Today in the U.S., about 80% of all physical goods being consumed find themselves at the back of a truck at some point along its journey from its place of production to the consumer’s shelf. With the rise of e-commerce giants like Amazon and Alibaba, consumers across the world have been accustomed to attractive shipping options that have shielded them from the exhaustive logistics process involved in shipping freight.
But for businesses, this is not always the scenario. Providing a free or quick-fire delivery option is extremely difficult for most businesses, since they often do not have the logistics resources or the wherewithal to facilitate such a freight delivery system.
Shipwell, a company based out of Austin, Texas has created an online platform that lets businesses ship freight just like the bigger logistics-centered companies, without having dedicated supply chain departments for the same. “The process for quoting, booking and tracking freight is largely manual in the industry,” said Jason Traff, co-founder of Shipwell. “We understood that businesses don’t have good enough tools to provide that same experience to their customers and so we do that Shipwell.”
Both the co-founders of Shipwell came from the freight industry, having observed the problem of freight from different perspectives. Traff had an art business based out of Shenzhen in China, which required him to ship across continents and deal with the many challenges of freight movement. Greg Price, the other co-founder was working in McKinsey, where he consulted for Fortune 100 companies who were dealing with freight shipping owes, losing shipments and ending up forfeiting millions trying to find the missing freight.
“With the problems that large companies were having and the problems that I had shipping paintings across the ocean, we realized that companies no matter their size, faced real problems with supply chain visibility,” said Traff. “That is where we believe we have an opportunity for Shipwell.”
Price noted that Shipwell does not face competition from logistics startups, but mostly from the existing TMS companies with the old dispatching software and on-premise solutions that have been outdated for over a decade. “With our B2B platform and our APIs, we can plug in with all the 3PLs, shippers and carriers simultaneously in a neutral and advanced way,” he said.
Shipwell raised $2.1 million in seed funding over last summer, with a round led by First Round Capital and a few other firms, with noticeable investors being the who’s who of the tech world including Jeff Bezos, Bill Gates, and Mark Zuckerberg. Traff contended that Shipwell is successful because it recognizes and empowers 3PLs and their relationships, helping ship to a number of Fortune 100 companies through them.
To improve on real-time supply chain visibility, Shipwell has established partnerships with a dozen ELD providers and has successfully plugged into fleets through those ELD devices to determine the best match for hauling loads in the most effective way. “What this means for the customers of Shipwell is that if you are a trucker and if you opt-in, you can receive notifications for loads in your area, that would figure out your HOS and be a good match for you,” said Traff. “If you are a shipper, you know the time it takes for a shipment to reach the destination and the hours of drive time left for truckers nearby, based on which you can prioritize your supply chain.”
Shipwell has found great success with its customers benefiting dramatically from their platform. One of the startup’s earliest customers was Lumi, a startup out of Y Combinator, which is into custom e-commerce packaging. The company was growing incredibly quickly, and as with most of the startups that scale up, it realized it was running a tightrope with regard to supply chain management and freight shipping.
But after switching to Shipwell, Lumi is currently getting an average of 9.6 carrier quotes back per shipment and receiving 14.8 automatic tracking and status updates per shipment. This helped them go from spending 10 hours a week quoting freight, down to 2 hours a week, even with them increasingly doing more shipments.
One of the challenges that Shipwell faces is in understanding the different ways by which the industry moves freight. “Just when we think we have a problem well understood, there is someone else that has a different way of doing it. In terms of difficulty, I think it is about the people who are currently shipping freight. For people to switch over, we need to build a product that is ten times better than the way they are currently moving freight,” said Traff.
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.
