Although automating freight systems is usually good for the environment as well as the pocketbook, few digital logistics companies have made a big deal out of the emissions reductions that go along with making transportation systems more efficient. Not Freightera, a Vancouver, British Columbia-based startup that has created what is perhaps the first green freight marketplace featuring rail services and carriers committed to energy efficiency and reducing their carbon footprint.
Oh, and its CEO is trying not to be preachy about it.
“It’s all about the cost savings, and, by the way, we’re also using the lowest emission option,” said Eric Beckwitt, a former business systems analyst who got into freight after working for a brokerage client.
Launched in 2014, the startup employs 13 in Vancouver and 35 globally. The company has raised over C$7 million, and is in process of securing C$10 million in a series A round. A recent Frost & Sullivan report on automated brokerage modes placed Freightera alongside such heavy hitters as Convoy, Loadsmart and Transfix as the top digital logistics firms globally in automation and growth potential.
What distinguishes Freightera’s pricing model from competitors’ is that it’s based on a fixed cost quote system for carriers. Some other companies use fixed costs from shippers. Or, like Convoy and Uber Freight, they use a model that predicts the cheapest market rate a truck will show up for.
Cost savings and instant bookings are the primary advantages, Beckwitt said. “Shippers can book instantly knowing the total shipping cost – provided they correctly entered the load information – and any special services needed at origin and destination, such as tailgate. They take advantage of a highly imperfect market, where one carrier will move the freight for up to 60 percent to 80 percent less than another with the same service quality.”
The model may also be less risky for Freightera – which charges a markup on carrier rates – because it doesn’t have to worry about covering a load for a given price. Uber Freight now guarantees a spot rate every day for 14 days in the future, but it can get burned if prices go up rapidly and the market turns.
To date, Freightera claims 1,800 revenue accounts. The company works with over 700 carriers and recently booked its 15,000th load. More than 9,000 manufacturers, distributors, wholesalers and retailers in the U.S. and Canada use the system. Freightera’s sweet spot is the less than truckload (LTL) sector, although the company also offers door-to-door full truckload (FTL) and LTL by rail service, container freight, volume pricing, temperature control, dry van and flatbed truckload services.
In regard to emissions reductions, 80 percent of Freightera’s bookings come from carriers that participate in the U.S. EPA/Environment Canada SmartWay program, an initiative that tracks participants’ greenhouse gas emissions. Shippers can see which carriers are certified, or they can select lower emission rail for long-haul freight.
Natural Resources Canada/SmartWay does not allow Freightera to reveal the actual emissions reductions from using each certified carrier, Beckwitt said. But several studies show that emissions are generally reduced by 60 percent or more when long-haul freight is moved by rail, rather than road.
“For long-haul, rail is by far the lowest-emission form of transportation,” said Beckwitt, who speaks frequently on green freight issues. He is the author of “A Green Future for Freight” in the 2016 G7 Summit version of Climate Change: The New Economy, and spoke at COP22, the UN Climate Change Conference in Marrakesh. Earlier this week Beckwitt was the featured speaker at Seattle’s CleanTech Alliance breakfast series.
Looking ahead, the company aims to expand rail capacity. But Beckwitt also has his eye on other market niches; the plan is to move into ocean and air freight, plus expand additional automated freight services.
The common denominator is a model that yields environmental and economic benefits, said Beckwitt, who moved from the San Francisco Bay area to Vancouver in 2003 because of the poor air quality in Northern California.
“My child had asthma and pneumonia constantly, so we moved up north,” he said. “This is personal.”
It’s also professional.
Freightera has commissioned an independent study comparing the company’s LTL coverage and rates with competitors in North America.
“When I last checked on a convenience sample basis, we had the best LTL coverage and were beating our competitors on about 80 percent of the sampled lanes,” Beckwitt said. “We were beating them by an average of about 30 percent.”
He hopes the independent study will confirm the in-house analysis. The results will be released in a couple of months.
By 2025 emissions from freight are expected to exceed emissions from cars, according to the U.S. E.P.A.
“I think it’s important for people to recognize that we have a huge opportunity to transition from unsustainable to sustainable,” Beckwitt said, “and in that process it’s perfectly possible to improve the operations of business to make them more efficient, more profitable.”
