Today we talk to uShip’s Timur Eligulashvili, VP of Commercial Products. Timur has over 10 years of experience in the transportation logistics industry. Before uShip he held several roles in logistics including analyst, sales, product manager, and even company founder. We talk to Timur about how uShip’s innovative marketplace has changed the logistics industry, the current state of shipper/carrier relationships, and where the logistics industry is headed. You can find out more about Timur and uShip at uship.com or catch their product offerings on A&E’s “Shipping Wars” on Tuesdays at 10/9c.
AP: What is uShip’s elevator pitch, i.e. what do you do (in 30 seconds or less)?
TE: We’re an online transportation marketplace that connects customers who want to ship things (i.e. shippers) and the service providers who deliver shipments (i.e. carriers). We offer an easy way for shippers and carriers to connect and transact online. Think eBay or Orbitz, but for shipping services.
The company was founded by our CEO Matt Chasen. Our company was born when he identified two problems he was having. The first problem was he wanted to ship an old dresser from his Grandmother’s house in the Midwest to Texas. They looked at all the usual suspects but couldn’t find a good price. All the carriers offered different prices for different services. The second problem occurred when Matt was working in Seattle before getting accepted into the MBA program at Austin. He packed up a truck with his wife and started driving down to Texas and thought about how he had extra space on his truck that wasn’t utilized. He thought about how he could have connected with someone who needed to ship something down to Texas so Matt could offset his own shipping costs or even make money. Along with his other co-founders, Matt then connected the dots at the UT-Austin MBA program. There are a lot of trucks out on the road today that aren’t fully utilized and have empty space that could be sold to people needing to ship something. That’s how the uShip idea was born.
AP: There are a lot of companies in other spaces that are also doing resource sharing of other kinds like AirBnB or RelayRides. Does uShip identify with that space? Do you ever see uShip capitalizing on its existing platform for other types of resource sharing?
TE: In the big picture, there’s so much opportunity in the shipping and freight space, that we look at those companies you mention as examples as how to model something. Almost every industry has had its marketplace disrupted by online information. AirBnB has provided a new service in an already disrupted hospitality industry. Orbitz, along with Priceline disrupted the personal travel industry marketplace. We don’t anticipate entering other industries because we’re looking at $300 billion and $39 billion industries in full truckload (FTL) and less-than-truckload (LTL) carriers, respectively. There is no shortage of odd items that need to be shipped, including more normal things like vehicle shipping and household good moving. There’s no lack of opportunity in shipping. So yes, we’re interested in learning from other industries but not necessarily expanding into their space.
AP: What is the profile of your typical users and the “whale” users i.e. those who make up the bulk of your revenue?
TE: If you take a look at the shipping marketplace and consider our slogan “Ship Anything, Anytime, Anywhere” we initially started in a very little market segment called “consumer freight”. If you want to ship a car or motorcycle or household good, bed, desk, etc. you could ship that with uShip. Once we created this marketplace and launched it, we were drawing business and commercial shippers who came into our marketplace and wanted a customized version of it for themselves. Our marketplace could be used for something more than just one-off shipments, it could be used for enterprise. We got into commercial freight because that opportunity presented itself. We produced an enterprise marketplace with some great partners including Ritchie Brothers auctioneers. They are the largest auctioneers of heavy equipment in the world. They would have these auctions where they sold large tractors or construction equipment. After the auction was completed the buyer would complete the transaction and need to move the equipment to their desired location. We formed a really strong partnership with Ritchie Brothers where we are their online provider for shipping. Anyone that buys a piece of equipment at a Ritchie Brothers auction can go to uShip and get quotes from multiple (feedback rated) carriers where they can then filter their decision by price and feedback rating of the carrier. We have over 2 million shippers and 350,000 transportation providers in our marketplace. Because the market is so diverse in size and highly fragmented we just don’t have that “one” customer out there who represents a large percentage of our business. What we do have, is our strong partnerships with businesses like Ritchie Brothers who then lead their customers to our platform. It’s not just one buyer, but several strong partnerships that feed their customers to us.
AP: Is it fair to say then that you guys are more focused on the “long-tail”? You don’t have #1 hits or “whale” users per se, but hundreds of thousands of millions of limited individual users and customers who make up the bulk of your revenue
TE: That’s right, at the same time though, at least half of the customers who come to uShip are regulars who just bought something on eBay. As a regular consumer, after their eBay purchase, they may use a service like uShip to find a transportation provider, but consumers may not always have a need for our service. Then we have small businesses that have a regular shipping need and regularly ship items. About half of our customers are repeat users. Where I think we’ve seen the highest engagement on the consumer side is with “enthusiasts”. These are people who ship motorcycles, or boats, the snowbirds who need to ship their cars from the North to the South seasonally. We see music enthusiasts who need to ship pianos or sensitive musical instruments. Vehicle shipping is huge. For that we have a strategic partnership with eBay. If you purchase a passenger vehicle on eBay we are there in their shipping tab and we connect you with transporters. On eBay, 3 of every 4 cars go to an out of state buyer. You can imagine the volume of cars that eBay processes, which translates into a huge opportunity for transportation.
We recently noticed that businesses are using us more regularly. Some 35% of our listings are listed by businesses, not consumers. When we started talking to these companies, they love uShip, the technology, the value proposition, they come back and say “We love what you’ve built with this technology. I have a trucking company or several that I work with on a regular basis, is there any way to leverage your technology for me to be more efficient with my business?” In response, a couple years ago we created a solution called uShip PRO. This is targeted towards the larger shippers. These companies have their own inter-network of carriers that they want to use. So we’ve enabled them a way to leverage the whole uShip marketplace and all the tools we’ve implemented over the last 9 years to bring in their own carriers and manager their own carrier network using uShip’s tools.
AP: How did you go about acquiring or bringing in all of those shipping providers?
TE: Good question. We have 350,000 providers worldwide. It’s such a fragmented market. This isn’t parcel carriers where the industry is dominated by the top 3 (UPS, FedEx, DHL), because worldwide there are millions of freight & shipping providers. To funnel those millions of providers into our marketplace we’ve built a successful online strategy. We do a lot of really good things with SEO, online advertising, and most importantly forming strong partnerships with other sites online. If someone has an ecommerce site that requires freight shipment, these ecommerce folks can put a uShip widget on their site, enabling their users to get an estimated quote to move that shipment. The fact that we are prominently integrated into A&E’s TV show “Shipping Wars” is extremely helpful. We have no say in production on “Shipping Wars”, but we do offer up loads that are on our site. They follow some of the more compelling providers on our site. What that show has done is raise interest in attracting transporters to the site. They believe there may be an opportunity to pick up some additional loads from uShip in the process. We always see a spike in sign-ups when there are new episodes or a marathon.
From a transportation carrier standpoint, we as a marketplace, are not in a position where we can legally vet them. Instead we provide a user feedback system similar to eBay or AirBnB. In time, as business shipping has increased on the site, we’ve needed to introduce more verification and raise the bar for who can participate in certain load activity versus others. That is an area where we can improve. We’re not a broker, we’re a marketplace, so it restricts how we can categorize the service providers. We are a venue, a technology marketplace. We don’t actually arrange the transportation for the shipper. The shipper uses our technology as decision support to select a transportation provider based on the information we provide. One thing we’re doing in this regard is our integration with SaferWatch, who enables monitoring of a carrier to ensure that they meet certain criteria. Does the carrier have the right legal authority? Do they have the right level of insurance? Have they had a satisfactory rating with the DOT? So we can present that data from SaferWatch to the customer, especially with our uShip PRO product. A lot of our uShip PRO users monitor their network using this tool, and in the background we can inform them which carriers still meet their criteria.
Obviously most people filter first on cost, but secondly they look at the carriers history on uShip via feedback and star ratings on things like punctuality, communication, etc. All in all, we’re developing the tools and giving the shipper the tools and information to make the right decision on which carrier they want to use.
AP: You have the Consumer marketplace, the PRO marketplace, what’s next in the product roadmap?
TE: Earlier this year we launched an LTL instant rates product. Booking a shipment should be as easy booking travel arrangements on PriceLine. If you look back in time people would have to call or visit a travel agent. Nowadays they’ve been replaced by online marketplaces. So we believe shipping your product should be as simple as booking your flight. Businesses want to save time and money. The auction format works so long as the shipper has time. In those cases though where a shipper needs to ship today, however, at uShip what we’ve done is integrate with several regional and national LTL carriers. We make it easy for our shippers to get dynamic price quotes in real-time. Based on the demand of where that carrier has available open space, they can provide a good price. Over time, the LTL carrier has started to lose market share to third-party logistics providers (3PL) on a contract or wholesale basis. Some 35% of our business is now enterprise shipping so we can essentially help facilitate that connection for those small to medium sized businesses (SMB) for whom a direct LTL carrier sale is cost prohibitive because the SMB doesn’t have the shipping volume necessary to make the potential profit for LTL carrier worthwhile to acquire with their existing salesforce. For the first time there is a spot market for LTL carrier rates, and uShip has provided that market disruption.
AP: What do you believe is the ultimate impact of uShip’s marketplace on the size or number of carrier providers? Do you foresee proliferation, consolidation, etc.? Who are the winners and losers in the next few years?
TE: We’ve been at this for 9 years by bringing value to both sides of the shipping marketplace. Our belief is that in 10 years the model of picking up the phone to call somebody to schedule a pickup will go away. Everything will be done online via web or mobile device. On the expansion side, just bringing on these LTL carriers into a dynamic priced marketplace to compete on a national level, these LTL carriers coming to the marketplace will provide a new service to shippers they didn’t have before. The carriers like it because we bring them customers that would be too cost-prohibitive to acquire on their own. We allow them to keep more of their revenue rather than allowing a 3PL or broker to take a roughly 30% markup on their LTL shipping service. One question we have is how do we make this one product fit all? There are all kinds of shipments out there. LTL is just one mode, mostly for pallet type freight, something that can be moved easily with a forklift and minimal manual handling. We need to be able to account for every possibility. One thing we’ve done recently is launch a product called MyRates to enable the smaller providers to add their services and rates on uSHip. If you’re not a LTL or FTL carrier it’d be hard for you to approach a million dollar transportation management system or any other companies. What we’ve done is create a tool for trucking companies to come to our site and upload their pricing model and keep it updated as often as desired. Someone can come in and say “We haul boats”. Boats are not LTL. “We go from Illinois down to Florida”. There are lots of boat shipments down to Florida in the fall. They can come and set their price, then uShip brings these carriers business. Shippers will see that carrier’s quote instantly and they can then choose to use that carrier based on an instant quote instead of putting their shipment request into auction. We’re making it a lot easier for these different scale trucking companies to work with uSHip instead of monitoring auctions. So while dynamic pricing is a market economy ideal, occasionally a static pricing model works better.
AP: Who would you say is your main direct competition and how do you differentiate yourself?
TE: There have been some knockoff sites in Europe and Latin America, but we have first-mover advantage, especially when you consider our name and brand recognition. If you’re going to talk about competition though, we should consider any alternative option that our customers have to facilitate their shipment. For example, there are still DIY options where people can rent their own trucks. Our data shows that it’s not cost efficient to do it yourself. You don’t really save that much by renting your own truck to move household goods. The same goes for car shipping. Someone who thinks they can take time off work, fly to where they bought their car, rent a truck and trailer putting their car on the trailer bed, drive it all the way back across 3 time zones because of the great deal you got on eBay. Why do that when you can get a similar or better price by using uShip? Sometimes you think you can save a buck yourself, but with a competitive marketplace that information asymmetry is removed and you can get a better price for using professionals.
AP: Are there any features that users keep asking for that technically aren’t feasible yet?
TE: We’re going in an interesting direction with mobile. For example, Uber makes it easy for you to make a real time request for transportation service and provide a slick integrated experience. We are expanding into mobile possibilities that are now becoming available. Imagine that you’re at an antique market and have just picked up a new armoire. At that moment there are dozens of drivers with empty space on their truck within a reasonable distance of you. Today we should be able to leverage smartphone technology to connect you with a trucker that is close enough and travelling in your desired direction. Connecting that demand with supply via mobile is quite compelling. You take a picture of what you’re shipping, put in your requirements and desired shipping prices, and now within seconds more than a few trucking companies see your request and can get you a real-time quote so you can get your armoire home that day instead of laboring over what to do and when you’ll get your find home. What we’re moving towards now is people being able to publish their rates and consumers being able to name their price to complement our more traditional auction marketplace. That is one of our core growth areas.
Arthur Pazdan is a transportation geek, attempted polymath, and humbled surfer. When he’s not paddling out, you can find him at fine coffee purveyors across the San Francisco Bay Area, dreaming of ways to bring our crumbling infrastructure into the 21st century. Flying cars, here we come.