June 25, 2014

Uber-like mobile technology finds a home in the trucking business

Cargomatic launches "find-a-driver" service in southern California.

By DC Velocity Staff

Uber-like mobile technology, where folks can find and hail a for-hire driver using their mobile devices, has come to trucking.

Cargomatic, based in Venice Beach, Calif., today officially launched truckload and less-than-truckload service across a 150-mile range in southern California. Using the Cargomatic app, shippers in need of capacity can find a driver best suited to haul a load and then hire the driver for a fixed, prearranged price.

The service has been in pilot testing since January, Cargomatic said in a statement. The operational hub will be in Los Angeles, with a coverage area running north to Santa Barbara County, south to San Diego County, and east to San Bernadino County, the company said.

According to Jonathan Kessler, Cargomatic's CEO, smaller truckers handle about 80 percent of deliveries in local markets. Most of those transactions are conducted in a fragmented, decentralized manner, he said in the statement. Cargomatic resolves the fragmentation by aggregating these truckers under one platform, he added.

The service is aimed at local shippers and truckers operating in the densely populated region. Using the platform, shippers will have access to capacity to supplement their regular service, while carriers will have an important channel for loads to fill trucks that might have otherwise operated empty, the company said.

In an e-mail today, Kessler said the company plans to add three or four markets by the end of year, but would not confirm any specifics. An industry source, however, says Cargomatic plans to expand to the New York metro area sometime in August.

Cargomatic gets paid on the spread between the price it charges shippers and the rates that it negotiates with the carriers, Kessler said. The company's rates are competitive because it is leveraging underutilized capacity, he added.

Kessler said Cargomatic does not intend to marginalize freight brokers who traditionally handle the task of procuring capacity for their shipper customers. "Cargomatic wants to work with freight brokers to provide dynamic capacity to meet their shipping needs," he said in the e-mail. "We are focused on aggregating supply rather than disintermediation."

The company said it has received $2.6 million in venture capital funding from multiple investors.

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