The less-than-truckload (LTL) segment is a $65 billion-a-year industry in the U.S., with roughly 165 million LTL shipments hauled across the country. However, what is strikingly evident to every shipper within the market is that LTL movement is vastly more inefficient than the much larger truckload industry.
This is apparent when the segments are compared across key service parameters. LTL’s on-time pickup rate is around 70%, whereas the truckload segment achieves on-time pickup over 96% of the time. LTL has an on-time delivery rate of only 50% as well, compared with 96% for truckload.
In addition, freight moved via LTL is an estimated 18 times more likely to be damaged.
FlockFreight, a business-to-business freight shipping company from San Diego, is looking to disrupt the LTL segment by introducing “shared truckloads” — a concept in which LTL-bound freight is pooled together and sent via full truckload.
“The LTL freight industry moves via a hub-and-spoke model, which has a high capital expenditure to operate. Our thesis at FlockFreight is about bringing the simplicity and higher hauling quality of the full truckload industry to the LTL shipper,” said Oren Zaslansky, the CEO and founder of FlockFreight.
FlockFreight aggregates freight from different shippers to piece together a full truckload trailer, arranging them in a ‘last-in, first-out” sequence. This ensures the last thing that is loaded is taken off first, preventing other cargo in the container from being disturbed through its journey.
“In a traditional marketplace of supply and demand, our demand comes from the LTL industry, while our supply comes from the truckload industry. We’re using technology to fundamentally change the way freight in and of itself moves — from LTL supply to truckload supply,” said Zaslansky.
FlockFreight unlocks financial arbitrage — as the cost of moving a truckload of LTL freight is roughly half the cost of moving the same freight via conventional LTL. Zaslansky explained that shippers were willing to pay prices that the LTL segment charged, as long as their shipment moved as shared truckloads within a full truckload container.
“The LTL industry was providing a service that was high priced but of low quality. By carpooling freight, we create shared truckloads where the service quality is high, and the hauling efficiency is excellent,” said Zaslansky.
Conversely, FlockFreight’s business proposition for full truckload carriers would help them “fill” all their full truckload freight, which in reality most often ran 20%-30% empty. With safety and efficiency concerns over LTL freight, several shippers opt for full truckloads even when their cargo does not fill the entire container.
FlockFreight digitally integrates with full truckload carrier operations and fills empty additional capacity within their container with shared truckloads — ensuring more operational efficiency and larger profit margins. “Think of us as a dual-sided marketplace, providing value to both shippers and carriers at the same time,” said Zaslansky.
The startup sells a service called FlockDirect to shippers, which guarantees at the time of purchase that the shipper is buying a shared truckload. The company has witnessed exponential growth this year, even through the pandemic months.
“We are also driving up our margins every month, month over month. That’s because we are a network effect business: As the more LTL freight enters our network, the more opportunities our algorithms have to put additional shared truckloads in a better way within full truckloads,” said Zaslansky.
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