The advent of digital freight matching within the trucking sector has brought order to the chaos of the spot market, as it helps usher real-time visibility into both capacity and volumes available in a market.
However, digital freight marketplaces do not come with a guarantee that every shipper on the platform would have its loads matched to a carrier. Around 5% of all shippers on these platforms reportedly get their loads rejected or go unnoticed.
Archerhub, a Denver-based digital freight broker, is tweaking such marketplaces by adding its own assets to the mix. The company runs its own fleet, which it uses as a backup for loads that go uncovered on its platform by carrier partners, thus guaranteeing hauls for every shipper that registers a load on Archerhub.
“We do not use our fleet to generate revenue or profits, but we use it as a backup recovery plan for some of the freight that we have from our shippers that we need to recover,” said Nick Darmanchev, the CEO and founder of Archerhub.
Before Archerhub’s advent into the digital freight matching space, it acquired a trucking fleet and ran it for a year to understand the difficulties associated with operating one. Darmanchev explained that this exercise led the company to realize that to keep fleets profitable it was essential for a truck to make around $1,000 a day in revenue.
“Once we realized that, we made our dispatchers book trucks a week or two in advance, in a way where the truck ends up making $1,000 a day. We perfected that system manually and later had our development team automate the process,” said Darmanchev.
This trial-and-error approach on understanding the pain points of fleets helped Archerhub design a system that accounted for the reality that several peer marketplaces inadvertently ignored. Owning a fleet helped the startup transition into a “recovery program” in which it can guarantee load pickup to every shipper on its platform.
“We have an algorithm that constantly looks for different trucks while the load is in transit. For example, if the truck is not showing up, we will be able to spot that a load on this truck is falling behind and that the driver is not going to make it on time for the pickup. We then immediately look for another truck on the market,” said Darmanchev.
If the system fails to pinpoint a truck on the market, Archerhub turns to its own fleet and sends it to the spot to pick up the load and deliver it on time to its destination.
“The system constantly sources for truck capacity from outside carriers regardless of whether the truck is fine and in transit. We’re still looking for trucks until that load gets delivered,” said Darmanchev. “If the truck breaks down midway, we already have a database of available empty trucks that might take this load. If that does not pass, we look into our own fleet.”
Archerhub is also working on pushing its transportation management system (TMS) to the market. Darmanchev explained that Archerhub addresses a problem that most of the current TMS solutions in the market do not — namely, the accounting that needs to be done in the operations. Accounting is especially hard on small and midsize fleets that work long hours as they lack separate teams that make sure invoices are sent on time and drivers are appropriately paid while also ensuring the overall profitability of the fleet.
These features have helped Archerhub gain a significant customer base in quick time, accounting for around 500 customers currently. Though traction was a bit tricky at the start, Darmanchev contended that it was primarily because it took time for companies to trust Archerhub with their loads initially as it was new to the business. But once they were on board, business kept flowing.
Another critical differentiation Archerhub has with its competitors in the market is its conviction to stay profitable right from the start rather than raise money to scale and push profitability into a distant future.
“Archerhub is actually generating a profit. While we position ourselves to scale and grow rapidly, we also have built a financial model that helps us grow without losing money,” said Darmanchev. “We are very proud of our profit-and-loss statement; it really differentiates us in terms of how we run our business.”