Speed is the formula of success for freight brokers, but most are limited to the rate at which humans can make phone calls or send faxes and emails to find loads and capacity.
During the past year, a number of new companies have entered the market backed with millions in venture capital to shake things up.
One of these new entrants is Cargo Chief. Co-founder Abtin Hamidi worked in sales and operations at small and large brokerage firms before leaving for Palo Alto, Calif., aka “Silicon Valley” to join a high-tech startup. He then returned to transportation as a consultant for XPO Logistics and became its president.
In early 2013, Hamidi returned to Palo Alto to start a non-traditional brokerage firm, Cargo Chief, with Russell Jones, the former chief executive of ClearVox Communications, an electronics manufacturer and shipper.
Cargo Chief is a data company with brokerage authority. Its first year in business was spent developing a proprietary search engine among other technologies. The engine’s algorithm receives inputs from 30,000 sources every day to predict where capacity will be and at what cost.
“When processing that much data, we think we can be within three percent of accuracy for pricing,” Hamidi says.
Hamidi compares Cargo Chief to the instant travel search engine Kayak.com. Instead of searching for flights or hotels, shippers use Cargo Chief to instantly find the best options for capacity.
“Brokers that have a technology advantage have a real value to shippers,” he says. “By aggregating data we can see things that shippers can’t see.”
Cargo Chief automatically verifies motor carriers’ safety, insurance and operating credentials. A mobile app, Cargo Locate, resides on drivers’ smartphones and provides customers with load tracking information from pickup to delivery.
Upon delivery, drivers use the same Cargo Locate mobile app to capture and submit proof of delivery. Cargo Chief pays freight charges five days later.
As a data company, Cargo Chief also uses aggregate lane and pricing information to direct its sales efforts and to provide feedback to its carrier partners for where to re-position their trucks to get the best-paying loads, he says.
The savings from making freight transactions more efficient and intelligent are passed onto shippers and carriers, he says.
Earlier this month, Cargo Chief announced it had raised $10 million to further its growth, product development and expansion into additional markets. It has between 300 and 500 customers and thousands of carriers with daily access to 500,000 pieces of available equipment, he added.
The Expedia of trucking
In many ways, trucking is becoming like the travel industry with sites like Expedia, Priceline and Kayak that give travelers instant pricing to make purchasing decisions.
Rather than exchange rates with brokers and shippers manually through email, motor carriers are starting to use technology to automate the sharing of dynamic rate information, much like airlines do.
Sunset Pacific Transportation, a 135-truck carrier based in Chino, Calif., is using a pricing engine API from Project44 to automate communications with shippers and brokers looking for spot quotes.
The company consolidates parcels and less-than-truckload shipments into truckloads outbound from California to locations nationwide. Its return trips to California are full truckload moves.
The API, which stands for application programming interface, directs rates from Sunset Pacific’s transportation management system into the TMS systems of its shipper and broker customers. Sunset Pacific also uses the API in its corporate website to present rates to customers and prospects through an instant search tool.
Josh Craig, president and chief operating officer, says Sunset Pacific gives customers prices based on current market conditions, automatically, by using the current rate information entered in its TMS. “We can change rates anytime we wish,” he says. “If we have a new customer with truckloads out of Minnesota, we can go in and lower our rates to Minnesota.”
Seventy five percent of the company’s rates used to be contract rates. Today that share is about 40 percent with the remainder spot quotes. Sunset Pacific also has brokerage authority and is currently working with Project44 to receive truckload rates through the API directly from carriers for its consolidated loads out of California.
Craig says the pricing engine API from Project44 does not have a setup fee which eliminates all risk for trying out the technology. The company pays a monthly charge based on the number of rate requests or “hits” it receives. To date, its biggest invoice has been $250 for one month.
Besides saving time, Sunset Pacific is now able to reach customers that it had not done business with before by being included in these companies’ automated requests for spot quotes, he says.
An automated marketplace
Trucker Path is building a new kind of marketplace for shippers, brokers and carriers to automate freight transactions. It started by building a large community of truck drivers and owner operators. About 450,000 drivers use its free mobile app for navigation and other useful tools.
The company is now in process of beta testing a web-based load board that interfaces with the smartphone app to automate load searches by location. The load board, called Trucker Path Truckloads, is free to brokers and carriers during the initial testing phase. A full release is planned for later this year.
The load board will continue to evolve into what Charles Myers, vice president of strategy and a member of Trucker Path’s board of directors, describes as an optimized marketplace.
The marketplace will be a “closed loop” system or private network, he ways, with tools that automate the entire freight transaction between brokers and pre-approved carriers. Carriers can tender pre-priced loads to themselves as well as submit offers. And all of the documentation will be electronic, he says, from the initial load confirmation to tracking, proof of delivery and payment.