Michael Colin doesn’t blame smaller brokers for holding a grudge against venture capital. After all, they’ve seen $4 billion invested in companies that compete directly with them, he said.
“There’s definitely not a similar amount of money going into enabling brokerages,” Colin said.
Colin, the founder and CEO of Chicago-based FreightTech startup MVMNT, joined a recent episode of FreightWaves’ WHAT THE TRUCK?!? to share his frustrations with venture capital creating wide discrepancies within the transportation industry. But he also talked about how his company is helping smaller players bridge the gap.
The past few years have seen the largest digital and even nondigital freight brokers spending tens of millions building out their own proprietary technologies, a privilege smaller brokerages can’t afford.
“The companies that are raising money from VCs are just going to build the next kind of digital broker or digital marketplace, rather than something to allow these small and medium-sized brokers to compete,” Colin said.
The fact that the industry is betting on digital freight to disintermediate the broker isn’t helping either. However, Colin suggests this notion is based on two false assumptions.
The first is that the brokerage can be automated entirely. While he said TMS functions like load building can now be done without manual input, completely removing the broker from the brokerage has turned out not to be as easy as previously thought.
The second, the belief that automation would result in a great consolidation of brokers, is something Colin said has yet come to fruition, noting that even if the top 10 brokerages were to combine, it would net just a 4% share of the market.
“Brokers are, one, incredibly important and, two, not going anywhere largely because carriers aren’t going to completely consolidate,” Colin said. “There’s this diseconomies of scale at the carrier level that’s going to make brokers a necessity far into the future and far more important than a couple of automated systems.”
Colin said MVMNT is ensuring smaller brokers will have a place in the burgeoning world of FreightTech.
Brokers and shippers have long only possessed two options: Choose a lackluster off-the-shelf TMS or spend millions building their own proprietary software. Now there’s a third and better option.
TMS 2.0 is MVMNT’s end-to-end freight platform that serves as the operating system for domestic truckload, from providing embedded financial solutions to a robust RFP tool all on a single platform — and all for free.
“That’s ultimately what we do,” Colin said of MVMNT’s ability to offer large-scale broker technology to everyone. “We’re taking it downstream, giving it away for free and providing more than just technology through the TMS, such as financial services and other products that not only help manage their technology better but their business as a whole.”
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