Commentary: SmartHop brings AI to owner-operators and brokers

Prior to this round of financing, SmartHop participated in the Summer 2019 Cohort of Techstars NYC, which was also reported by Baker in FreightWaves on July 16, 2019 (SmartHop joins TechStars NYC).

Defining the problem that SmartHop solves for small trucking companies and freight brokers

One perennial problem trucking companies face is decision-making about what loads to book. SmartHop solves this problem by gathering information about rates, customizing load suggestions for specific drivers, tracking and benchmarking performance during a trip, developing travel strategies, and then booking the load on the drivers’ behalf. This eliminates the flurry of back-and-forth phone calls and emails that characterize the daily interactions between owner-operators and brokers, and enables truck drivers to focus on what they do best.

Another difficulty that small trucking companies face is that they do not have the resources to invest in modern technology to enable them run their businesses more efficiently and productively. Moreover, whatever workplace productivity tools are available, and affordable, were not designed specifically for the truckinging industry.

I touched on this question in Commentary: Can software meaningfully increase economic productivity In trucking?, which ran in FreightWaves on February 10. Meaningfully increasing the economic productivity of trucking is an important endeavor given how essential the trucking industry is to the U.S. economy, and to the global economy more generally.

SmartHop has set out to solve these two categories of problems. For now, the company is focused on 53-foot dry and reefer vans anywhere in the U.S. With time, the company expects to broaden its reach to all of North, Central and South America.

In my conversation with Guillermo Garcia, Co-founder and CEO of SmartHop, I was struck by the passion with which he spoke about the problems that owner-operators in the trucking industry face. His empathy for the plight of owner-operators comes from his experience, in supply chain at Nestle in Venezuela, and then as the founder of Grupo ALCARIN, a large integrated logistics services provider, also based in Venezuela.

I asked him to tell me more about the time leading up to the decision to start SmartHop.

He said, “During my college years in Venezuela, I started a pet food delivery company, and after graduation I accepted an offer to work in supply chain at Nestle Venezuela. I worked there for three years but decided to use my learnings, dedicate 100% to my business and turn it into a trucking company – Grupo ALCARIN. We served customers like Nestle, Pepsi, Johnson & Johnson, Kraft, among others.”

Garcia continued, “Fast forward to 2012… I went to New York City where I did a program at Columbia University and that led me to relocate to the U.S. and start an asset-based trucking company.,  That company evolved and became a 500-employee trucking company spread across Venezuela and the U.S.

Garcia trained as an industrial engineer, as did his co-founder, Joaquin Brillembourg, who is also the Chief Operating Officer of SmartHop. Miguel Sucre, SmartHop’s third co-founder and Chief Technology Officer, studied computer science and built and ran a mobile app development company between 2006 and 2017. He sold that company before the trio teamed up in 2018 to start working on SmartHop.

 Garcia, Brillembourg and Sucre have been friends since they were in high school.

 In my conversation with Garcia, I said, “I understand the benefit of SmartHop for owner-operators. What’s the benefit for brokers?”

He said, “In helping truckers, we digitalize and standardize owner-operators and small trucking companies’ operations, as no one can. This gives SmartHop a unique ability allowing brokers to cut their trucker acquisition costs and amplify their current and future capacity visibility. Now brokers rely on SmartHop – at no cost – to digitally allocate the right capacity with the right level of service.”

I also asked Sucre to explain SmartHop’s secret sauce to me in simple terms, “Does SmartHop use reinforcement learning, deep learning, or some other approach to do what it does?”

He said, “Our technology is an ensemble of models performing together – forecasting, probabilistic programming, and reinforcement learning, thus creating a decision support system that can augment our operations to a superhuman level.”

SmartHop has recruited a group of industry veterans and strategic angels to help Garcia, Brillembourg and Sucre scale the company. These include: Alex Yeager, director at Redwood Logistics; Andrew Leto, founder of GlobalTranz and Emerge TMS; and Jett McCandles, founder of project44.

Rick Zullo, General Partner and co-founder of Equal Ventures, is joining SmartHop’s board as part of this investment. I know Rick well. In August 2015 he published Trucking: The Next Unicorn Marketplace?.

I asked Zullo, “Given how many startups are building software for owner-operators in the trucking industry, what prompted Equal Ventures to invest in SmartHop?”

He said, “This is a space that I’ve been looking into for years and while there are countless solutions for carriers, almost all of them have two critical failures. First, they are tools, not solutions. Second, they lack defensibility.”

Zullo continued, “So many of these companies and startups offer widgets to optimize drivers’ workflow and operations, but ultimately the biggest pain point for drivers today is getting access and agency over the best loads – those that generally go to the enterprise carriers.”

 “SmartHop has solved this by working with the nation’s top brokers – rather than competing with them, to give independent owner-operators the same access as the largest fleets. Brokers are flocking to our platform for our growing pool of high-quality drivers and, in turn, the loads available to our drivers are getting better each day,” he said.

 Concluding, Zullo said, “The technology SmartHop provides really reinforces that flywheel and comes from the drivers’ point-of-view given Guillermo’s experience running his own fleet. I had the pleasure of getting to know him well in-advance of this fundraise – even before he was in Techstars. His understanding of the driver and the industry is second to none. That shows in the product, it shows in the company’s mission and it shows with the long list of industry insiders who came out in support of him and this company. The industry has really coalesced around SmartHop and we think that support is critically important to building a transformative company in this space.”

Craig Fuller, FreightWaves founder and CEO, is an advisor to SmartHop. I asked him the same question I asked Zullo. ““Given how many startups are building software for owner-operators in the trucking industry, what prompted you to agree to become an advisor to SmartHop?”

Fuller said, “SmartHop is focused on helping carriers maximize utilization through a combination of technology and human intelligence.”

Conclusion

There is no doubt that supply chain logistics, and trucking in particular is ripe for technology-driven innovation as a means to increase economic productivity in the industry. Some of the problems that startups like SmartHop have set out to solve are highlighted in my Commentary: Responding to readers’ reactions, which ran in FreightWaves on January 10, 2020. These problems have become even more pertinent in the context of COVID-19.

I will profile other startups applying “artificial intelligence” to solving problems in supply chain logistics, and trucking specifically, as this “AI in Supply Chain” series unfolds. Given all the other factors that must come together to enable the success of any early stage startup, it  will be interesting to see which of the various approaches ultimately wins.

If you are a team working on innovations that you believe have the potential to significantly refashion global supply chains we’d love to tell your story in FreightWaves. I am easy to reach on LinkedIn and Twitter. Alternatively, you can reach out to any member of the editorial team at FreightWaves at media@freightwaves.com.

The reference archive – dig deeper into #AIinSupplyChain with FreightWaves

●     Commentary: Optimal Dynamics – the decision layer of logistics?

●     Commentary: Combine optimization, machine learning and simulation to move freight