​Big Disruption in the Freight Industry On the Way...

Gary C. Bizzo  |

Traditional freight forwarders and logistics companies don’t want disruptive technologies in their industry – because it’s disruptive!

They think the industry is fine the way it is - after all, the big guys define the market, call the shots and make all the money while regional carriers and others try to compete.

Investopedia describes Disruptive Technologies as “a technology that significantly alters the way that’s businesses operate. A disruptive technology may force companies to alter the way they approach their business, risk losing market share or risk becoming irrelevant.

Established logistics companies don’t like the new disruptive kids on the block – they prefer the status quo. Well, guys join every industry faced with anything that makes life easier, cheaper or better for the consumer. The world is changing, so get in step with it.

Huge new ships, partially filled trucks and poor planning of routes cry out for disruptive technologies to make booking and routing product more efficient. More efficient means more money and lower costs, not to mention a greener industry.

Logistics is an unusually segmented sector when you look at it globally. There are 750,000 trucking companies in the US, with licenses according to the US Department of Transport and 90,000 have more than 20 trucks. Compare this to the airline industry, with maybe 50 airlines and 600 airports, and it’s not hard to see that a disruption in the way the trucking industry does business is not only needed but is happening now.

If you have ever tried to ship inventory across the country, you know that the differential between prices charged by two carriers can vary by thousands. Indeed, a $300 bill by one company can be as much as $3500 from another for the same route. The question is, do you have the time to call twenty shippers to get quotes and even then, can you be assured they will abide by the phone quote when your bill arrives.

Brokers already know what customers will pay as soon as you call them so they give you the high end price assuming you have not called your twenty or so shippers direct. The brokers also know that some companies can, and will, do the same job for 80% less than the quote they will give you from a national carrier. What the world needs is a level playing field and transparency on quotes and pricing.

A more level playing field is the tip of the iceberg. Governments, particularly in Canada, are looking for ways to reduce greenhouse gases and costs. They are afraid freight charges will kill the manufacturing sector. Add to the problem, the tough time regional carriers have trying to compete on the national scene. In most industries, national brands can offer cheaper anything based on economies of scale, but is this what really is happening? There must be a better way!

What if every route available to a shipper in North America, all five billion of them (and counting) was available directly to the customer on a database?

Customers Controlling Shipping Costs

A small but growing Vancouver company, Freightera, is going direct to the customers and is causing a disruption of volcanic proportions. This two-year-old startup, with revenue growing about 300% a year, and with a mission to automate and integrate the global transportation industry, is also claiming to dramatically reduce air pollution and greenhouse gas emissions from the sector.

In two years, Freightera has shipped over 4000 loads, covering 23,000 cities representing 3000 companies. They have computer access to five billion lanes, or routes, and are adding 140 million more lanes every month.

Their secret? Well, the answer is a proprietary database/booking platform that gives customers the power for the first time to be able to control their own shipping costs and see the unbelievably disparate pricing in the market. Freightera offer instant all-inclusive freight quotes from carriers of all sizes 24/7. It’s not hard to make a choice on shipping product when the pricing by shippers varies by hundreds of dollars per truckload and it’s compared on your computer screen.

Remember whenI talked about the level playing field? Freightera gives every logistics, freight company fairness in 10 seconds whether you have ten or a 1000 trucks and whether you’re a small company or a national giant. Because customers use the database there is now a paper trail available to them to keep everyone honest along the way.

The database can find partially filled trucks that you can piggyback on and share the costs with others. Gone are the days when you would have to send a truck to LA with a small shipment but pay freight on the entire truck.

Their system allows even the regional carriers to compete across the board with the national carriers and has an interesting side benefit – the environment. Funny enough, with a computerized routing/booking system, often the route will include rail as the preferred option that is cheaper and greener. In fact, rail shipping offers 66-80% less carbon dioxide emissions.

Freightera CEO Eric Beckwitt told me that investment in his company is mainly through private equity rather than VC’s and it falls into two types of investors, those who are more interested in the environmental and those who are into disruption and making money while reducing costs.

Todd Buchanan of Equifaira Advisors, tasked with helping Freightera with strategy, execution, corporate finance and investor relations said, “Eric Beckwitt and his team have done an exceptional job of identifying and addressing a significant need in the freight shipping sector. In much the same way that Expedia disrupted the travel sector, Freightera’s online freight marketplace is transforming the freight industry. Bringing real-time, online quotes from national, regional and local carriers to shippers, Freightera is truly disruptive.”

With Equifaira’s assistance, Freightera has raised $2.18 million so far, and a new offering is in effect until February 2017.

Freightera's innovative B2B freight platform, designed to integrate all 750,000 plus transportation companies in North America and expand globally is gathering interest from every sector. With annualized gross revenue recently hitting $8Million on the moving average charts it’s easy to see why the excitement.

Finally the status quo is shifting and when Freightera gets the traction it’s expecting everyone better get used to sharpening their pencils – Change is afoot!

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer



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