Many startups are understandably strive to become an “Uber of Trucking” of sorts. Businesses like Cargomatic, Trucker Path, and Convoy are taking advantage of mobile app technology to help connect shippers with carriers. A new startup called CargoX has been launched in Brazil, and it has attracted backing from big names like Goldman Sachs. Even Uber itself is testing out delivery services.
C.H. Robinson CFO Andrew Clarke isn’t too concerned. In a recently aired episode of Talking Logistics, he said that while they are paying attention to what is going on in the industry, they are not worried about these startups displacing them. He says that his firm spends more than $100 million on technology every year, and he feels that it’s going to take a lot more than just putting up a mobile app to make a dent in the task of connecting 70,000 transportation providers with 110,000 shippers.
Transportation Is Not A Commodity
During the dotcom boom, many startups tried to make inroads in this area, and nearly all of them failed. One big reason they weren’t successful was because they did not have a firm grasp of the way the transportation market works. They were viewing it as a commodity that could be handled simply by facilitating reverse auctions. What they failed to realize is that transportation is actually a relationship-based business where trust is a key driver. Shippers have their reputations and brands at stake, and working outside of contracted carriers is a risk that many are simply not prepared to take.
If these startups want to beat the odds and be successful, they’ll need to keep in mind that transportation is in fact not a commodity, and they also need to build critical mass. Finally, they’ll have to measure and control the quality of the experience of end-customer delivery.
This blog post was based off an article from Talking Logistics. View the original here.