Thousands of semitrunks cut across the US highway system every day are secretive. They are only about half full.
Its inefficiency represents a multi-billion dollar opportunity. And what several companies, such as Uber cargo and herd cargo, are already chasing as part of a broader business model that matches truck drivers and companies selling goods.
San Francisco-based startup Oway is looking for a narrow business model similar to Uber for its freight, especially on the most inefficient long distance routes. But it is a model that believes startups can expand large enough to affect the country’s economy.
Founded in 2023 and backed by Y-combinators and general catalysts, Oway recently closed its $4 million seed round to pursue its goals. Founder Philip Najafov told TechCrunch that investors have bought investors on the Oway concept as his company has already developed ways to reduce the cost of shipping pallets across the US by 50% using a clever mixture of new and slightly older technologies.
Of course, there is artificial intelligence in the form of machine learning developed to find and match cargo at empty trailer space and convenient destinations (or short detours). Oway also automates many of the standard shipping and insurance documents associated with cargo.
However, Oway’s ride-share cargo pitch is made possible by what is known as the “electronic logging equipment” (ELDS) installed in trucks across our country.
Elds became a government mandated about a decade ago. This has become part of the push to make trucking safer and more efficient by eliminating paper logbooks. This makes it difficult for shippers and drivers to avoid federal rules regarding maximum driving time and theoretically reduce fatigue.
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The device was a source of competition for many drivers worried about excessive monitoring. And there is some evidence that the promised safety benefits can be offset by an increase in aggressive driving, as drivers cannot take away as much time as time.
But nonetheless, the device is the cornerstone of what Oway is doing. This is because ELD also allows you to monitor the exact location of your truck in real time.
This information allows Oway to work with the shipper to identify destinations close to the already planned route. If there is empty space in the trailer – Najafov says it often exists, but Oway helps customers place cargo for just a small portion of the typical cost for these trailers.
The result is argued that it could result in the cost of moving a 2,000-sub-pound pallet from around $350 to $140 between Los Angeles and Dallas.
“You don’t have to buy an entire 50-foot truck to travel around the country to get great pricing,” he said. “If you want to move boxes over 100 pounds nationwide, current technology should be able to do so.
Najafov argued that the cut would generate higher shipping rates and consumer prices, but also resulted in increased truck driver emissions and increased idle times. He believes Oway can solve this and believes he is working with a large company that already has thousands of vehicles in his fleet, but he says he can’t reveal who they are as he is seeking a personal stay for now.
How Nadjafov sells it, Oway’s business model combines some of the best aspects of the two main ways cargo is shipped to US trucks
One model is known as the “Full Track.” This includes truck trailers packed with items that are often used by one shipper. These shipments are usually passed from Point A to Point B, offering faster delivery, but at a higher price.
Another model is known as “less than truck” delivery. It usually includes multiple shippers who share space on a single truck. This reduces costs, but takes time as items need to bounce between multiple trucks and warehouses before reaching their destination.
Nadjafov’s promise is that Oway can achieve full truck delivery speeds with the cost and dynamism of sub-truck delivery. Plus, shipping more items over direct, long distance routes reduces the chances of cargo breaking as they move from truck to warehouse and return again as they are not unloaded and reloaded.
Oway does this all in a “distributed” way, explains Nadjafov. This means they don’t try to buy space across the trailer, but work with other brokers in the industry on top of their carriers and shippers.
“We want Oway to be flexible and one day we can build new businesses and industries based on new applications in this infrastructure,” he said.
Nadjafov said Oway has already attracted interest from companies in other countries, but his startup is currently focusing on the US.
“Trucking is a trillion dollar industry, and the empty spatial phenomenon itself is a $100 billion problem,” he said. “I think over the next decade, it’s going to be a very transformative move across the US commercial and logistics sector. I believe this will basically be a de facto way that most businesses are keeping things going.”
Update: This story has been updated to reflect current market rates for moving goods between LA and Dallas.
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