quickly. While these services differ in details, they all offer fast payment, often within 48 to 72 hours.

To be clear, we’re talking here only about the new, smartphone-based companies that serve the long-haul truckload market, not outfits like Cargomatic and others that deal in LTL or local freight markets or like DashHaul, a truckload venture that operates on computers without an Uber-style app.

So where did these would-be truckload Ubers come from? And how do they have the cash to pay truckers so quickly?

For the most part, they arise from California’s Silicon Valley, New York City’s Silicon Alley, and other technology hotbeds. The money, or most of it, appears to come from investment banks and other professional investors betting on big success – maybe even a new Uber.

According to investor website CrunchBase.com, for example, startup Transfix launched last year with $2.5 million in funding. TechCrunch.com reports that Trucker Path recently landed $20 million in funding led by Wicklow Capital of Chicago. Trucker Path is also backed by Chinese social media giant Renren. (By comparison, Uber received its first investor funding of $l.3 million in October of 2010. Since June of 2014, investments in Uber have been in the billions and include companies like Goldman Sachs.)

Most trucking Ubers are brokers, in fact if not in name. They are hired and paid by shippers; in turn they hire and pay carriers. But some, most notably Trucker Path, won’t refer to themselves as a broker. Trucker Path refers to itself as a marketplace.

As funded startups, their greatest challenge may be time. Many successful freight brokers started up in a founder’s kitchen with one or two customers and little or no cash. They grew slowly, organically. The trucking Ubers have no such luxury. They’re starting out at a much higher level, some with significant payrolls, and they’re burning through investor cash as they try to attract carriers on one hand and freight on the other. The clock is ticking.

In that respect, they resemble many of the startups that came and went during the infamous Internet Bubble 15 years ago. At that time, trucking technology startups were expert at fooling the media. They introduced “vaporware,” which often existed only as an idea, as though it were real. Reporters, including me, were led to believe some enterprises were much farther along businesswise than in fact they were. Lesson learned.

Speaking and emailing with the principals and spokespeople for the new trucking Ubers, this reporter experienced some deja vu. While it appears the smartphone-based technology is real enough, I’m skeptical that some are doing the volume of business they would have us believe. I hope I’m wrong.

In any case, the two most visible players in the Uber-like truckload business at the moment are Transfix and Trucker Path.

Transfix (transfix.io) made the biggest publicity splash by winning a Transportation Research Board contest for business proposals called The Six Minute Pitch. That Transfix pitch for its app generated enthusiastic coverage outside the industry. Otherwise good writers with virtually no understanding of freight transportation wrote with great authority that Transfix would revolutionize freight transportation by truck. It will do nothing of the sort.

A licensed freight broker, Transfix works from an office off lower 5th Avenue in Manhattan. The company claims to have launched with seed business from New York City-based shippers, including Barnes & Noble. According to their marketing director, Transfix has generated $2 million in revenue since January, and “shipper customers range from mid to large companies across electronics, manufacturing, grocery and big-box retail, amongst other industries.”

Transfix claims to pay quickly and offers “no haggle” detention compensation. The company recently announced a trip planner for its mobile app. Called TransPath, the new software offers maps and lists resources along the way, but not turn-by-turn, truck-sensitive directions.

Trucker Path (truckerpath.com) first appeared in 2013 as a free app with reviews of truck stops, parking, and other resources along any route you might choose. Truckers themselves provide the content, Trucker Path explains, commenting on such things as the quality of truck stop food, the demeanor of the servers, and the condition of the showers. Truckers even chime in on less savory subjects like infestations of hookers, though Trucker Path does claim to monitor and edit inappropriate entries. Trucker Path calls the concept crowd-sourcing and says it can work in real time as drivers post reviews. The company says 250,000 drivers have signed up, though clearly not all take the time to actually write and post reviews.

But free Trucker Path it turns out was really built to draw truckers into Trucker Path Truckload, which the company calls a marketplace. Operating in software beta and by invitation only at press time, Trucker Path Truckload is reportedly set to go live. The timing resonates neatly with that $20 million infusion of investor cash, which also gives Trucker Path more time and a substantial shot at ultimate success.

Trucker Path works largely through brokers, functioning much like a load board and sometimes as an extension of a broker’s own transportation management software systems. Trucker Path is paid for its service, which includes tracking, etc., through your smartphone, by the broker. But the actual transaction, Trucker Path stresses, is between the broker and the carrier. They are not a broker themselves or another party to the shipment.

That being the case, your payment is through the broker as well. You can be paid quickly and directly from Trucker Path at your option, but that will involve a Trucker Path factoring service.

Meanwhile, Trucker Path is functioning, it’s hiring, and it is now backed by some serious venture capital. They appear to be doing something right.

Of course, Transfix and Trucker Path aren’t the only entries in the truckload Uber race. For example, there’s Keychain Logistics (keychainlogistics.com) based in San Francisco, which promises “broker-free shipping.” When it launched in 2012, founder Brian Beshore told a Silicon Valley audience that Keychain was a “classic case of technology cutting out the middle man.” Both statements are curious from a company that is precisely, in fact, a middleman and a broker.

Keychain handles more than just truckload. Its website allows carriers and shippers to select metropolitan areas in which to work. But beyond that, and like all of the startups mentioned here, Keychain offers little operational information on its website. The Keychain contact phone number went directly to an anonymous voice mail box, and I wondered about Keychain’s health. But founder Beshore did return the call a few hours later to assure me that Keychain was doing great.

LaneHoney (lanehoney.com) evolved from the world of Wall Street big-data technology and is based in New York City. It promises pretty much the same benefits as the other guys, but not for everyone and not right now.

At the moment, according to CEO Roseanne Stanzione, LaneHoney is building business in intermodal containers, both loaded and empty. Without substantial backing by venture capital, at least as reported in the media, LaneHoney is rolling out in what appears to be a planned manner.

“Our business model is all about the owner-operator – making the truck a properly valued asset in a carrier-short world,” Stanzione wrote in an email, obviously playing to a Land Line audience. LL