A technology startup called ShipX Freight is offering small businesses the chance to ship their goods at the same low rates that large corporations pay, thanks to an online freight exchange that aggregates their orders and negotiates for lower LTL freight rates.
Traditionally, companies that ship freight infrequently or send a low volume of goods lack the leverage to demand lower rates from carriers. They either pay higher fees or turn to third-party logistics firms (3PLs), who charge an additional percentage for their services.
ShipX, based in Riverside, Mo., said it allows so-called microshippers the chance to cut out the middleman by booking and tracking their shipments directly on its site, locking in lower prices than they could have scored alone, according to Augie Grasis, the company's founder. The site allows them to compare freight rates and customer reviews for the country's largest carriers, and choose the one that meets their needs.
Less-than-truckload (LTL) firms are happy to participate in the online exchange because it gives them a chance to fill up partially loaded trucks with last-minute shipments, Grasis said.
"If a carrier has the potential for a bunch of empty trucks to be returning from St. Louis to Kansas City, they can now drop the price on that lane by dynamically, instantly changing the price," Grasis said.
A transportation-industry outsider, Grasis founded ShipX in 2014 after the telecommunications firm Sprint acquired his previous startup, a news, weather, and sports app developer for mobile phones called Handmark. Surprised to learn that shippers and trucking companies still relied on a series of phone calls to book LTL shipments, he saw a chance to streamline those transactions by applying the familiar technology used on consumer websites such as Travelocity and Amazon.com Inc.
ShipX generates its data on shipping rates through partnerships with technology firms such as project 44, a software vendor that builds application programming interfaces (APIs) that allow transportation management system (TMS) platforms to dramatically improve the speed of data exchanges among shippers, LTLs, and 3PLs.
By relying on project44 to generate near-instant rate quotes, ShipX can compile real-time information with more speed and accuracy than if it had applied blanket pricing from SMC3 or collected quotes from each carrier one by one, Grasis said.
"Small business customers are underserved, or they're paying high prices," he said. "Most small businesses don't necessarily have a dedicated shipping manager, so they call FreightQuote or a 3PL on the phone and pay a high markup."
In contrast, ShipX has negotiated 30- to 40-percent volume discounts with large carriers, and passes that savings along to its users, charging a single $25 booking fee for every load it handles, regardless of size.
"It doesn't cost us any more to book a load that's 10,000 pounds or 300 pounds," Grasis said. "We're not reinventing the wheel here. Our customers are very, very web savvy, since they just did their Christmas shopping online. This is not rocket science at all."
Despite their value and potential, online freight exchanges will never completely displace the need for 3PLs, Grasis said. The website works best for simple, direct shipments, he said.