Convoy has reached another milestone on the long road toward complete automation of the trucking industry’s brokering process.
The Seattle-based digital freight network announced Wednesday that it has achieved fully automated load pricing. The breakthrough comes less than a year after Convoy achieved fully automated load matching. Convoy says the combined pieces of brokering, which traditionally involved manual, time-consuming work identifying available trucks and negotiating on bids via calls and emails, can be handled by its platform in minutes with no calls or emails.
Convoy has come a long way since CEO and co-founder Dan Lewis was visiting shippers and truck stops, learning about the market and getting feedback on Convoy’s early ideas. Speaking Tuesday night at a live recording of the Acquired podcast in Seattle, he recalled walking into a shipper’s office for the first time, so nervous that all he could do was ask to use the bathroom.
But as he talked with drivers and shippers about the concept, Lewis found an industry in need of transformation. That was in contrast with some of his past ideas.
“I’d had some really bad ideas — really bad ideas,” said Lewis, a veteran of companies including Amazon, Google and Microsoft. “This one, every time I shared it with someone from the industry, they were excited about it and felt like it was necessary.”
Fast-forward more than four years, and Convoy is one of the Seattle region’s unicorns, valued at more than $1 billion. The 4-year-old startup, backed by high-profile investors including Jeff Bezos, Reid Hoffman, Bill Gates and U2’s Bono, competes against traditional brokers such as C.H. Robinson, the largest U.S. freight broker, and newer players such as Uber Freight.
Convoy says its new milestone in automated pricing will help it operate more efficiently, and lead to reduced costs for shippers and full trucks for carriers.
“We’ve been working for the past four years on improving our pricing models,” Convoy Chief Product Officer Ziad Ismail told GeekWire. “And as we’ve been building more and more density we have more and more data for us to train our models. We’ve also gotten more drivers to use our app. The combination of those two things have led us to 100-percent automated pricing in Convoy’s top markets.”
Those markets include Atlanta, Boston, Dallas, and Los Angeles, among others.
Truckers earn more when they get more load options, better routes, and make fewer “empty mile” trips. Convoy aims to increase capacity and decrease costs for shippers with more truckers on its platform. Automated brokering produces further benefit for both sides of the marketplace, the company said.
The technological breakthrough comes just a month after Convoy’s latest funding round of $400 million, at a $2.7 billion valuation. And in Ismail’s view, it’s a top tech accomplishment for the company, alongside Automated Reloads, which uses machine learning to group full-truckload shipments for carriers and is helping reduce empty mile carbon emissions.
“Once you automate the core of the marketplace, which is the matching and pricing side, your ability to run experiments ends up being completely different,” Ismail said. “When you have human-based processes, trying to run small experiments to test differences is very difficult. But once you have a digital network, you can innovate, experiment and learn at a completely different pace. And so that’s kind of what we’re seeing now, it’s setting Convoy up really to experiment the way that you would expect a true technology company to experiment.”
Speaking with Acquired podcast co-hosts Ben Gilbert and David Rosenthal at the University of Washington in Seattle last night, Lewis recalled overhearing skeptical brokers cast aspersions on Convoy’s early plans, under the theory that “computers don’t match freight; people match freight.”
Such skepticism from traditional players put Convoy in a position to “write the rules … and be the first to come up with the models” for key parts of the process including payments, matching and providing data and insights to customers, Lewis said.
In a sign of how much things have changed, Lewis didn’t outright dismiss the question of whether Convoy could someday operate a third-party marketplace for other brokers, similar to what Amazon does with its marketplace for third-party sellers. “It could move in that direction at some point,” he acknowledged.