6 January 2023
Business objectives beyond shareholder value—commonly packaged as ESG goals— typically elicit something between healthy skepticism and outright cynicism in C-Suites. As companies weigh their response and responsibility to the climate crisis, they quickly calculate the trade-offs. “How much of a real commitment can we make,” CEOs ask, “without harming our bottom line?”
Apparently, too many don’t think they can do all that much. A recent study showed that only 21 percent of business leaders see a clear case for sustainability in their business strategy. That lack of vision at the top can render commitments ineffective in any organization. When four out of five CEOs decide sustainability is bad for business, the outlook for meaningful private-sector climate action becomes bleak.
So how should we rethink “business as usual” with our planet’s future on the line? If sustainability doesn’t fit within traditional business models, we need better models that turn sustainability from an added expense to a key ingredient for growth. That’s why I founded a technology company (which is also a certified B-corporation) to create a new model for one of America’s most carbon-intensive sectors: freight.
As both an entrepreneur and a father invested in my family’s future, it has been my most fulfilling mission yet. Here’s what I’ve learned along the journey so far.
The empty truck problem.
Here’s something you might not know about the freight trucks delivering almost all the goods in America’s homes and offices: many of them travel with significant empty space a substantial portion of the time. This happens because, despite the exponential market growth for goods over the past two decades, companies typically only get two options for shipping.
On one hand, businesses can purchase all of the space in a truck — known in the industry as truckload (TL) — regardless of whether they have enough goods to actually fill it. On the other hand, businesses also have the option to purchase a smaller amount of space — or less-than-truckload (LTL) —, but will have to send deliveries on an indirect route, where every terminal consolidation point increases the chances of damage, delay, and loss.
If companies want their goods to reach their destinations on-time and damage-free, they go with the first option. In most cases, they’re paying to ship air: our research found that over half of truckloads in 2021 were actually half-empty.
So why do businesses reserve full trucks when they can’t actually fill them? In America, consumers expect their packages to be delivered on time at all costs. Businesses live and die by their ability to fulfill that expectation (last year, shippers paid average annual fees over $290,000 for all the times they fell short). As a result, companies have grown accustomed to shipping air as the cost of doing business.
In a $875B trucking market, we know the operating costs of America’s half-empty truck problem inevitably fall to consumers. And while we don’t have cents-to-the-dollar data to show those costs on individual goods yet, we know its carbon footprint: the Environmental Protection Agency reported that medium and heavy duty-trucking emitted nearly 423 million metric tons of CO2 in 2022. We can’t justify that when 51 percent of so-called “full truckloads” are really just half-empty.
If every truck carried all the inventory it’s designed to hold, there would be massive financial and environmental benefits. Once I realized this, I directed all my attention towards building a smarter alternative to TL — one that brings multiple shippers and carriers together to fill trucks to capacity without compromising quality. In 2016 I started the company Flock Freight, and we set out to turn sustainability from a cost into a key ingredient in our success.
Finding and filling the empty spaces.
While Flock’s underlying technology is complex (and patented), the concept of pooling freight is simple: keep trucks full by bringing together multiple shippers whose goods are heading in the same direction with carriers who are driving that way. When trucks move consistently full and terminal-free, they aren’t burning diesel to drive empty trucks — and emissions fall by as much as 40 percent.
Freight brokers have tried for years to pool shipments, but lacked the technology to do it efficiently. Thanks to a team of software engineers and data scientists, Shared Truckload (STL) can now combine pallets from multiple shippers into one truck driven by a single driver all the way to one destination. Sophisticated algorithms identify the best options for shippers and carriers, optimizing routes and filling trucks to capacity.
Most importantly, STL aligns cost incentives for all parties: shippers only pay for the space they need and carriers can earn more from every linear foot of capacity. It gives shippers the safe, on-time deliveries they demand without the inefficiencies of TL. The result disproves the cynical misbelief that lowering carbon emissions requires economic sacrifice. In fact, STL shows how profitable it can be: when we studied over 4,000 Shared Truckloads last year, we found that they can increase a trucking company’s revenue by 20 percent per haul, 20 cents per mile, and $200 per day on average, compared to traditional one-pick, one-drop truckloads.
Here’s a glimpse of STL’s environmental impact at scale:
- In 2022, Flock Freight set out to save 40,000 metric tons of CO2e with carbon neutral shipping. In the last 12 months, our STL shipments traveled nearly 56,800,000 cumulative miles (equivalent to 119 trips to the moon and back).
- STL has moved over 610 million pounds of freight carbon neutral and saved over 52,000 metric tons of CO2e (about the same carbon output of 11,000 gasoline-powered vehicles in one year).
- In the realm of Scope 3 greenhouse gas emissions, reducing emissions from diesel by 40 percent holds immense potential for businesses. If America’s truckload industry committed to sustainable freight shipping by using STL, market valuations show us that carbon emissions would fall by over 10.5 million metric tons a year.
Shared Truckload is about more than just quality and cost. Every time we pool freight and fill a truck, we prove that reducing emissions isn’t a zero-sum game. It’s a win-win-win outcome for businesses, truckers, and our environment.
Innovating the next wave of profitable sustainability.
As electric vehicle fleets and clean-energy transportation continue to come online, Shared Truckload offers a more efficient way to maximize their capacity and fuel.
But the STL solution doesn’t just provide a blueprint for moving goods more efficiently on trucks. It also offers a glimpse into a more coordinated, data-driven future among traditional air-and-sea modes across global freight networks.
Ultimately, it shows the broader mindset shift necessary to create a smarter supply chain, and decarbonize other carbon-intensive industries. Rather than asking how much sustainability will cost, we need business models grounded in it. In every sector, there is profit to be made in eliminating the waste we take for granted but just can’t see yet.
If we want to foster a habitable planet, business leaders have no choice but to open their eyes.