This has clearly been the year of the large M & A deal in the freight industry with TFII’s purchase of UPS’ LTL business (https://www.dantranscon.com/index.php/blog/entry/the-first-big-transportation-deal-of-the-year-tfii-s-purchase-of-ups-freight ) followed by Knight Swift’s acquisition of LTL operator AAA Cooper Transportation (https://www.dantranscon.com/index.php/blog/entry/why-are-large-ltl-trucking-companies-such-attractive-m-a-targets ). The Uber Freight purchase of Transplace for $2.25 billion is different from the other two acquisitions.

Unlike the prior mergers that combined two asset-based trucking companies, this merger blends two non-asset-based technology-driven freight brokerage operations. Uber Freight supplies shippers with real-time quoting and booking, using their freight management platform; it provides access to a network of US and Canadian-based carriers. Their focus has been on a transactional, instant gratification shipper-carrier load matching services. While still unprofitable, they have been achieving rapid growth in this segment of the freight brokerage market.

Transplace, while also in the freight brokerage space, has focused on large shippers with consistent freight volumes. Their technology is designed to marry this class of shipper with carriers that have the capacity and coverage to handle recurring traffic in designated areas. This is much more of a contracted business rather than a transactional business model. Transplace states on its website that it counts 62,000 unique users and has $11 billion of freight under management.

So, what made Transplace attractive to Uber Freight? Uber Freight is paying 22 .5 times EBITDA to acquire a company that has a current EBITDA run rate of over $100 million. This is a steep multiple, but Transplace’s earnings will improve the financials of the merged Uber Freight.

On July 7, 2020, Freightera (https://www.freightera.com/), North America's rapidly growing online freight marketplace, announced the enhancement of its popular free platform with value-added paid memberships and a rewards program. Freightera’s customers can now subscribe to a range of Membership Plans that provide enhanced freight transportation services, tailored to their unique requirements.

Freightera is one of the top growth companies in the North American freight transportation industry, having increased revenues 240% per year since 2015, making it the third fastest-growing company in British Columbia (source: Business in Vancouver 2019 report). Frost & Sullivan identified Freightera as one of the top five "automated on-demand" freight platforms in North America and the only system that offers fixed-cost, all-inclusive quotes direct from transport companies of all sizes and modes.

Overview of Membership Plans

- Starting with less than truckload (LTL) and rail freight, North America’s online freight marketplace is rapidly expanding its services and coverage 

The Freight Transportation Industry

The US and Canadian trucking industries generate about $750 to $800 billion in revenue. When you add in rail volumes, the North American surface transportation industry represents trillions of dollars in revenue. The industry is highly fragmented; there are 750,000 licensed trucking companies in the US, according to the US Department of Transport, of which 90,000 have more than 20 trucks.

Shippers that move freight across North America have always faced the challenge of finding a set of trucking and rail service providers with the precise range of services, geographic coverage and rates that meet their needs. Since no single asset-based transportation provider can meet the needs of all shippers, the trucking industry has long relied on the thousands of third-party brokers, essentially travel agents for the freight transportation industry, who connect shippers and carriers. Over the past few decades, the industry has evolved from phone and fax machine communication to internet, smartphone technology and sophisticated data management.

This has been a remarkable year for the Surface Freight Transportation industry in North America. Here are some of the top stories for the past 12 months.

1. The Booming Economy

The booming economy was the single biggest story in the Freight Transportation industry in 2018. After years of steady but modest growth following the Great Recession of a decade ago, the economies of North America took off. A very strong jobs market, record employment, high consumer confidence, deregulation, and a tax cut in the United States stimulated an economy that was already at full throttle. Instead of a “storm” we experienced a powerful explosion. Americans and Canadians were working and spending money, pushing freight volumes to very elevated levels.

2. Climate Change

From time to time, I come across companies that offer a unique blend of freight transportation services and technological capabilities. I have written about several of these companies over the last decade. Freightcom (www.freightcom.com) is one of these companies.

The Freightcom Growth Story

The company was founded in 2010. The founders brought many years of freight experience into the business. They established Freightcom with a vision that there had to be a better way to book an LTL or small parcel shipment. It was their experience that the entire process of calling a carrier, obtaining a rate, and booking a shipment was too slow, too difficult, and too complex. They believed that if they could simplify the process for shippers and carriers, they could fill a void in the market and create a significant business.

One of the interesting aspects of the Freightcom story is that they resisted the temptation of many entrepreneurs to build a product and rush to market. In fact, the leaders of the business take pride in the fact that they grew the business slowly and methodically. They purposely “stayed under the radar” as the business expanded. Throughout the process, they refined their service with a combination of freight transportation acumen and technological sophistication.

On October 11, my company co-hosted the 2017 Surface Transportation Summit with my partners at Newcom Business Media. I am very pleased to report that we had another packed house for what has become the premier educational and networking event in Freight Transportation in Canada.

The day was again kicked off by one of Canada’s leading economists, Carlos Gomes of Scotiabank and by two investment analysts, Walter Spracklin, CFA, Equity Research Analyst - Transportation Sector, RBC Capital Markets and John Larkin, CFA, Managing Director and Head, Transportation Capital Markets Research, Stifel Financial Corp., who provided an American perspective. These gentlemen highlighted that 2018 will be a year of economic growth. This economic growth, coupled with the ELD mandate and the limited supply of quality drivers in the United States, will translate into tight capacity and higher freight rates.

One of the slides that caught my eye was the one inserted above from the John Larkin presentation. John’s views are consistent with what one of the largest US trucking operators, J.B. Hunt Transport Services, is telling its shipper customers. They are advising them to budget for transportation cost increases as high as “10 percent or more” as the peak fall distribution season and electronic logging mandate intensify a driver shortage. “This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon,” John Roberts, president and CEO, and Shelley Simpson, chief commercial officer, said in a letter to J.B. Hunt customers.

The freight brokerage industry has been near and dear to my heart for many years. Earlier in my career, I had the privilege of running one of Canada’s largest 3PL operations. My current company has had the distinct pleasure of consulting with some of North America’s finest freight brokers. Periodically I like to look at the changes that are taking place in this industry. In previous years, I have published blogs (http://www.dantranscon.com/index.php/blog/entry/technology-comes-to-the-freight-brokerage-industry-in-2016 ) on the impact on technology in the freight brokerage industry. Times have changed.

Technology is no longer a driving force in this industry. It is THE DRIVING FORCE. This year we are witnessing the application of technology to every facet of the business. This industry has been discovered by venture capitalists, entrepreneurs, truckers, software, and hardware providers. Software innovations are entering the industry at a very rapid pace. This blog will feature a range of companies that are at the forefront of transforming the industry.

Find an App

Posting a shipment has never been easier. Friendshippr.com (http://friendshippr.com/) turns your Facebook friends into a shipping network. The Friendshippr app, available on Google Play, or from Apple store, is a simple tool to move goods between your Facebook friends.

Every few years I like to take a look at some of the new technology-based entrants to the freight transportation industry to see who are the “movers” and “shakers.” While Amazon dominates the headlines, there are a host of other companies doing some very interesting things in the technology space.

This blog will look at some names that surfaced in the past and some of the new players that are taking freight brokerage to a new level. While new technology is being applied to a variety of freight related tasks (i.e. calculating freight dimensions, dock appointment scheduling), this blog will examine some of the companies are actually in the business of moving freight. They are bridging the asset world with the technology world. I have selected a group of companies that have caught my attention. They are Cargomatic, uShip, Freightera, Freightquote, FreightCentre, Uship, Project44, Logistical Labs and ZRATE.

Cargomatic

This is the fourth in a series of blogs on Technology in Transportation. The three previous articles appeared in 2013 (http://www.dantranscon.com/index.php/blog/entry/quotemytruckloadcom-and-freightopolis-enter-the-automated-freight-brokeragefreight-portal-space, http://www.dantranscon.com/index.php/blog/entry/innovation-and-technology-come-to-the-freight-brokerage-industry, http://www.dantranscon.com/index.php/blog/entry/freightsnap--an-exciting-new-visual-tool-to-verify-the-density-of-ltl-freight) and featured 5 interesting companies, FreightSnap, Freightopolis, QuoteMyTruckload, BuyTruckload and Post.Bid.Ship. In this piece, I will examine two other innovative freight transportation companies, Zipments (https://www.zipments.com/) and DashHaul (https://www.dashhaul.com/) that are using technology to transform their segments of the freight industry.

Walmart, Amazon, and Google, among others, are piloting same-day delivery projects in select locations around the country that have enough density and demand to drive the value proposition. However, obstacles persist, and success is contingent on critical mass. Expedited transportation is costly, and last-mile capacity is likely to become even more constrained as e-commerce grows. Moving small volumes over short distances at high speed is a significant challenge.

Zipments aggregates courier capacity—whether it's a truck, van, or bicycle messenger—in effect, creating capacity that didn't exist before, especially in urban areas. This New York City-based technology company has evolved into a “virtual freight broker for local and regional courier services”. The company serves four types of customers: retail, professional services, consumers, and restaurants. Many startups in the same-day delivery space are searching for capacity to provide consumers with the fastest delivery possible. That's not the case for Zipments that is focused on tapping into latent capacity. So whether it's auto part milk runs, florist delivery vans, or bicycle messengers, there's a huge nationwide fleet of available but untapped capacity. Zipments tries to work with fleet managers to help them better utilize their assets and serve other sectors.

The business is segmented both in terms of the markets it serves and the modes of transportation. Metro delivery is anything less than 10 miles, local deliveries extend out to 20 miles, suburban deliveries reach 30 to 50 miles and regional deliveries would represent going from New York City to Philadelphia or Montreal to Toronto. Zipments doesn’t do many regional deliveries yet, but as their network grows, they expect that segment to expand. There is capacity for regional deliveries; people are passing through these corridors every day.