Get-listed-729x90
110799

FR8 Revolution raises $3.6M, enters partnership with Sandhills Publishing

The company offers a trucking marketplace to match carriers and shippers

Financial trends and news by Steven Loeb
December 12, 2017
Short URL: http://vator.tv/n/4aaa

Trucking in the U.S. is huge. It's a $700 billion industry, which makes it surprising how it's a space that really hasn't caught up with the times in terms of technology. The industry has long been fragmented, without a central system and no good way of matching the best shipper and carriers, to get equipment shipped the fastest and cheapest way possible. 

That's the problem that FR8 Revolution, the company behind the FR8Star.com marketplace for open deck carriers and shippers, is solving. It provides a platform to connect shippers and carriers to make the process more efficient and cost effective. 

On Tuesday, the company made two big announcements: first, that it entered into a new partnership with information processing company Sandhills Publishing, which also led a new $3.6 million round of funding into FR8 Revolution.

What FR8 Revolution does

Founded in 2015, FR8 Revolution provides a platform for matching carriers and shippers.

"The spot part of the market, meaning loads that are booked one at a time, today is facilitated by brokers. So, if you're a shipper, and you need to move your excavator or your crane or a house or a control building or a wind turbine, anything big, the way you're doing that today, by and large, if you're calling a freight broker, they're quoting you a price, and they are going out and trying to locate a truck that can move that load for you," Matt Kropp, CEO of FR8 Revolution told me in an interview.

"There are 12,000 brokers in U.S. You can imagine if you've got 12,000 of these guys what most of them are like: it's a guy with a telephone," Kropp explained. "Because you have such a fragmented set of brokers and such a fragmented carrier base; around half of the trucks on road are fleets of less than 20 trucks. So the carriers, the companies that own the trucks, are also very, very fragmented and basically half of them are mom and pop, SMB kinds of businesses. What you end up having is this market where there’s not a central clearing house for matching these shippers and carriers and they're sort of finding each other through this very distributed search mechanism."

That can lead to situations where a broker may find a truck but it's 300 miles away, rather than the one that's five miles away, simply because they don't have a platform to show them that there's a truck closer by.

"This market, and the broader truck freight market, absolutely will go toward a marketplace model, an exchange model, where you have a central marketplace or, maybe two, where basically all the shippers come, they put their loads up, and all the carriers come to put their capacity up, and they get a match," said Kropp.

Part of what makes FR8 Revolution unique, he told me, is that it focuses exclusively on flatbed trucking, which represents a $50 billion slice of the overall trucking market. What also sets it apart is its ability to solve some of the other inherent problems with trucking in the U.S.

For example, the company provides carriers and shippers with a calculator that solves problems with oversized or overweight shipping, which may require permits route surveys, engineering work or even a police escort, depending on the state. Simply by putting in the load dimensions, FR8 Revolution can determine which states have which requirements, as well as the cost of the permits. 

"As a shipper, if you're moving something big, up to half of the price of that move can be in these third part costs, and, yet, as the shipper you really don't have any way of knowing what these costs are going to be, so it's very difficult to understand, when you're getting a price from a carrier, whether it’s a fair price. With our platform, shippers come in, they put in their loads, they put in their dimensions, and we tell them instantly what the third party costs are going to be, and then we give them an estimate, a range of what the price will be from the carrier, so they have, right up front, a budget number for making that move," said Kropp.

FR8 Revolution winds up saving both the shipper and the carrier time and money by matching them based on distance, and by cutting out the 10 percent broker fee that shippers would have to normally pay. 

Partnering with Sandhills

The big part of today's news is FR8 Revolution's partership with Sandhills, a company that Kropp said FR8 Revolution had known about for a long time, but only started working with earlier this year.

Sandhills is a company that publishes classified advertisement magazines, such as Truck Paper, Machinery Trader and TractorHouse, each of which advertises equipment that is being sold by dealers and individuals. So, for example, Truck Paper is a publication for selling used trucks.

In addition, Sandhills had launched a site called Needahauler.com, which is essentially a service for their customers to get their equipment shipped or delivered, by referring them to a broker.

"They've been looking for a while for a partner that could provide a much better experience for their customers – and when we connected with them it was a match made in heaven. We move exactly the kinds of products that they sell through their platform, and they needed transportation for those customers, so it was a very natural thing for us to connect," said Kropp. 

"That's really the great opportunity here: for their customers to have a better experience, so anyone buying equipment through their platform, from their dealers, they can now go straight to FR8Star to book a truck to move that equipment. Obviously it's good for us because it's source of leads and business for us. But we see this, ultimately, as a partnership that really creates a one stop shop for their customers."

Sandhills has been focused on offering more services around the purchase, including providing financing and insurance, and now FR8 Revolution will be providing trucking services.

"As we work with them, and integrate closer and closer, we want to make that experience almost like Amazon. You buy something from Amazon and you know it's going to get shipped to you; we want to create that same experience, where you buy something through one of Sandhills' properties, and you're able to just click a button and say, 'Get me freight,' and we take care of that."

FR8 Revolution is rolling out categories, starting with construction and farm equipment. It expects to handle thousands of shipments a week for Sandhills. 

New funding

The other news is FR8 Revolution's new funding round, which was led by Sandhills along with MAN Truck & Bus AG, as well as Doug Abrams. 

The company has previously raised funding from investors that included Off the Grid Ventures and individuals including David Mes, Ricky Wong and Rick Marini. This latest round brings its total funding to over $8 million.

The company says it will use the new funding for product development.

"It's a platform business, it's a marketplace business, so everything that we’re doing is focused on growing scale, so growing both sides of the marketplace equation, and customer acquisition, but it's also continuing to improve the product offering and expand the product offering," said Kropp. 

That includes enhancing the transaction mechanism so shippers can book instantly; giving more tools to the carrier side; and doing more with payments so that carriers can get paid same say instead of having to wait two months. 

The company will also use the funding to expand its 25 person team, adding to the engineering and sales teams.

Utimately, FR8 Revolution's ultimate goal is to be, along with Amazon and Uber, one of the major players in the trucking space. 

"I believe that these digital marketplaces will take a substantial share out of this whole brokerage market. It could be 20, 30, 40, 50 percent. The economics and just the benefit, the experience is so much better for both parties involved that I think it really will take over that function within in the market. We will be, and I would say already are, the leader on the flatbed side of that evolution," said Kropp.

"What I'd like to see in five years is that we own the flatbed space. If I were to place my money on the commodities side of the market, the drive in and refrigerated side, I would say it's either going to be Amazon or Uber or both, and I would say the three of us could stake out a nice position facilitating a $100 billion a year market."


Related companies, investors and entrepreneurs

28648
FR8 Revolution
Startup/Business
Description: Book and Dispatch Heavy-Haul Freight FR8Star.com is a booking and dispatch platform for carriers and shippers moving heavy haul and open ...
Bio: Matt is CEO of FR8Star.com, the digital marketplace for flatbed and oversized truck freight. Bringing together 10 years startin...

Related news