A Seattle-based trucking company, Convoy, has raised $185 million in a round led by CapitalG, the growth equity arm of Google (Nasdaq: GOOGL) parent Alphabet. David Lawee of CapitalG is joining the company’s board of directors. The investment was announced Sept 28, 2018.
Convoy is bringing technology into the transportation sector in a big way and offering innovative services that seem surprisingly behind tech trends, though the trucking sector has been driving blind for years with few technology adaptions, if any.
The Google brand brings value to Convoy in that after CapitalG’s investment the value of the company jumped three-fold to $1.1 billion, according to Pitchbook.
Convoy’s products are great and include things like FleetOwner, an app that matches instant bidding on available loads. HDT, a pool of trailers available for rent by other carriers. Freightwave, an app-oriented business dealing with load detention. And several other techy-app-oriented transportation services. These are all great accept getting drivers to use the Apps remains the most challenging proposition, given that drivers are used to calling dispatch instead.
Other trucking companies have adapted some technology applications, though labor shortages continue to plague them. U.S. Express Enterprises (NYSE: USX) increased driver pay by 13.5%, offering unheard of rates, though it hasn’t gotten employment candidates off the couch as yet and USX isn’t alone.
Knight-Swift Transportation Holdings Inc. (NYSE: KNX) isn’t fairing any better than U.S. Express, a Phoenix-based rival of Knight-Swift, when it comes to having enough drivers – though its need isn’t all over the frontpage of their new website, having Knight and Swift completed a merger in Sept. 2017.
While the trucking sector has always been competitive, it held a blind eye to the future with NONE of them doing anything about it, until Convoy came along. But Convoy could be a double-edged sword for the sector. In some ways, it helps them be more efficient, carry more loads and logistically improve trucking companies’ overall results. On the bad side Convoy now has Google as a key shareholder which means Convoy will ALWAYS have better access to search results than its competitors. Oh sure, Google is free of any preferential treatment in search, treating all websites fairly. And if you believe that, I want to sell you a bridge somewhere.
Google is a monopoly that the U.S. government turns a blind eye towards. If they own a principal amount of Convoy, you can bet that company will always have top results – no matter the app or search activity – at least in this writer’s personal view.
What trucking companies need to do is hire the right people – solicit interest at techy gatherings where the attendees are used to technology applications and web apps. The day that happens, the sector could see some action to the upside.