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Speaking as the son of a trucker who spent a summer helping my dad negotiate and optimize his freight rates and schedules, the freight brokerage business is not
by pg_bot 9y ago
Speaking as the son of a trucker who spent a summer helping my dad negotiate and optimize his freight rates and schedules, the freight brokerage business is not one I would consider getting into. There is also a ton of competition in the freight brokerage space and the problems associated with shipping are due to poor warehouse management and unreliable truck drivers.
Unlike hailing rides in a taxi, manufacturing and shipping generally holds a regular schedule. If you build a reputation as someone who always shows up on time, you can make a lot of money as a truck driver (more than most programmers). After building a good reputation you cut out the broker and work with the manufacturers directly. All you need to do is find two manufacturers in a high paying industry, (pharmaceuticals, chemicals, specialized plastics) whose pickup and dropoff points are near one another and you can be set for years.
Most poorly run warehouses can be backed up for 4-6 hours before you can begin unloading. Most standard contracts allow 2 hours from the point of arrival to fully unload your truck. We would negotiate our billing like a lawyer. For any additional time after that grace period we would charge in hourly blocks at over $100 per hour. Companies try to abuse their power by wasting the time of drivers by not paying them to sit idle at their warehouses. Amazon and Walmart are notorious for these practices.
I think there is a lot more money to be made using technology to run a high tech fleet of trucks than there is a freight brokerage company. Trucking is an information game for sure but there is too much competition in the freight brokerage space and you can be easily side stepped by savvy truckers.
- mv4 9y agoI feel that for most companies playing in this space, freight brokering is just a transitional step. It can't work long-term, just like Uber can't be viable without self-driving cars. However, it's the best way to understand how the industry operates - if you're serious about disrupting it.
- irishasaurus 9y agoThis really is the other side of the automated trucking coin. This way they can build enough of a network to start brokering freight for autonomous trucking companies and hiring short distance truck drivers, much like pilot/captains in shippng.
- mv4 9y agoExactly. The ultimate goal isn't incremental improvement of the current way for doing things, it's fundamental change.
- mcguire 9y agoI was left asking, what is the real difference between Convoy and any other freight broker? The collect more data? I thought IBM was already in that business.
- mv4 9y agoHow's IBM in that business? IBM has a few initiatives in transportation + blockchain (Maersk, also trucking in Brazil). Anything else?
- mcguire 9y agoI have a vague recollection of IBM working with trucking companies to collect routing and shipper's source and destination information to optimize routing. Possibly part of their "smart shipping containers" thing that has apparently evolved into the blockchain Maersk deal. https://www.forbes.com/2006/08/06/smart-shipping-containers-cx_rm_0808ship.html https://www.forbes.com/2006/08/06/smart-shipping-containers-...
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- michaelbuckbee 9y agoOne interesting thing that Uber/Lyft/similar did in terms of markets was make it much simpler for people to track and view the reputation of a particular driver - which shapes behavior. I wonder if something like Convoy would do similar -> rapidly highlight the unreliable truck drivers. Allow a good truck driver to carry their reputation from manufacturer to manufacturer, etc.
- baillon 9y agoThere's another side to that, too: Highlighting shippers that are unreliable or hostile to drivers. E.g. shippers or facilities that have disorganized staff, incur egregious waits, etc.
- TeMPOraL 9y agoIs there something that incentivizes the facilities to stay unorganized? If no, then maybe there is a way to help them get better (and make money on that helping)?
- rubidium 9y agoYes there is. It costs money to train and retain good workers. Cut costs, increase revenue, decrease service. As long as it's not too terrible you still have a business. There are a lot of people running businesses poorly (from and efficency standpoint) and still making a buck.
- FussyZeus 9y agoAs someone who worked in a will-not-be-named supply chain, the incentives are a combination of the silo-ing that occurs in any sufficiently large corporate structure, and the simple fact that if a corporation can not spend money, they will not spend money. Case in point: In our (relatively small) facility we had two different switcher trucks (the really tiny semi trucks with hydraulics in the backs so they could jack up trailers without assistance, and without the driver leaving the vehicle). Over the course of one Christmas, both broke down because the company was always cheap about maintaining the things, which is especially bad because in our climate not maintaining trucks is a terrible, terrible idea. For about a week near end of December, route drivers were having to dock their own trailers on the building and according to them, were not being paid for that time, so they either had to hand the keys to their $90k-ish trucks over to complete strangers to let them do it, or do it themselves without pay after having driven usually 3-4 hours before. Most of the disorganization in places like this is simple shit, but the corporates constantly decline to spend literally ANY money on maintaining literally ANYTHING, plus as a corporate entity we're incentivized to be as quiet as possible, i.e. not submitting things up the chain that need doing or buying, and even better to cut costs continuously, usually by sidestepping maintenance or janitorial work. Mind you: this business was not even remotely in trouble, it's one of the largest shipping companies on the fucking PLANET, it's just in a corporation's DNA to be stupid and cheap.
- Waterluvian 9y agoWhat's the cause of "unreliable truckers"? Is it that their ability to be on time is unreliable because of uncertainty in the travel time and traffic, or that the humans themselves do their job unreliably?
- pg_bot 9y agoBoth of those cause truckers to be unreliable. You can also include accidents, and delays at other facilities.
- IgorPartola 9y agoWhy is it advantageous to a warehouse to have the trucker sit idly by for long periods of time?
- Angostura 9y agoI guess, it gives you extra free storage and workflow contingency. You tell the trucker you need them early. If they turn up early and you happen to have the stuff ready early great - you have some warehouse space freed up. If you're late however - no biggy - the transport is available to take it, immediately, effectively in demand when it is effectively ready. Maximum flexibility, zero additional cost.
- flamedoge 9y agoit's not? it may be a case of incompetence instead of malice.