Startup’s software identifies available capacity, opening up opportunity for small shippers with just a few pallets
According to the Department of Transportation, nearly 20% of all trailers are traveling empty down the highway. That doesn’t account for trailers that are running less than full. That empty space, whether it is enough room for one pallet or ten, is a revenue opportunity lost.
Guilermo Garcia, one of the founders of SmartHop, is hoping to turn those empty spaces into revenue for carriers and lower costs for shippers.
“We sell the unused space on the road in real time to small manufacturers and e-commerce [shippers],” he says. “That spare space they have, we are buying that space from those trucks and we are selling it to those [who need it].”
Founded in 2016 by Garcia along with Miguel Sucre and Joaquin Brillembourg, SmartHop uses a technology platform to match willing participants. Currently available on the East Coast (New York to Miami and out to Chicago), SmartHop “soft-launched” in March and currently has between 100 and 120 trucks in its network and a couple of customers.
Garcia explained that manufacturers and small e-commerce shippers usually pay higher prices in the less-than-truckload market to move their goods. A typical shipment is between 1 and 8 pallets. Conversely, many trailers are running just less than full, leaving available space that could be used to generate revenue.
“We are basically a marketplace for the carrier for them to fill [capacity] and increase their rate per mile,” he says. “For shippers, we are making it cheaper than traditional LTL and faster.”
SmartHop handles all the transactions so that the shipper does not need to spend time creating an account for new carriers for each transaction. They simply pay SmartHop for moving the goods and SmartHop will ensure the carrier is paid. The same process works in reverse – carriers don’t need to go looking for loads, instead, by connecting with the SmartHop system, they will be notified of an available opportunity and can decide whether they want to take advantage or not.
Fully integrated with a carrier’s and shipper’s system will allow for complete automation of the process, giving SmartHop access to available capacity and truck route to match with shipper needs along that same route. With full access, the algorithms will automatically make potential matches.
“The system will calculate where you are, what the new route will be and the consequences of those additional miles and time [on the existing route] to make the new delivery,” Garcia says. “The real value comes when we are fully integrated with a trucking company. When we are fully integrated, we are able to determine how profitable the rerouting of the truck will be.”
If the system determines the new load is not cost-effective for the carrier, it will not make the match and continue looking for another option.
Pricing is handled in terms of origin and destination points. Every trucking company is screened by SmartHop and on top of the carriers’ insurance, SmartHop also provides insurance coverage for loads.
Garcia says there is no off-loading of shipments – whatever truck picks up the load is the one that delivers the load. Because of that, shipments are restricted to palletized freight heading to warehouses/distribution centers and there are no residential deliveries.
The SmartHop solution is currently web-based, but SMS and app versions are coming.
For a small shipper that needs to relocate 2 pallets of parts or reposition inventory, the SmartHop solution could lead to lower shipping costs. For the carrier that picks up that load, the added revenue could provide a nice boost to its rate for that vehicle movement.
The final SmartHop product should be ready by the end of the year for a full-scale launch, Garcia said.