The app and the matching service are the most visible parts of it, though, leading to inevitable comparisons to Uber. Convoy’s system allows shippers to post requests to handle a freight move, but instead of broadcasting that job to the entire trucking universe, Convoy’s system can immediately find a carrier in the right place with the right equipment, and with preset pricing, get agreement between the parties almost instantly. The Convoy system also promises real-time tracking of shipments and delivery for shippers, and near-immediate payment for carriers.
The mobile Convoy app may be free, but getting into the Convoy network is not as simple as signing up and downloading it. Hassan says carriers have to be vetted through their safety records as compiled by regulators and insurance companies. After a carrier is approved, Convoy continues to monitor its performance metrics, including safety and on-time pickup and delivery.
ON A ROLL
Convoy cofounders Dan Lewis, left, and Grant Goodale believe technology can bring dramatic improvements to trucking,
an industry that affects nearly every person in America.
On the carrier side of the market, Convoy is targeting owner-operaters and small to midsize fleets. About 90 percent of U.S. truck-freight capcity comes from companies with six or fewer vehicles - companies that aren't likely to have the resources to develop their own online bidding services the way the biggest fleets might. It doesn't hurt Convoy's cause that many of those smaller carries are looking for any tool to sop up excess and empty capacity that is currently plaguing the industry.
But Convoy isn’t taking on every segment. It’s not currently working with drayage carriers, which haul containers to and from ports, usually to local rail yards or distribution warehouses. “We can’t chase down every opportunity,” Ries says. “We’re not afraid to say no if it’s not a good fit.”
Convoy is willing, however, to go after really big shippers, as it has done with Unilever. That deal will test the company’s ability to handle a much broader territory than it had when it was operating in the Pacific Northwest. Ries says the company is ready. “One of the key things we’ve been thoughtful about is scale,” he notes.
Convoy isn’t releasing financial details beyond saying it’s now working with thousands of trucks in its virtual fleet. Pricing varies according to loads, distances and services taken from the company. The typical broker takes between 15 percent and 40 percent of what a trucking company might receive, with the average in the low 20s. Ries says Convoy isn’t competing solely on price, because in that realm “you’re only as good as the person coming in $1 less.”
But he also believes the company can offer a strong value proposition through technology, convenience and price. “Price is an important factor for both shippers and carriers,” he says. “We believe we’re super-competitive on price.”
Some other advantages for Convoy include the high-profile pedigree of its investors and board members. Besides Bezos, the $2.5 million seed round included investments from Salesforce.com CEO Marc Benioff, eBay founder Pierre Omidyar, KKR CEO Henry Kravis, Expedia CEO Dara Khosrowshahi and former Starbucks President Howard Behar. In conjunction with the $16 million Series A round, LinkedIn founder Reid Hoffman became a director.
The Unilever deal may make even more of an impression, at least within the industry. Ries says Convoy is talking to Fortune 500-level companies about similar arrangements and hopes to have more announcements in 2017.
All those other players will be chasing similar deals, but Ries says that’s all to the good. “We’re pleased to see all the investment in the industry,” he says, because it validates what Convoy has been trying to do.