On Wednesday morning, May 6, Convoy co-founder and chief technology officer Grant Goodale joined FreightWaves chief strategy officer JT Engstrom for a conversation about the future of freight and supply chain innovation.
The conversation centered on how Convoy’s technology first drove automation in its own operations, which then allowed the company to deploy resources to make the entire supply chain more efficient. Broadly conceived, those initiatives seem to come in two large buckets. Strategic efforts, like helping a shipper target improvements in its facility operations in response to granular carrier feedback, and tactical efforts, in which real-time data can help carriers find connected batches of loads and help shippers pivot in response to market conditions.
Offering a quick update on Convoy’s operations during the pandemic, Goodale began by saying that “as a technology-first company, we’ve really built the company around the notion of being productive from anywhere.” Convoy has about 200 people in Atlanta in addition to its main headquarters in Seattle.
From there, the conversation shifted to Convoy’s origins.
“Dan [Lewis] once told me a story that the idea sort of started on a whiteboard among a small group, and you were a part of that,” Engstrom recounted. “That was only a few years ago and you guys have grown and matured a lot since then.” Engstrom wanted to know how the idea was conceived, how the team was built, and the rationale behind Convoy’s service offering.
Goodale said that other than Amazon, his background for the last 20 years has been primarily working at startups. “I’ve been working mostly at small to medium-sized businesses that were trying to do something big for about 20 years. Dan and I met at Amazon; that was the largest place I’d worked at by a pretty wide margin. It’s hard to be inside Amazon and not see how impactful supply chain and a really efficient supply chain is to the success of the company.”
It was 2014, and Amazon Prime was changing consumer expectations around rapid delivery and thereby changing the face of the supply chain. The rest of the retail supply chain was figuring out how to catch up.
After conducting research that included talking to transportation companies and visiting warehouse facilities, Lewis and Goodale realized that there was an opportunity to introduce a digital marketplace-style business for freight movements that could remove inefficiencies from the system that were slowing things down and contributing to waste. The thesis was that ubiquitous smartphone technology would by its very nature go a long way toward solving persistent problems in visibility and information transfer between parties.
“From the very beginning we had this mission statement around improving the efficiency of trucking in the U.S. and by extension hopefully reducing the waste that was associated with that inefficiency,” Goodale said. As of April 2020, Convoy has prevented 1.7 million pounds of carbon emissions from entering the atmosphere through the elimination of empty miles and the more efficient utilization of carrier assets.
Engstrom asked how Convoy was using technology to drive efficiencies – whether in freight matching, price discovery or something else – and Goodale explained that Convoy started by automating traditional brokerage tasks so that it could ingest data and free up resources to work on harder problems. In Convoy’s top markets, the freight-matching process is 100% automated, Goodale said, and across the network, matching is fully automated on more than 95% of loads.
Refinement of the matching algorithms led to the creation of Automated Reloads; Convoy offers complementary loads, where the pickup of the second load is very close to the drop off for the first load, minimizing downtime and empty miles and helping carriers be more efficient.
Convoy has essentially automated the process of network design for small carriers by building highly efficient loops or routes of good-paying loads.
As Goodale explained, newly realized efficiencies don’t just benefit carriers and the environment, but also help shippers optimize their transportation budgets and other resources. Convoy Connect is a free transportation management system built for small and medium-sized shippers, while for enterprise customers, Convoy offers customized analytics tools to help streamline their operations. One-click detention and driver facility reviews have already offered shippers a unique view into the efficiency of their own operations and which points in their networks might be experiencing challenges, Goodale said.
Convoy’s technology can also help shippers and carriers deal with freight market volatility, Goodale said.
“We have a customer base that is heavily weighted toward essential goods and services, so we work with a lot of companies that have continued to transport goods through this difficult time,” Goodale said. “Part of what Convoy’s been able to do is work very closely with them to ensure that the goods they’re ramping up to meet demand [for] are able to get to those destinations as quickly as possible and to be able to flex to meet that additional demand. We’ve worked very closely with those partners through this period to ensure the timely delivery of all the essential goods you can imagine.”
“The vision started on a whiteboard among a small group,” Engstrom said, “but the technology has evolved very rapidly over a less than five-year period, and you guys are able to – as confusing as this time is, being a pandemic – been able to still provision capacity, manage cost, manage access to markets.”
Goodale said one of the advantages of a digital freight network is the heavy incorporation of data to build out capabilities that are able to rapidly respond to volatile markets and changing conditions. One of the advantages that technology can bring is to rapidly respond when the market shifts in a way that is coordinated, based on current data, Goodale said. One of the challenges of relying on historical data is that current market volatility is being caused by external events that supply chain participants haven’t seen before.
“We hope to build a more dynamic, more fluid, more responsive digital freight network over time, and we actually expect customers to come to demand this of their freight partners as volatility continues to become the norm as opposed to the exception,” Goodale said.