Online freight marketplace uShip makes push into LTL spot rate market.
By Eric Johnson
The freight movement industry generally isn’t enticing enough to draw reality TV viewers.
But in the case of uShip, the online domestic transportation marketplace, the company’s affiliation with A&E’s “Shipping Wars” series has made shipping downright dramatic. uShip has built its business on the back of helping non-traditional or occasional shippers find carriers to haul their loads—typically people moving their household goods, and mostly those items that are overweight, cumbersome, or cost a small fortune to have a traditional moving company ship.
It’s these oddball shipments, and uShip’s online reverse bidding structure—think an eBay-type environment where people post their loads and carriers vie for those loads—that creates the drama on the show. But all of that, while interesting, has little relevance to the world of North America’s high-volume over-the-road shippers. While it might be intriguing to watch how a single quirky piece of machinery is hauled on TV, regular shippers are more interested in a tool that provides them access to accurate and competitive rates.
And that’s where the uShip story is now headed, according to its founder and chief executive officer Matt Chasen. The company is aiming to significantly expand its reach into the less-than-truckload and truckload markets.
“We got started not specifically aimed at consumer, but aimed at the eBay market for large goods, where there aren’t many solutions,” he said in an interview with American Shipper. “Things like furniture or equipment, whether they’re going consumer-to-consumer, or (business-to-consumer) or (business-to-business).” The idea is that a shipper lists its shipment—a buyer-arranged transaction—and uShip’s community of service providers bids for the load in a reverse auction. The transaction is consummated on the site. “Everyone from owner-operators to fleets and some of the largest LTL operators is plugged into us,” he said. “We have over 300,000 carriers registered worldwide, and we have carriers of all shapes and sizes—80 percent of carriers in the U.S. are single operators. They love us because we connect them to shippers.”
Here’s where the uShip business model is becoming pliable, Chasen said. In April, the company announced three of the biggest LTL operators—YRC Worldwide, Con-way Freight, and Old Dominion—would post their shipper-direct spot rates on the uShip marketplace. At the time it brought the number of LTL carriers posting rates up to 28, with those carriers representing about 80 percent of LTL capacity in the market. Of course, all that capacity won’t be available solely via the uShip marketplace, but it speaks to the level of carrier the company is now attracting. Chasen said uShip is essentially a next-generation load board. “We launched the business 10 years ago with the aim to create the first true market place for shipping and transportation,” he said. “A neutral venue that connects buyers and sellers, but is not directly involved in the transaction. We’re not a broker, even though some folks think we are or look like one. We do no arranging. We’re a pure technology play.”
Other such market places have emerged in recent years, such as Freightship, and more recently transportation management software provider eFreight Solutions, though none have the critical mass yet of uShip, based partly on its longer history and TV exposure. Chasen said uShip does not purport to be a transportation management systems (TMS) provider, simply a place where loads can be transacted. Some critics have argued the system encourages smaller trucking companies to underbid on loads to win business, taking non-compensatory rates in an effort to win business. But Chasen said the marketplace is an effective place to link shippers and carriers that otherwise would struggle to make a connection. That newness is resonating, especially within the LTL market. “Increasingly we’ve had demand for more traditional freight modes and options,” he said. “We’ve found that organically shippers are listing palletized freight. Even brokers are bidding for shipments. It’s pretty disruptive and novel in the space, the first instant rate spot market for LTL.”
Building the structure for an LTL spot market place meant expanding the platform. “We’ve added different formats, because the auction bidding format is good for hard-to-rate shipments, like heavy equipment moves,” Chasen said. “Typically, flatbed carriers bid on heavy haul. But everything is contract in LTL. So we thought, let’s give these carriers access to small and medium shippers and let you do the rating based on seasonality, the time of day. Create a true spot market like the one that exists in travel. LTL carriers have really taken to that, and there are benefits to both shippers and carriers.” Chasen said LTL represents about 10 percent of uShip’s business and is “growing very quickly. We see a lot of opportunity there.”
Where uShip differs from traditional load boards is in the pricing. “Load boards have subscription fees based on how much you use it,” Chasen said. “Our pricing differs based on the vertical. It’s a transactional marketplace and our fee is entirely success based. For carriers, it’s free to join and search and bid. They only pay for completed loads through the site. The fee can range from 1.9 percent to the teens in percentage, all based on the transaction price. We have a payment platform and we have all the pricing data, so we have a shipping price estimator to see what similar loads have traded for.”
Chasen said the site is seeing more business from freight brokers, as well. “As a pure marketplace, brokers are able to join uShip as service providers,” he said. “They can bid for shipper business, and they can also post loads out to carriers. We like brokers, we see ourselves as completely complementary. We see brokers as helping to provide liquidity on both sides of the transactions. And in a marketplace, liquidity is what it’s all about.”
Chasen co-founded the company in 2001 along with partners Jay Manickam and Mickey Millsap while in business school at the University of Texas. As the story goes, Chasen’s epiphany came while moving his household goods from Seattle to Austin, Texas, in a largely empty moving truck. That wasted space led him to hone an idea to create a market place based on space. Unfortunately, his idea sprang forth at the tail end of the dotcom bubble, and it took some time to convince venture capitalists that it was a worthwhile endeavor.
While “Shipping Wars” brings uShip’s consumer-based business into sharp and dramatic focus, Chasen pointed out that half of the shipments consummated in the marketplace touch a business – either B2B or B2C – including auto transport and commercial heavy equipment. uShip has been an eager partner with other online marketplaces that foster buy-sell transactions, said Chasen, noting integrated partnerships with Richie Bros.—the largest auction marketplace for heavy equipment—and, unsurprisingly, eBay. “In any marketplace model, you need supply and demand coming together at the same time,” Chasen said. “In the first year or two of business, we were trying to develop that liquidity, and we quickly realized the demand side was more important. If you have the freight, the service providers will come. So the demand side of the equation is where we spend the most time.
“We’re a marketing channel for the carriers. The marketplace is nothing without the capacity side, without the carriers. Carriers like the level playing field and the transparency we provide. The feedback rating system is indispensable for these guys, and inspires confidence to someone who might not use an independent hauler,” he said. Chasen said the company’s growth has largely been about marketing, not sales.
“We’ve aimed at folks that have the need to ship things,” he said. “The big channel for us is online search. We’re all about online advertising. Most of the things we ship will be in the top one or two or three keywords.” Chasen said shippers can think of uShip a little bit like LinkedIn. With more than 300,000 carriers, when a shipper or broker likes to do repeat business with a carrier, they can invite them from that broad group into their network in a more controlled environment.
The company is quick to say it’s not a TMS provider either, but the marketplace is intended to plug neatly into such systems. “The typical shipper lacks a TMS,” Chasen said. “So this is primarily aimed at small and medium businesses or consumers that don’t have a TMS. But our products can plug into an existing TMS—our LTL rating tool can plug into an existing TMS that a shipper uses to manage their contract rates with certain carriers. So it provides the contract side alongside an integrated spot market.”
The uShip user interface, meanwhile, is intended to be easy to use and familiar to those accustomed to transacting online for things like travel. “It’s designed for shippers to receive quotes and bids,” Chasen said. “From a technology standpoint, it’s pretty clear mobile is going to redefine the transportation industry. We’re on the cutting edge of that. We’re one of the most downloaded apps for shipping. Tens of thousands of carriers use our apps every day to find nearby loads to fill their capacity day to day.”
This article was published in the October 2014 issue of American Shipper.