In cities like Chicago, New York and Los Angeles, people who need to get from one place for another are increasingly skipping the subway or taxi stand and instead touching an app on their smart phone called Uber to arrange for a safe, affordable ride.
Companies like Uber, Lyft and others act as a middleman, coordinating online request from passengers with part-time drivers who shuttle them around in their own private vehicles. They system generally works because it is efficient: Urban travelers pay a flat rate, which is split between the driver and the app’s owners.
Uber for Short-Distance Deliveries?
Now a California company is taking that concept and applying it to short distance trucking.
Cargomatic, which is based in Venice Beach, has created an app that businesses can use to arrange for truckload and less-than-truckload shipments to be transported within a 150-mile geographic range around the Los Angeles area.
Like Uber, Cargomatic’s app matches customers with available short-haul trucking companies that are in the same area as the requestor and have the on-board capacity to make their deliveries, with the costs paid by the shipper divided by the app’s owner and the truckers.
Jonathan Kessler, Cargomatic’s CEO, said the Uber model made perfect sense for short-distance trucking because 80% of deliveries are made within local markets. And most of those deliveries aren’t organized according to a centralized manner. Cargomatic resolves this fragmentation by aggregating these truckers under one platform, he told DC Velocity.
Lots of Opportunity
Another benefit is that an app like Cargomatic aggregates and rationalizes capacity for short-distanced trucking services, a segment of the trucking industry that is estimated to be worth about $77 billion per year.
Cargomatic’s profits are the difference between the price it charges shippers and the rates it negotiates with carriers. The company can keep its rates competitive with traditional carriers like UPS and FedEx because it leverages underutilized capacity in local delivery trucks that are already on the road making other deliveries.
Right now, the service is only being offered in Los Angeles, but Cargomatic is expected to expand to other major US cities by the end of this year.
Similar Platform in NYC
On the other side of the country, Roseanne Stanzione has launched a similar company of her own in New York City called BoxSmart. Stanzione said she developed her short-term trucking app after realizing that the local delivery business lacked consistency in pricing.
Short-distance deliveries also are incredibly financially lucrative, she said. An estimated 11 out of 16 locally sourced loads aren’t being delivered because they are either waiting for a truck or they can’t find one at at all because local networks are too scrambled and inefficient to respond to the need, she said.
That’s where BoxSmart comes into play. For an estimated $6/mile, businesses can get their deliveries where they need to be without delay.
“Brokers misrepresent supply and demand,” Stanzione told DC Velocity. Using her app, businesses can get a better snapshot of which delivery trucks currently are available to handle their deliveries.
While BoxSmart is still in the pilot stage, Stanzione said she already is working with two big local companies and plans to be fully operational in the New York metro area later this month.