Load-matching wars escalate as DAT snaps up Convoy

Flexport has cemented its role as a vital player in global trade, helping firms cope with ever-shifting rules and requirements. Despite volatility in trucking, Flexport’s best bet is to stick to its strengths: providing seamless tools for international supply chains.

DAT is disrupting DAT

For DAT, buying Convoy transforms its offering. Its load board is a simple posting site, like Craigslist. Loads are listed online, but deals are struck offline.

Think of it as a dating app for trucking: matches occur on the platform, but everything else happens elsewhere. DAT’s former finance chief once compared it to Ashley Madison, the notorious affair site—not for its users’ demographics, but because customers keep coming back rather than committing.

Convoy’s platform changes that. Built with hundreds of millions in venture funding, it is regarded as best-in-class by potential buyers.  It handles the lot: finding capacity, matching loads, payments and execution. The system takes a cut for automating deals—like Amazon, not Craigslist.

DAT has inched this way through acquisitions. It bought Trucker Tools, a visibility platform that links capacity to load matching. Then came Outgo, for payments and financing. These bolster liquidity and fight fraud, a plague in trucking.

Convoy for Brokers thrusts DAT into a new arena. Transactions happen entirely on the platform. Brokers remain key, but DAT’s tech handles the grunt work. That could slash costs by ditching carrier sales reps—a boon for managers, but a threat to those reps. The era of “DAT rats”, a term used to describe floor brokers that mindlessly post loads and match freight on DAT without much effort beyond that, may be ending.

DAT will also participate in the gross merchandise value of the load, earning a commission rather than a software-as-a-service fee.

Big brokers may be ambivalent. Consolidation could reduce costs, but it cedes more power to DAT.

VCs spent billions to disrupt the model, but the incumbents will do it instead

Venture capitalists dreamed of disrupting load matching. Instead, incumbents are doing it. This mirrors the payments industry a decade ago. Fintech startups, awash in billions, targeted Visa and Mastercard. The giants bought innovations to fill gaps. They prevailed.

If DAT is Visa, the market leader, who is the number-two player, the “Mastercard” of load matching? And if one is Mastercard, who is Discover—a late entrant with scant hope of contending?

The contest seems to be between Truckstop and Highway + Triumph, rivals in fraud-risk management.

Currently, the number-two position is held by Truckstop, which until a few months ago seemed poised to concede its role. It has since regained momentum with founder Scott Moscrip’s return in June as interim chief executive, focusing on in-house product innovation. Original founders can work magic that few outside executives could hope to match.

Earlier this year, Triumph bought Greenscreens, a rate-data startup rivalling DAT, for $160m—a steep price for a firm with $8m in annual revenues.

Highway is launching a private load board to compete directly with DAT and Truckstop, hoping to capture share. In recent weeks, Highway has conducted joint sales calls on brokers along with Triumph, in a bid to secure second place in the load-matching wars. While Highway and Triumph are separate businesses, the market will view them as a common offering.

There is also Cargado, Matt Silver’s startup. It occupies an unchallenged niche in the fastest-growing segment: cross-border logistics. Entering the broader, cut-throat domestic truckload market would be daunting, but not unthinkable. It is probably years away—if it happens at all.

Recent acquisition valuations show how much is at stake

Whoever secures second place, one thing is clear: the premiums paid relative to revenues show the hunger for dominance in load matching. Roper, DAT’s parent with a $60bn market cap, is unafraid of bold bets, as shown by the over $450m spent on acquisitions in the past seven months.

That is hefty for logistics tech, especially since these platforms generated less than $20m in combined revenues at closing. Crazier still, Roper’s investors will barely notice; none of these deals is material to the “Berkshire Hathaway of software”, as admirers call it. 

Triumph, on the other hand, spent over 10% of its market cap on a freight data business that is smaller than 2% of its revenues, with the hope that a combined Highway + Triumph will be a major contender in the load-board wars. This might prove to be a savvy bet, assuming the combo can gain traction. But the road to market relevance for Highway + Triumph will be contested with an entrenched category king, with a nearly unlimited budget to protect their core market and a legacy runner-up with founder’s revenge.

SONAR is sitting this one out, preferring our role as the only independent freight data provider

As for SONAR, my own company, we have no intentions of getting into load matching. We believe that market is too crowded and our focus is on being the best source of truth in the market, regardless of where freight transactions are consummated.

We’ve increasingly realized that our customers view our role markedly differently from those of DAT and Triumph’s Greenscreens, or any other freight data platform.

Clients use SONAR for market and strategic analytics—something no rival offers. We see it as a complementary data platform, whatever the outcome of the load-matching wars, providing deep market intelligence and high-frequency data unencumbered by transactions. True independence, regardless of how freight is matched (today or in the future).

An uncontested blue ocean in contrast to the increasingly red one that is being fought over by three rival groups: DAT, Truckstop and Highway + Triumph. This is has become the most exciting period in freight tech history and its not the venture capitalists creating the momentum, but the sleeping giants.