With a background in the U.S. Navy and as founder of a large online less-than-truckload (LTL) brokerage, Andrew Leto, now founder and chief executive officer of online truck freight procurement platform Emerge, has a habit of looking for gaps in the logistics industry that can be filled via emerging technologies.
Around 2013, Leto identified that one of the biggest holes in the industry is full truckload (FTL) freight procurement. “I realized that every shipper has a TMS [transportation management system] to manage their freight, but very few had a platform to actually go and run their bids where they have a decisioning layer regarding which carriers they’re going to use,” Leto says.
An online marketplace made sense because there are 100,000 trucking companies in the U.S., Leto explains, but even the largest buyers of freight bring at most 200 trucking companies into the bidding process, with an average of only 20 for most companies. “Most trucks that you see on the roads were procured using spreadsheets and email.”
The challenge with changing all that was that any online platform needed to have enough activity and users to attract other users. Leto says he initially thought visibility was the magic element, and worked on a company doing that for a while. “But I realized quickly that wasn’t the way to build any marketplace.” The solution was to focus on bringing three elements together – the carriers, the shippers and a middle layer in the form of an online platform. Investment money flooding into the industry in the last decade made it viable to build one.
Convincing shippers to change their ways and embrace new technology has been one of the hardest challenges in driving adoption, Leto says, even when it’s free to them. “The hardest part is relationships; they’re very deep. It’s working, but that definitely takes time.”
Timely, incisive articles delivered directly to your inbox.