- Alphabet’s investment arm, CapitalG, just announced a $US185 million investment in Convoy, a technology-enabled trucking network.
- Convoy allows trucking and shipping companies to connect over an app, rather than the traditional way of using a phone broker.
- It’s not Alphabet’s first move into the world of freight. Its autonomous driving arm Waymo has developed self-driving trucks that have already made deliveries around the US.
- Tech companies like Tesla and Uber are also investing into the $US740 billiontrucking industry.
Trucking is a $US740 billion industry – and one that relies on a lot of old technology.
When a small trucking company or a trucker who owns their own vehicle needs a shipment to carry, it’s not unusual for them to depend on “voice brokers,” who call up warehouses and ask if there’s anything that they can carry. About 15% to 25% of the time, trucks end up carrying nothing.
That’s slowly starting to change. Trucking companies small and large are increasingly turning to apps to see what’s available to carry, and bidding directly on their phone or computer to take those jobs.
One of those apps is Convoy, a Seattle-based startup that’s now valued at $US1 billion. Some of its customers looking to improve efficiency in the freight brokerage process include Unilever and Anheuser-Busch InBev.
“A lot of the people in Silicon Valley are talking about automated driving as the biggest change in transportation,” Convoy CEO Dan Lewis told Business Insider.
“If you look at the opportunity now, it’s really about efficiency in the networks and efficiency in the brokerage process.”
Convoy announced its most recent round of funding on Friday, totaling $US185 million. CapitalG, Alphabet’s growth equity fund, led the investment round. YCombinator, Salesforce CEO Marc Benioff, and T. Rowe Price Group have previously invested in Convoy, as well.
A highly-fragmented industry – and one that’s ready for disruption
Scads of tech companies are joining Alphabet in the trucking sector. There’s Uber Freight and the Tesla Semi, as well as startups with significant investor backing like Transfix, Trucker Path, and Keep Truckin.
Many of these startups were founded by those outside the logistics industry and sought to disrupt it. For instance, Convoy’s co-founders, Lewis and CTO Grant Goodale, were most recently at Amazon.
And while several of these startups are interested in self-driving technology, most of them are seeking to solve existing problems in the trucking industry.
Keep Truckin, for example, provides electronic logging devices for more than 40,000 fleets so that companies can track their employees on the road. Convoy, as well as Uber Freight and Transfix, connects truckers and trucking firms to the shippers themselves.
Trucking is a highly fragmented industry where small firms and individual owner-operators dominate; the top five logistics firms in the US together hold just 20% of the market share. According to Lewis, the average trucking firm has just three to four trucks. These smaller firms are less equipped to ensure that their trucks are always moving freight.
“If you’re able to run the brokerage system more efficiently, truck drivers can get more jobs done per year,” Lewis said.
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