Patagonia vests aren’t the only thing the logistics industry has taken from Silicon Valley
Freight is an insular industry. The hours are long, the challenges are unique, and everyone knows the catchy saying – “once you go freight, you’re here forever.”
And while it is true that there isn’t anything quite like freight, the logistics industry does bear some striking resemblances to another industry with long hours, unique challenges, and a “you’re here forever” motto.
Hear us out.
Marc Kiven, President of Forager, is a serial entrepreneur. With decades of experience and dozens of tech companies under his belt, Kiven knows a thing or two about selling software and scaling the latest startup endeavor.
“I was in advertising technology before it was adtech,” Kiven explains. “I got started in the 90’s, during the dial up days. No need to do the math on how long ago that was.”
So how does one man go from starting, scaling, and selling some of the largest adtech companies in Chicago to climbing aboard a plucky, cross-border freight startup?
“There’s actually a lot of overlap” says Kiven “between the freight tech industry today, and the ad tech industry twenty years ago. That’s ultimately what drew me to logistics. I realized a lot of the work I had done would translate well.”
In other words, he was ready to party like it was 1999. Without the dial up of course.
The year is 1994. The Ford Taurus is selling like hotcakes, the first season of Friends is playing on CRT televisions everywhere, and AT&T just purchased the world’s first banner ad on the website hotwired.com.
And thus began the digital marketing boom. Early ad buys were purchased in one–time deals directly negotiated between advertiser and publisher, similar to the way companies purchased ads in magazines and newspapers.
“You’d call up the website you wanted to advertise on, talk numbers, send creatives, and repeat. It was all phone calls and emails and legwork – either by an individual or an agency. Nothing was automated, every ad space was handpicked and negotiated with the publisher directly.”
In other words, it was all direct. Advertisers talked to publishers on a case by case, ad by ad basis. Skip ahead to 1997. Celine Dion is now dominating the airwaves with “My Heart Will Go On” whether we all liked it or not, and the rise of Ad Networks is removing the tedium from buying and selling ad space online.
And here’s where freight and adtech begin to look a lot alike.
“In the late 90’s there were literally hundreds of these Ad Networks. Ad Networks were basically digital marketplaces that matched ad buyers and sellers. But the market was so crowded and disparate, there was no automated matching, no transparency. You still had to sift through the noise to find ad space you wanted. Sometimes you wouldn’t even know where the ad was being served. You just clicked “buy” and hoped for the best.”
Multiple platforms, tons of noise, sound familiar?
New Industry, Same Pitfalls
Freight tech now sounds an awful lot like adtech then. There is a glut of marketplaces, some general, some specialized. It’s hard to get visibility, it’s hard to know which platforms you need, it’s hard to juggle so many apps. There is a lot of innovation, but there’s still a major focus on manual brokering.
So how did adtech get over the hump?
“Better technology, for one, but also better operational standards. Ad Networks became Ad Exchanges, and Ad Exchanges had better infrastructure. They improved their interfaces, they automated bidding, they started treating their platforms like products instead of auction houses. The companies that stayed successful became pickier and more specialized, they offered a service as much as they were moderating a marketplace.”
And services were indeed offered. Exchanges became fleshed out tools for advertisers and publishers alike. Platforms like Google Ads offer more than simple exchanges, they have entire suites of services. Users can create optimized ads, get expert advice from dedicated account managers, and use a host of analytic reports to monitor ad performance in real time. Their offering is robust and completely removes the handpicking of yore.
“It’s easy to forget these are marketplaces,” Kiven points out “they seem like tools. Like complete services. You don’t even need to think about the publishers on the other end because the platform handles that for you. All you need to focus on is your ads and your audience, and that’s a huge reason Google keeps coming out on top.”
The Trench Coat Conundrum
Freight is slow to change. This is a truth universally acknowledged by brokers, shippers, and carriers alike. Despite marketplace creation and burgeoning automation, most loads are still booked and moved with a hearty helping of phone calls and emails. At its core, freight is a manual process – and the manual nature of the beast informs the majority of operations and marketing at modern brokerages.
“There are a lot of traditional brokerages standing on each other’s shoulders, wearing trench coats and calling themselves tech companies. Ultimately, they’re still focused on the manual services, not the tech itself. The focus is well hidden, but it always shows through.”
How does it show through?
“The sales process is a great example. If you’re selling yourself as a tech company, but your sales process is just a boiler room of brokers making cold calls at random, well that’s not how the SaaS industry operates. How automated is your operation if every department is so manual?”
But it’s not all doom and gloom for innovation within freight. While the industry’s human roots run deep, great strides have already been made to shift the focus off the phones and toward platforms.
“There will always be a human element, but innovation is completely possible.” Kiven confirms “look at companies like project44, or Convoy. There are so many great examples of true automation out there. Look at Forager, all the cross-border pricing through SCOUT is algorithm based. No one is behind the scenes making rate calls and plugging in quotes.”
The key for freight tech companies, then, is closing the gap between that automation in freight pricing and matching and the rest of the business.
“You have these elements of pure tech companies; you have the ingredients. Now it’s all about making the jump and embracing new ways of selling and operating. Which is why I was excited to join Forager. It’s a jump I’ve made before, and it’s a jump I’m excited to make again.”
So, what can freight tech learn from adtech? Lots, as it turns out.
“You have to know your market, for one. And you have to treat your platform like it’s your product – because if you’re a tech company it absolutely is. Your platform must add value independent of the brokerage side. Unless your platform is offering something truly unique, there’s no incentive for users to stay.”
“Actually,” Kivens amends “you could also slash your margins to keep your prices artificially low. Low costs are a big incentive for users. But they’re also unsustainable, and easy for the next best thing to undercut. I wouldn’t recommend it.”
Sound advice, no matter your industry.