Convoy | Transporting Innovation | Summary and Q&A

TL;DR

Convoy is a platform that connects shippers, freight brokers, and drivers, addressing the pain points in the trucking industry and reducing waste through technology and data.

Key Insights

• 🇺🇸 Trucking accounts for around 80% of freight transportation in the United States, making it a crucial sector with substantial room for improvement.
• 😫 Convoy's unique focus on small trucking companies and owner-operators sets them apart, as they leverage technology to connect and optimize operations in the industry.
• ⏳ The ability to reduce waste, improve efficiency, and provide real-time visibility creates a win-win situation for truck drivers, shippers, and the environment.
• 😀 Convoy's success in onboarding drivers to their app and building a strong network has attracted attention from investors and industry observers.
• 😀 The challenges Convoy faced in changing the mindset of customers and potential employees highlight the complexity of transforming an antiquated industry through technology and data.
• 🖐️ As the trucking industry evolves, Convoy's data-centric approach and expertise position them to play a significant role in the future of logistics and supply chain management.
• 😀 Convoy's focus on optimizing appointment times, reducing empty miles, and improving overall operations aligns with the increasing demand for sustainability and efficiency in the industry.

Transcript

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Questions & Answers

Q: How does Convoy connect shippers, freight brokers, and drivers through its platform?

Convoy serves as a centralized platform where shippers can input their freight and request pickup and delivery. Convoy then finds available trucks, optimizes appointment times, and matches drivers with jobs through its app.

Q: What were some of the early challenges Convoy faced when trying to convince truck drivers to use their app?

Convoy initially encountered resistance from truck drivers, as many were reluctant to adopt new technology. However, by offering benefits such as faster payment, access to higher quality freight, and better overall efficiency, Convoy was able to onboard drivers onto their app.

Q: How does Convoy reduce waste and improve efficiency in the trucking industry?

Convoy's platform allows for better coordination and optimization of routes, appointment times, and job bundling. By reducing empty miles and wait times, Convoy improves efficiency, reduces fuel consumption, and addresses environmental concerns.

Q: How does Convoy plan to adapt to emerging technologies like autonomous driving in the trucking industry?

Convoy's comprehensive database and expertise in the trucking industry position them well to integrate autonomous trucks into their network. The data collected can help optimize routes, match appropriate trucks to jobs, and ensure a smooth transition to autonomous driving.

Summary

In this podcast episode, Heather Mack interviews Dan Lewis, CEO and co-founder of Convoy, a platform that connects shippers, freight brokers, and drivers in the trucking industry. They discuss the challenges and inefficiencies in the shipping industry, Convoy's role in streamlining logistics, and the company's success in raising funding. Lewis shares insights into the trucking industry, the impact of technology, and the company's approach to solving problems.

Questions & Answers

Q: What is the current state of the shipping industry and why has it been offline for so long?

The trucking industry represents a significant portion of the overall freight transportation in the United States, accounting for about 80% of it. However, it has remained offline and fragmented for a few reasons. Firstly, there are nearly a million small trucking companies and over 15,000 freight brokers, leading to a highly fragmented market. Secondly, communication within the industry has traditionally been done through manual methods such as phone calls, text messages, and emails. Finally, until recently, truck drivers didn't have smartphones or a digital platform to connect to, making it challenging to bring the industry online. The rise of smartphones and the availability of a digital platform provided an opportunity to disrupt the industry and optimize its operations.

Q: How does Convoy work and what systems are involved in the process?

Convoy's customers are large shippers in the United States who hire Convoy to move their freight. Convoy takes the freight details from the shippers and uses technology to optimize appointment times and pricing. They offer the job to their network of truck drivers through their app and look for opportunities to bundle jobs together for efficiency. Convoy's platform connects various stakeholders, including shippers, freight brokers, truck drivers, and dispatchers, through different software systems and algorithms. The company focuses on building machine learning models to predict pricing and algorithms to optimize job bundling, appointment times, and route planning.

Q: How did Convoy identify the pain points in the trucking industry and why did they feel they were the right team to solve them?

Before starting Convoy, Dan Lewis and his co-founder Grant Goodale conducted extensive research by talking to truck drivers, shippers, and other industry participants. They asked what aspects of their job they didn't like or wished were different. By talking to a wide range of individuals in the industry and identifying common pain points, Convoy learned that trucking was a highly fragmented and offline industry. With the advent of smartphones and their widespread adoption among truck drivers, Convoy saw an opportunity to bring the industry online and optimize its operations. They felt they were the right team to tackle this challenge due to their experience at Amazon and their ability to understand and analyze complex systems.

Q: What is the economic impact of Convoy's platform on the trucking industry?

Convoy aims to reduce the cost of running trucking operations by optimizing efficiency and reducing waste. In the traditional brokerage model, the average spread between what the shipper pays and what the broker pays the trucking company is around 20%. Convoy's platform seeks to reduce this spread by streamlining operations and reducing empty miles and wait times. By driving efficiency, Convoy can lower the cost structure of the industry, benefitting both trucking companies and shippers. Their approach is deflationary, and they aim to pass on some of the cost savings to their customers while also creating value for their own business.

Q: What were some major initiatives or strategies Convoy implemented as the company grew, and what challenges did they face?

One of the significant challenges Convoy faced was changing the way their customers, the shippers, thought about their procurement processes and buying trucking services. Traditionally, trucking contracts were based on a volume expectation and a set price, which often led to unforeseen challenges and changes in the market. Convoy sought to establish a long-term relationship with their customers and remove the "gotcha game" mentality by being transparent about their margins and economics. They also faced the challenge of getting truck drivers to adopt their app. Initially, the adoption rate was low, but Convoy incentivized drivers by offering timely payments, access to quality freight, and convenience features within the app. Convoy also invests in building a community and maintaining good communication with their drivers.

Q: How does Convoy ensure a positive experience for truck drivers?

Convoy recognizes that truck drivers play a crucial role in the industry and aims to provide a positive experience for them. They have built an app and implemented features that make it attractive for truck drivers and small business owners to use Convoy's platform. They offer benefits such as quick payment, access to pre-loaded trailers, and better job assignments for reliable and high-performing drivers. Convoy tracks driver statistics, provides reports, and offers customer service support to ensure a smooth experience. They also actively engage with the trucking community, listen to feedback, and continually optimize their platform to meet driver needs.

Q: How did Convoy recruit its early employees and what attracted them to work on a tech solution for the trucking industry?

Convoy's CEO, Dan Lewis, recruited early employees by leveraging his network, spending time on LinkedIn to find potential candidates, and sending personalized messages to get them excited about the company. He sought individuals with specific experiences related to sales, managing a supplier base in a marketplace, understanding trucking, and marketplaces in general. Convoy attracted talent by emphasizing the unique opportunity to work on a digital solution for a physical industry and the tangible impact their work could have. The chance to be part of a company that addresses inefficiencies, improves operations, and contributes to the trillion-dollar trucking and supply chain market was a key attraction for early employees.

Q: Why are there now several other startups entering the trucking and freight industry?

The trucking and freight industry presents a significant market opportunity, with the overall industry size exceeding a trillion dollars in the United States. This, coupled with the complexity and inefficiencies within the industry, has attracted the attention of startups and investors. With the advent of technology and the increasing demand for improved logistics solutions, there is plenty of room for innovation and disruption in the market. Startups see the chance to optimize operations, reduce waste, and provide better experiences for shippers, brokers, and truck drivers alike. While competition exists, the size and complexity of the market allow for multiple players to coexist and serve different niches and customer segments.

Takeaways

Convoy has successfully disrupted the trucking industry by introducing a digital platform that connects shippers, freight brokers, and truck drivers. The offline, fragmented nature of the industry presented an opportunity to optimize logistics and streamline operations. Convoy's platform reduces waste, improves efficiency, and lowers costs for trucking companies and shippers. By leveraging technology, Convoy has transformed how the industry operates, resulting in benefits such as faster payments, better job assignments, and real-time visibility. The challenges faced by Convoy include changing customer procurement processes, ensuring app adoption among truck drivers, and addressing the complexities of contracts and market dynamics. However, the company has overcome these challenges through community engagement, data-driven decision-making, and a focus on building long-term relationships with customers. The size and complexity of the trucking and freight industry continue to attract startups, indicating the ongoing potential for innovation and disruption in this space.

Summary & Key Takeaways

• Convoy is driving an update in the trucking industry by connecting shippers, brokers, and drivers, improving reliability, efficiency, and reducing pollution.

• The trucking industry is highly fragmented, with a vast number of small trucking companies, freight brokers, and drivers, which Convoy aims to streamline through its platform.

• Convoy provides real-time visibility, reduces empty miles, optimizes appointment times, and offers pre-loaded trailers to improve efficiency and reduce waste.