Trucking News: NEXT Trucking's Path To A Lucrative Niche—And A $500 Million Valuation

Mike

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Staff member
Lidia Yan has a hard decision to make. Her fast-growing startup, NEXT Trucking, is moving from a gritty industrial outpost south of Los Angeles, Lynwood, to more stylish headquarters in colorfully rehabbed former Xerox offices near the Pacific Ocean in El Segundo in the heart of L.A.’s booming Silicon Beach tech corridor. Her 150-person team is excited about the upgraded digs, but Yan isn’t sure she’ll commit to something else they want: a kombucha dispenser and a supply of the fermented beverage.

“We had one set up for a while as a test,” Yan admits. But now “I’m not sure,” she says, wrinkling her nose at the thought of smelling the pungent drink every day.

The chance to mull over what pantry perks should get added to an office is a pretty good sign that a startup is on the rise. NEXT Trucking has the numbers to show that, too. It’s raised $125 million from VCs like Sequoia Capital—most recently at a $500 million valuation—for its four-year-old smartphone app. It’s used for freight booking, a hidebound corner of the logistics world that until recently relied mostly on telephone calls, faxes and, at its technological height, emails.

NEXT Trucking isn’t the only company digitizing that process of freight booking, in which a company uses a middle man like NEXT to hire a trucker to haul its goods. There are a lot of well-funded startups, like New York-based Transfix, as well as Uber Freight and Amazon. But those companies are focused on long-haul shipments. Yan, 38, and her co-founder husband Elton Chung, 41, have smartly steered Next Trucking into a different, lucrative niche.

They focus on “drayage,” the business of ferrying cargo containers from sprawling Los Angeles and Long Beach ports and trucking them to the region’s 35,000 warehouses for state and national distribution. NEXT Trucking charges the company shipping the goods varying rates, depending on distance and the type of load, for putting them a finger swipe away hiring one of 16,000 trucking companies on its app. The company estimates drivers typically earn more than $500 a day. Last year, the startup did almost $46 million in sales and thinks revenue could more than double this year to $120 million. When it comes to cargo, Yan says, “the first mile is as important as the last mile.”

 

nan

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Supporter
Thanks for the heads up. I refuse to drive loads for anyone who doesn't have a kombucha dispenser at corporate.

Most of the brokers here already have app based dispatch. They're just getting special attention and VC funding because they're in Silly Con Valley.
 

Mike

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Staff member
Most of the brokers here already have app based dispatch. They're just getting special attention and VC funding because they're in Silly Con Valley.
As in you pick your own loads and get paid within 48 hours?
 

ironpony

Professional Pot-Stirrer
Supporter
...and get paid within 48 hours?
Quick pay. Everyone has it, as I'm sure you know. It costs, because the brokerage (automated or traditional) is offering you a short-term loan. Those are much more expensive than long term credit, like car loans. Traditional brokers offer it as an option, and explicitly state their fees. If its not up front in the app, don't expect that you're not paying for it. They just built it into the cost structure, and are taking their cut off of the top.

There's no such thing as a "free lunch."
 
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Mike

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Staff member
If its not up front in the app, don't expect that you're not paying for it. They just built it into the cost structure, and are taking their cut off of the top.
I don’t consider myself to be paying for it when I bid on a load and have that amount accepted.

I even work with traditional brokers that pay quickly like this without charging for it.

Traditional brokers and their 30+ day pay terms have become my last option at this point. Beyond posting my truck, I barely even glance at the load boards now
 

ironpony

Professional Pot-Stirrer
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I don’t consider myself to be paying for it when I bid on a load and have that amount accepted.

I even work with traditional brokers that pay quickly like this without charging for it.

Traditional brokers and their 30+ day pay terms have become my last option at this point. Beyond posting my truck, I barely even glance at the load boards now
Different industry segments might have something to do with it.
 

Mike

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Staff member
Different industry segments might have something to do with it.
I don’t think so, could be wrong though.

I believe 100% that this is simply the way the industry is trending, and quickly.

Coyote is quickly moving in this direction as well, but they are simply too cheap on rates at this point to ever book anything with them unless you catch them in a desperate position. I bid on their system, but they constantly lose my interest by countering with BS offers.

Supposedly, CH Robinson also has something available, or coming soon, wouldn’t know for sure because I don’t keep up with them much at all.

The myth being pushed is that app based brokerages are cheap. They aren’t, they simply play the same game as other brokers. If any broker can move something cheaper, they will. I would do the same thing if I was a broker.

JB Hunt is moving more and more freight through their 360 app, and they are now dumping a ton more funding into improving it further.

The other big names are dipping their feet in the waters, but not making the plunge yet. They will, though, or they will get left behind.

This technology is here to stay, it will only continue to improve and become the normal, and as far as I am concerned, it’s about time.
 

ironpony

Professional Pot-Stirrer
Supporter
I don’t think so, could be wrong though.

I believe 100% that this is simply the way the industry is trending, and quickly.

Coyote is quickly moving in this direction as well, but they are simply too cheap on rates at this point to ever book anything with them unless you catch them in a desperate position. I bid on their system, but they constantly lose my interest by countering with BS offers.

Supposedly, CH Robinson also has something available, or coming soon, wouldn’t know for sure because I don’t keep up with them much at all.

The myth being pushed is that app based brokerages are cheap. They aren’t, they simply play the same game as other brokers. If any broker can move something cheaper, they will. I would do the same thing if I was a broker.

JB Hunt is moving more and more freight through their 360 app, and they are now dumping a ton more funding into improving it further.

The other big names are dipping their feet in the waters, but not making the plunge yet. They will, though, or they will get left behind.

This technology is here to stay, it will only continue to improve and become the normal, and as far as I am concerned, it’s about time.
I get a significant premium on rates at Coyote by working with their brokers. They were offering a load this morning at $825 - they were going to load me for $1000, but I couldn't make the timing work. The apps are just the latest method they're using to depress rates.
 

Mike

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Staff member
The apps are just the latest method they're using to depress rates.
That’s the fiction I read daily on Facebook by people who fight every attempt at change in the industry.

Brokers are always going to keep rates as low as possible, they have to because the shippers are their customers. Doesn’t matter whether they are booking the load over the phone or through an app.
 

ironpony

Professional Pot-Stirrer
Supporter
That’s the fiction I read daily on Facebook by people who fight every attempt at change in the industry.

Brokers are always going to keep rates as low as possible, they have to because the shippers are their customers. Doesn’t matter whether they are booking the load over the phone or through an app.
It's not fiction. They use the fiction that by "cutting out the middleman," aka the broker and offering you "no cost quick pay," that you're getting a bigger cut. Nothing could be further from the truth. All the talk about the supply chain being "more efficient" is just double talk meaning their costs have gone down. App software is a one time charge, and the overhead is occasional software maintenance, and the power bill. They still have to absorb the cost of short term finance of bill's or pass it on to you. TNSTAAFL - Theres No Such Thing As A Free Lunch; in American business no one is doing you any favors. One way or another, you're paying for it.
 

Mike

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Staff member
It's not fiction. They use the fiction that by "cutting out the middleman," aka the broker and offering you "no cost quick pay," that you're getting a bigger cut. Nothing could be further from the truth. All the talk about the supply chain being "more efficient" is just double talk meaning their costs have gone down. App software is a one time charge, and the overhead is occasional software maintenance, and the power bill. They still have to absorb the cost of short term finance of bill's or pass it on to you. TNSTAAFL - Theres No Such Thing As A Free Lunch; in American business no one is doing you any favors. One way or another, you're paying for it.
They can market their business however they want. At the end of the day, it comes down to what I can make on a load and how easy the transaction is. I’m not tricked by their marketing tactics no more than I am tricked by a shady broker telling me that $1.35 is all he has in a load.

They don’t cut out the middle man, they are the middle man. Granted, there is less of them, meaning less overhead, meaning they can work at a smaller profit, but that is fine with me.

I can book loads today that are leaving Dallas on Wednesday for $2+/mile in a dry van with the touch of a button on a phone, or at the very least, submit multiple bids on similar loads without picking up a phone. I call the brokers today for a load on Wednesday out of Texas, and I am going to hear how rates are in the dumpster and the best they can get me is $1.35, knowing they will be paying much more unless they find a sucker to pad their pockets early.

Apps are not driving down rates. Rates are a product of supply and demand, mixed in with the business mentality of those in the industry. With the apps, a brokerage can simply do more work with less people.

Seriously, if they were about driving down rates, few would use them and they wouldn’t be growing so quickly, and others wouldn’t be jumping into the market with huge investments.

Fact is, more and more loads are being booked via an app, and that will only happen more and more as time goes on and the app based systems improve.
 

ironpony

Professional Pot-Stirrer
Supporter
They can market their business however they want. At the end of the day, it comes down to what I can make on a load and how easy the transaction is. I’m not tricked by their marketing tactics no more than I am tricked by a shady broker telling me that $1.35 is all he has in a load.

They don’t cut out the middle man, they are the middle man. Granted, there is less of them, meaning less overhead, meaning they can work at a smaller profit, but that is fine with me.

I can book loads today that are leaving Dallas on Wednesday for $2+/mile in a dry van with the touch of a button on a phone, or at the very least, submit multiple bids on similar loads without picking up a phone. I call the brokers today for a load on Wednesday out of Texas, and I am going to hear how rates are in the dumpster and the best they can get me is $1.35, knowing they will be paying much more unless they find a sucker to pad their pockets early.

Apps are not driving down rates. Rates are a product of supply and demand, mixed in with the business mentality of those in the industry. With the apps, a brokerage can simply do more work with less people.

Seriously, if they were about driving down rates, few would use them and they wouldn’t be growing so quickly, and others wouldn’t be jumping into the market with huge investments.

Fact is, more and more loads are being booked via an app, and that will only happen more and more as time goes on and the app based systems improve.
You're cheating yourself out of the desperate broker who'd willing to pay. Computers don't get emotional.
 

Mike

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Staff member
You're cheating yourself out of the desperate broker who'd willing to pay. Computers don't get emotional.
No I’m not. I post my truck and get those folks as well.

And they get emotional on the apps as well, LOL. They have loads that need to move, and in desperation, they move them either at a loss or for a very thin profit.

Eggs in many baskets, and a several laying loose all over the ground. :)
 

nan

Well-Known Member
Supporter
Rates will eventually go down as automation via apps goes up. When a broker can book loads automatically he can do more in less time so he will do exactly that. He'll be able to interface a much larger pool of drivers with even less effort than the handful he interacts with via phone/email...and he won't even get carpal tunnel anymore.

Basically he'll have more trucks fighting for the same loads.

Mike Mike I think you're just too early in it and seeing the upside before the fall. Mostly because a lot of truckers HATE technology and HATE change and aren't really embracing it yet. We had a lot of people REFUSING to use the automated gates at the rail for a while. Then they saw some of us early adopters getting through faster (in and out before they were even in), it finally caught on, and now people get mad when it doesn't work. 😂


Anyway just like anything, volume drops prices. It always does.
 

Mike

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Staff member
Anyway just like anything, volume drops prices. It always does.
You are correct, but the streamlining of brokering will reduce the percentage held by the broker, not the carrier.

The amount of trucks aren’t increased by this transition.
 

nan

Well-Known Member
Supporter
You are correct, but the streamlining of brokering will reduce the percentage held by the broker, not the carrier.

The amount of trucks aren’t increased by this transition.
The amount of trucks will eventually be increased. A broker is gonna take on the max he can handle. With everything via automation aka an app, he can take on more. Same goes for trucks. Truckers are gonna get on the app and it'll be so easy to book one load after another they'll do more loads for less. Because many of them are dumbasses.

Hell just look at uShip and their insane cut as an example. eBay too. eBay is basically an online sales broker. They make it easy, take huge cuts, and the seller response is MORE VOLUME FOR LESS MONEY.
 
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