Take a look around you. Nearly 75 percent of all the goods you see have moved by truck at some point. The result? A $700 billion trucking industry, with logistics capturing around 10 percent of the entire U.S. GDP.
It’s the foundation of our infrastructure. It’s also probably the most wasteful.
Due to a multitude of inefficiencies resulting from a historically manual and fragmented industry, trucks drive 80 billion empty miles every single year. When you start to consider the amount of gas that takes, the extreme overhead, the impact on natural resources, on our roads and power supplies, you begin to realize a major overhaul isn’t just an economic opportunity — it’s a civic necessity.
That’s why Ricardo Salgado left Goldman Sachs in 2014 to build Loadsmart, an on-demand platform for full truckload shipping. Despite being in such a massive market, 97 percent of truck owners own fewer than six, making the process connecting shippers to carriers incredibly time consuming and unreliable. Brokers emerged as intermediaries, who themselves comprise a submarket just as manual and fragmented. Loadsmart aims to maximize industry efficiency by getting rid of the middle man. Instead of going through a broker, who then has to go through his salespeople, who call numerous carriers to figure out quotes and availability, Loadsmart has emerged to offer instant pricing, instant booking and take over the heavy lifting.
On the front end, all shippers have to do is hop on the website, enter what they want to ship and where they want it to go, and Loadsmart takes care of the rest. On the backend, Loadsmart sources the best trucking company for each shipment not by calling hundreds of people, but by providing trucking companies with a free fleet management platform that manages and tracks their trucks.
They provide the free platform, and on the flip side, Loadsmart collects their data — where they are, where they’d like to go, what they like to ship, what kind of trucks they have, so they can send targeted business to the relevant guys. Carriers can see those jobs online, check the price, accept it, and go.
“The long run result is that by bringing in technology to this process of tracking the trucks, you can start to bring more efficiencies to the market that you couldn’t have otherwise,” Mark Gurevich, Head of Business Development, said. “You can optimize how the trucks travel, and compress 80 billion miles into, say, 40 billion."
Technology also brings an opportunity for standardization in an industry where every bill, every form of documentation, is totally different from one trucking company to the next — another byproduct of fragmentation.
But what sets Loadsmart apart from the other startups in the market? Gurevich said it's their instant booking model and their commitment to a slow-and-steady approach. The instant booking model provides an immediate quote based on Loadsmart’s algorithms. They might get the number wrong and end up taking a blow for it, but they look at such instances simply as opportunities to adjust and perfect their algorithms.
This is representative of Loadsmart’s approach at large, informed by their time behind the trading desk: turning a startup into a quality, sustainable business is a marathon, not a sprint.
“We’ve seen other competitors who got started up earlier than us raise a lot of money and grow very quickly and dramatically,” Gurevich said. “What happens is they end up very quickly transforming into these traditional freight brokers, where the entire organization just exists to stay in and move freight, grow revenues and sustain higher valuations. What we’ve seen is some of them have lost sight of creating transformative products."
Instead, Loadsmart is focused on retaining a fresh set of eyes for the industry. Rather than scaling prematurely, he said they want to ensure that everything they do is a big jump for the industry.