Thread by @daniellewis

1/ The future of #trucking is the hybrid carrier, a new model that leverages technology to overcome long standing industry fragmentation and finally provide shippers with the benefits of economies of scale. #SupplyChain #Logistics 🧵

linkedin.com/pulse/driving-…

2/ When I started Convoy 8 yrs ago, I wondered why trucking was still so fragmented. Why hadn’t economies of scale caused the market to consolidate around leading providers (like parcel, LTL, air freight, ocean, ridesharing) who could offer better service & lower prices?

3/ Why is selecting dozens or hundreds of trucking providers the strategy of choice for companies procuring these services in the U.S.? The article answers these questions and paints a clear picture of how and why this is now changing with a new model, the hybrid carrier.

4/ Unlike parcel or LTL delivery, each truckload delivery can be viable on a standalone basis. Therefore, the primary inefficiencies to solve in truckload are network inefficiencies like empty miles and wasted time (waiting to load/unload).

5/ Truckload brokerages don’t have network effects because their marketplace is fragmented between each carrier sales rep’s portfolio of carrier relationships. Unlike the hybrid carrier model, it isn’t one marketplace.

6/ Asset-based carriers have effective network planning to maximize the utilization of their assets. However, their driver and trailer pools are more fixed and they are less flexible when volumes jump and unpredictable things happen.

7/ Neither can do it all, and with today’s model, neither gets materially better for shippers as they scale. In fact, trucking has diseconomies of scale. This leads shippers to develop strong feelings against consolidating.

8/ The VP of a major national U.S. retailer told me, “We have hard caps built into our system. Whenever we relax this and give a huge award to one carrier, it backfires, and their service drops the next year, and we move them back out.”

9/ Hybrid carriers address existing limitations & fragmentation, combining a digital truckload marketplace, universal pool of smart trailers, connected drivers, broad industry integrations, & a smart platform to automate workflows. This model has economies of scale.

10/ Over the last decade, billions of dollars went into the freight industry on the promise of digital transformation. The next innovations will be built on top of this groundwork.

11/ Convoy’s technology, marketplace, and shared trailer system operates like a hybrid carrier today. The results are promising, showing reduced wasted, lower operational costs, and better performance when volumes are consolidated into one platform.

12/ As the volume of loads and trucks in a market grows, network density increases, reducing waste and costs. Convoy sees the gains come in waves with each efficiency, including overall density, load batching, appointment time optimization, flexible trailers, etc.

13/ As hybrid carriers scale, they provide lower costs, better service, and insights for shippers. For the first time, shippers will have a compelling reason to consolidate their freight onto fewer providers.

14/ Hybrid carriers enable flexible Drop & Hook, which has been observed to successfully handle rapid changes in freight demand without needing to failover to live spot or paying underutilization fees.

15/ Hybrid carriers can handle volume spikes and seasonality with minimal impact on service quality because of the scale and automation of the marketplace.

16/ The truckload industry has long been held back from enjoying the efficiencies and service benefits that come from economies of scale. But that is changing fast. Convoy has begun to open up their platform to the broader industry to accelerate this transformation.

17/ The future is already here in the US trucking industry. It's just not evenly distributed. To learn more, inquire at [e-mail]. (And they’re not wedded to the name hybrid carriers. Have a better one?!)