Climate investors from Bono and Gates to Bezos and Gore give this startup a big 10-4.
Sitting in a freeway traffic jam, it’s easy to understand the inefficiency of how most of the public gets around: Car after empty car –– save for the bored and frustrated drivers –– spewing polluting emissions. What is less obvious is the inefficiency of freight transport. Of the big trucks roaring past you on the freeway, more than one-third are empty, as they return to home base after delivering their loads.
“Empty miles” constitute one big, fat, unnecessary waste by an industry that, according to the Environmental Defense Fund, is responsible for some 420 million tons of climate pollution each year in the U.S. alone.
Enter young entrepreneurs who saw those empty miles as an opportunity –– the big idea behind Convoy, a digital freight network launched in 2015.
“By reducing the miles driven by empty trucks, the industry can eliminate 87 million metric tons of carbon emissions [a year], the equivalent of taking more than 10 million passenger vehicles off the road annually,” says Convoy CEO and co-founder, Dan Lewis. ”Reducing empty miles driven by heavy-duty trucks is at the core of our mission.”
Convoy’s digital freight network automates the traditional freight brokering process, including the matching, pricing, and scheduling of trucks to shipments, reducing the cost structure and the time it takes to find the most efficient truck for every load. A blog by Y Combinator, a company that provides seed funding to startups, compares Convoy’s role in freight movement to familiar business-to-customer platforms in other markets, like “Airbnb in hospitality, Instacart in grocery, DoorDash in food delivery, and Lyft in transportation.” The company used to refer to itself as “Uber for trucking,” but stopped when Uber itself moved into the market with a competitor, Uber Freight.
“By reducing the miles driven by empty trucks, the industry can eliminate 87 million metric tons of carbon emissions [a year], the equivalent of taking more than 10 million passenger vehicles off the road annually.”
Lewis, who as a youth did deliveries for his family’s office supply business in Seattle, got a taste of supply chain challenges early. He then got a degree in cognitive science from Yale. He worked for a series of tech startups and tech giants, culminating with an executive role in Amazon’s “online shopping experience.” It was there, he says, that he witnessed how that company was raising the bar for delivery.
Gates, Gore, Bono and more …
Teaming up with another former Amazon executive, Grant Goodale, Lewis did extensive research and interviews on freight transport and scores of interviews with shippers and carriers. He sometimes found himself hanging around at truck stops to question drivers as they came in for coffee. The business plan for Convoy was born in 2015 and initial Series A funding of $16 million came in March 2016 through Greylock Partners.
By November 2019, Convoy had raised $668 million from a Who’s Who list of investors, including Al Gore’s sustainable investing firm ($400 million), Bill Gates, Jeff Bezos, Salesforce CEO Marc Benioff, former U.S. Senator Bill Bradley, former Starbucks executive Howard Behar and even U2’s Bono. The company was last valued at $2.7 billion after its Series D funding round in 2019.
Convoy tackles the big shipping empty return problem with technology far more complex than, say, Lyft. When matching a shipper’s load to a carrier, there are at least half a dozen factors involved. In addition to origin and destination, there is the type and size of truck required and the type of shipper facility, to name a few of the variables. It’s a process that has been historically challenged by delays, cancellations and the negotiating –– and renegotiating –– of prices, much of it handled through brokers working the phones, each with their own sets of contacts in shipping and trucking.
Convoy’s platform can digest and optimize these variables, allowing truckers to see available loads as they are offered, bid on them in minutes and combine jobs to keep their trucks full. The Convoy system also helps minimize loading wait times for truckers, saving both time and emissions from idling.
The new middleman is a machine
The U.S. freight market –– worth about $800 billion a year –– is extremely fragmented and ripe for a transformation. The biggest shippers have their own delivery fleets –– think Walmart –– but the vast majority of the market is made up of thousands of independent drivers and small trucking companies, each with a handful of vehicles.
The emerging tech from Convoy and similar competitors promises to be good for truckers –– who can quickly locate the most optimal –– and shippers who save time, money and carbon emissions, but is likely a threat to traditional freight brokers, middlemen who will now be competing with the speed and efficiency of automation and machine learning.
In a YouTube review of Convoy for fellow carriers, one California trucker who goes by “Vic Med” had a message for some of the big names in U.S. freight brokerage: “… All these mega-companies –– you guys need to catch up because these apps that they’re coming out with, they are out of this world … super easy,” he says. “[Using Convoy] was a piece of cake. So If you’re an owner/operator with your own authority, and you’re thinking about getting it, Convoy is the way to go.”
Convoy’s system “prevented trucks from running 637,112 empty miles and using up 98,018 gallons of fuel” in 2020.
Convoy assists in moving thousands of shipments daily in the U.S. “We started measuring our sustainability impact halfway through 2019. As of December 31, 2020, Convoy has eliminated 2,195,585 pounds of carbon emissions from our roads. This is equivalent to preventing trucks from running 637,112 empty miles and using up 98,018 gallons of fuel,” according to the company’s 2020 Sustainability Report.
Convoy’s customers, including giants such as Unilever, Anheuser-Busch and The Home Depot, have access to a dashboard of their individual statistics from the digital freight network which they can in turn use to improve efficiency and report on sustainability. This is a growing priority, Lewis says.
“Today, 90% of S&P 500 businesses publish sustainability reports and have corporate sustainability goals, including those specific to carbon reduction. With Convoy, our customers can get reporting on how they are doing with regard to trucking and sustainability, and they can see the benefits of using Convoy for reducing their carbon footprint,” Lewis says. “Five or six years ago, this was more of an ad hoc option for our customers, but today it’s top of mind and a requirement for most of our shippers.”
Beyond eliminating the waste of empty miles, the freight industry greatly needs other improvements in the shift to being more sustainable.
“Preventing empty returns through digital freight matching is definitely a step towards zero emissions for freight,” says Heather Jones, an expert on freight for the non-profit Project Drawdown. “This needs to be incorporated in urban deliveries as well.”
Jones notes that electrification of long-haul vehicles using clean energy or moving to alternative biofuels will be critical for a green transition in this industry. She cites a host of other ways it can improve such as modular packaging to improve efficiency, drones for final-mile deliveries and the use of 3D printing to avoid the need for shipping long distances.
Convoy’s technology is offering just one piece of the shipping climate and efficiency solution but, importantly, it is one that is at the fingertips of truckers today and can make an immediate difference to reducing global carbon emissions.
Featured image: Convoy