Chicago has always been about hustling or selling something. Jean-Baptiste-Point Du Sable, after being arrested by the British during the American Revolution, became the first non-native person to settle in what would become the Chicago area in the late 1780s. A successful trader, he sold out in 1800, took the money, and retired to St. Charles, Missouri. Had Du Sable been around today, he might have started a freight brokerage instead, or at the least, he might have been an early employee of American Backhaulers.
From its humble beginnings as a small trading post in the early 19th century, Chicago has become one of the most important cities in the United States, particularly in the realm of freight and transportation. The city’s strategic location at the intersection of the shore of Lake Michigan and the mouth of the Chicago River first made it a hub for canals.
After boats had their glory, next came the trains, with many viewing Chicago as a rail hub first and foremost. They’re not wrong: Chicago is the largest U.S. rail gateway, with over 1,300 freight, passenger and commuter trains going through the city each day. One out of every four freight trains and half of all intermodal trains pass through the Chicago metropolitan area. The area is so massive that the Chicago Metropolitan Agency for Planning put together a handy map to show the freight clusters.
Naturally, a city with an ample volume of things needing hauled led to its becoming a major hub in the U.S. logistics and supply chain space. This transformation didn’t happen overnight; it’s a story of innovation, entrepreneurship and strategic positioning that spans decades. For the recent milestones in this story, we need to go back to 1981.
In the beginning: American Backhaulers and the birth of the Chicago Split model
The story of Chicago’s modern rise in the freight world began 43 years ago with the founding of American Backhaulers by Paul Loeb. At a time when the U.S. trucking industry was undergoing deregulation, Loeb told FreightCaviar’s Paul-Bernard Jaroslawski that he saw an opportunity in the inefficiency of empty trucks returning from deliveries. This simple observation led to the birth of “backhauling” – filling those empty trucks with freight for their return trips.
Noam Frankel, the second employee and later COO of American Backhaulers, recalls the early days: “Paul handed me a Yellow Pages and said, ‘Start calling sand companies.’ We didn’t have technology back then. It was pure grind.”
Another innovation Frankel pushed for was in pricing loads to customers. “We were one of the first to price freight upfront and commit to it before covering the load. That was a huge advantage,” said Frankel.
To take advantage of upfront pricing paired with a brute-force method of grinding out customers, American Backhaulers created the first version of the Chicago Split model. This involved separating customer representatives from carrier representatives – a departure from the traditional “cradle-to-grave” model under which one broker handled everything from finding a customer to booking the truck and invoicing.
The model proved more efficient and scalable, allowing American Backhaulers to handle larger freight volumes and grow more rapidly. A challenge remained in managing the added complexity. Fortunately, Frankel and his team also pioneered the transportation management system to handle the freight chaos.
American Backhaulers’ success did not go unnoticed. In 1999, the company was acquired by C.H. Robinson for $136 million. Kevin Nolan, who worked at C.H. Robinson during the acquisition, told Jaroslawski: “The carrier network they brought in was incredible. It helped C.H. Robinson grow from $2 billion to $13-14 billion today.”
Part of that success came from not just Backhaulers’ carrier network but from its homemade TMS. Eddie Leshin, vice president of operations at American Backhaulers, told Jaroslawski, “The technology we built became the foundation for C.H. Robinson’s execution platform, which they still use today.”
However, the merger was not without its challenges. Phil Shook, a former intermodal division manager at C.H. Robinson, observed: “The cultures couldn’t have been more different. Backhaulers was entrepreneurial and paid on commission, while C.H. Robinson focused on low base salaries with a percentage of the office profitability.”
This culture clash would become a recurring theme in the industry as more Chicago-based brokerages were acquired by larger companies.
The Backhaulers acquisition marked the beginning of a trend that would define Chicago’s freight industry: innovation followed by strategic acquisitions. The talent and knowledge cultivated at American Backhaulers spread throughout the industry, with Loeb founding Command Transportation in 2005 before selling it to Echo Global Logistics in 2015. Both companies were founded in Chicago, Echo in 2005.
Another Backhaulers alumnus and innovator who followed a similar path was Jeff Silver.
The second wave: Coyote and the man with the Silver Touch
In 2006, Jeff Silver, a veteran of American Backhaulers, founded Coyote Logistics. Silver joined American Backhaulers in 1984 and helped Loeb develop the tech systems and early TMS, which helped it get acquired by C.H. Robinson.
Silver told Inbound Logistics in an interview that one reason behind his success was being in the right place at the right time – in this instance, Chicago. “I came into the industry just after it had been deregulated, with a bit of IT knowledge and capability. I could look at things with a clean slate and from a systems perspective at a time when nobody was doing that.”
Silver originally did not consider a career in logistics, after first completing internships in France and a semester in Denmark. “I came back to the United States with no idea what I wanted to do with my life. Fortunately, a friend was working with Paul Loeb, who had started American Backhaulers (ABH). Loeb offered me a job at $16,000 per year, which I thought was great. I figured I’d stay there for one year and then go back to Europe or go to law school. But I never left.”
When ABH sold to C.H. Robinson in 1999, Silver worked at Robinson for 18 months and then parted ways. For those unfamiliar with the brokerage industry, the existence of noncompetes is a thorny subject and one that kept Silver out of the game until the mid-2000s.
Fortunately, Silver didn’t let that time go to waste: “While I sat out my five-year noncompete agreement, I earned an MBA at Michigan and a master’s in engineering from MIT. I hadn’t planned to go back into the industry, but as my noncompete ran out, I realized two things: I couldn’t find another industry with as much potential as ours, and not much had changed during my time away.”
Building on the lessons learned from his previous venture, Silver told Inbound Logistics: “I started Coyote because I wanted to do things completely differently. I wanted to commit to moving every load we took, rather than hitting the 80 percent or worse average service level that pervaded the industry at the time. The only real way to do that was to start my own company.”
Through following a similar playbook as ABH, Coyote quickly grew to become a major player, reporting annual revenue of $2.1 billion in 2014.
Coyote Logistics’ success culminated in its acquisition by UPS in 2015 for a staggering $1.8 billion. FreightWaves reported that at the time of purchase, Coyote had more than 35,000 trucking companies in its brokerage network and arranged 6,000 loads per day for over 12,000 customers.
Similar to the case following the ABH and C.H. Robinson acquisition, Phil Shook’s earlier quote about clashing cultures became eerily prophetic. By 2018, Jeff Silver parted ways with UPS. Mark Solomon, later a FreightWaves reporter, wrote in DC Velocity, “Tension had been building between Jeff Silver and UPS executives, many of whom thought that Silver, despite being a brilliant visionary, had too independent a personality to suit UPS’ consensus-driven environment.”
The very hungry entrepreneurial spirit that creates the brokerages does not bode well after they’re acquired by large corporate entities. Solomon added, “As far back as mid-2015, when the deal was consummated, observers were questioning whether the UPS and Coyote cultures could mesh beyond the standard honeymoon period.”
Silver was not the only high-profile exit following Coyote’s UPS acquisition. Solomon noted that over a period of eight months, “Jim Sharman, its COO, and John Leach, its chief commercial officer, departed in January [2018]. Jodi Navta, who was chief marketing officer and long-time spokeswoman, left the company in late 2017.”
UPS ended up selling Coyote to RXO 10 years later for $775 million less than its original $1.8 billion purchase price. By the time the company was sold, FreightWaves’ Grace Sharkey wrote, Coyote managed around 10,000 loads per day with a network of over 10,000 carriers.”
While Coyote and UPS marked a crescendo in the early tech-driven Chicago model, its acquisition marked a delineation between the second wave and the third.
Chicago’s FreightTech third wave: Move fast and sell things
It’s hard to characterize Chicago’s FreighTech wave without acknowledging the outsize impact that American Backhaulers and Coyote Logistics had on the space. The man with the Silver Touch became three, with Jeff Silver’s scions Matt Silver and Andrew Silver starting the next generation of Chicago freight brokerages.
Andrew Silver and MoLo, Chicago’s third-generation modern freight brokerage
In 2017, MoLo Solutions – short for Modern Logistics – was founded in a tiny space above a bar in the River North neighborhood of Chicago with 20 desks jammed together. Matt Vogrich, who started MoLo, was originally an Academic All Big Ten Honors basketball player at the University of Michigan. After creating the company in July, Volgrich tapped Andrew Silver, who joined the company in April 2018.
By then Andrew was no newcomer to the freight brokerage world. FreightWaves’ JP Hampstead wrote, “He grew up with Coyote and brokered his first load during his high school Christmas break in 2006 at the tender age of 16. At Michigan, Silver didn’t attend many classes, but leased office space above the bar Red Hawk on State Street, right across from campus, and helped cover loads as a carrier rep for Coyote about 40 hours a week.”
Hampstead continued, “Silver noted that MoLo was the first brokerage born out of Coyote — not counting Chattanooga’s own Trident Transportation — and considered outfits like Arrive Logistics (started by Command alumni) a peer in the third generation of modern Chicago freight brokerages.”
When Andrew Silver joined MoLo as CEO, he focused on the importance of respect and service in an industry known for its dog-eat-dog nature. Silver said during a FreightWaves event, “Our industry can be cutthroat and competitive, with people willing to screw each other over to make an extra buck.” He added, “I won’t stand for that. If you can’t respect people in our office and the people we partner with – our customers and drivers – then you don’t have a place here.”
The focus on people paid off, with MoLo growing revenue from $40 million in 2018 to $625 million in 2021 when it was acquired for $235 million by ArcBest. At the time of purchase, the deal was estimated to increase ArcBest’s brokerage revenue to $1.2 billion, doubling its platform to 70,000 carriers and propelling it overnight to a top 15 freight broker by size.
By March 2023, ArcBest in a surprise move abruptly parted ways with Silver and Vogrich effective immediately. FreightWaves’ Mark Solomon wrote, “The internal announcement from Judy R. McReynolds, ArcBest’s chairman, president and CEO, made no mention as to why the two were let go. Two individuals close to the situation said the departures were just a matter of time. One of the individuals said the breakups stemmed largely from ongoing culture clashes between Vogrich and Silver and the ArcBest hierarchy.”
For Chicago-based MoLo, the culture of Fort Smith, Arkansas-based ArcBest may have been a shock. Robby Nathan, who founded Load Delivered, a Chicago freight brokerage that sold for $100 million in 2018, said, “Most companies tout their technology. Andrew led with people. It was a different approach. Part of it was not listening to the noise. He built his own brand and company. You don’t grow a broker to $600 million unless you’re eating, drinking and sleeping logistics, which is what he did. He knows the business as well as anyone.”
Forager, Cargado and Matt Silver’s cross-border focus
Matt Silver’s foray into freight brokerages also began at Coyote but took a cross-border focus with the launch of Forager Logistics in 2019. FreightWaves’ Hampstead wrote, “The early part of his career at Coyote was spent in carrier operations and software testing, but over the past four years, Silver focused on sales and pricing strategies in Mexico and Canada.”
The company launched with former Coyote employees who knew the Mexican market, but it also planned to build out its own digital freight marketplace platform. By March 2020, Forager secured a $10 million Series A led by U.S. Venture Partners. This came after a pre-seed round in December 2018 and a seed round in 2019.
By February 2021, Forager launched a cross-border load board following the release of its pricing and booking portal Scout in the fall of 2020. In September 2021, Forager was seeking an exit or strategic buyer at a $50 million valuation.
One issue is the difficulties involved with cross-border moves. Sharkey wrote, “While FreightWaves is told the company does have hundreds of millions of dollars of freight in its marketplace, including a carrier network of 3,000 companies with about 110,000 trucks, the company hit a $24 million revenue run rate at a mid-single-digits gross margin, showcasing the difficulties of executing cross-border logistics.”
It took until February 2022 to find a buyer, with Austin, Texas-based Arrive Logistics acquiring Forager for an undisclosed sum. Matt Silver stayed on with Arrive as vice president of cross-border solutions until September 2023, before starting his next venture in October, Cargado.
By January 2024 Cargado came out of stealth with a $3 million pre-seed round led by Ironspring Ventures. Matt Silver’s next venture will not be a freight brokerage. He wrote on Substack, “I want to make two things crystal clear: we are not building a brokerage and we are not here to disrupt cross-border supply chains. They’re way too fragile and complex to break.”
In September, Silver announced Cargado is launching a first-of-its-kind invite-only load board for freight moving into and out of Mexico. At the time of its launch, Cargado’s platform had over 50 logistics customers with bids from more than 300 cross-border trucking companies.
For those looking to follow Cargado, Matt writes an excellent Substack detailing his journey and thoughts on startup life.
The Chicago model of entrepreneurial spirit and hustle lives on
While Chicago’s fortunes ebb and flow like the tide on the shores of Lake Michigan, its freight-hustling spirit born of Jean-Baptiste-Point Du Sable lives on. For Du Sable, creating something then selling out and moving to Missouri was a great plan, considering Chicago had fewer than 350 people by the 1830s.
For the original freight brokerage pioneers who launched operations in Chicago, there was never a reason to leave and all the more reason to stake their claim and start again.
On April 8, 2019, Jeff Silver and Paul Loeb of American Backhaulers, Coyote, and Command Transportation fame, launched a FreightTech startup called Mastery Logistics Systems.
By July 2020, Mastery came out of stealth and announced Green Bay, Wisconsin-based carrier Schneider National as its first customer. By November 2020, Werner enterprises announced it was deploying Mastery’s MasterMind TMS and investing in the system. Mastery continues to capitalize and grow, with Covenant Logistics partnering in June 2022 Followed by C.A.T. North America in July 2023 and Transflo in April 2024.
Despite the ups and downs, the buyouts and mergers, one thing remains clear: Chicago’s role as a hub of the nation’s freight and transportation network is unlikely to diminish anytime soon. The Windy City’s legacy in shaping the movement of goods across America is set to continue. The freight winds are always blowing in Chicago.