The Best Electronic Logging Device (ELD)
When you’re a small business owner, you learn to manage your costs very quickly to compete. In the United States, 91% of trucking companies have fewer than 6 trucks with the average having 3 trucks. With more than one million trucking companies in the U.S., this translates to 900,000 owner operators that won’t be likely to make any large investments in technology anytime soon. Sounds like the perfect setup for an “Uber of trucks,” and one firm we talked about late last year, Convoy, has raised $265 million to connect truck drivers with companies that need to ship stuff. Since 40% of trucks traversing the land of the free have nothing in the cargo-hold, that’s a pretty appealing proposition. Still, it’s a “nice to have,” and owner operators should be more concerned right now with the fact that Electronic Logging Devices (ELDs) are being mandated by the government. Let’s talk more about ELDs.
The Electronic Logging Device (ELD) Mandate
Simply explained, an ELD is a piece of hardware that records when a vehicle is traveling. If a vehicle is moving at more than 5 miles per hour, the ELD will automatically switch to driving mode. Once the speed of the vehicle falls to 0 miles per hour and stays there for 3 consecutive seconds, the ELD will consider the vehicle stopped. In driving mode, the ELD records information such as date, time, location, vehicle mileage, driver, etc. This data is then used to produce driver logs, something that used to be handled with pen and paper. Department Of Transportation (DOT) inspectors will check a truck driver’s logs to make sure they’re not getting hopped up on some “high speed chicken feed” and running more hours than what is considered safe. (There are government-mandated Hours Of Service (HOS) regulations that dictate how much driving a driver can do before needing to rest for a designated period of time.)
With an ELD, drivers do not have to print out logs when they encounter an inspector. Drivers can transfer logs to a roadside inspector or show them on, say, a compliant mobile device, making the printing of logs unnecessary. Then there’s the notion of honesty. Paper logs can be fudged. A digital ELD can’t be fudged. That’s why the Federal Motor Carrier Safety Administration (FMCSA) has issued a mandate that states – in a 126-page document no less – that all commercial vehicles operating in ‘Murica need to install electronic logging devices by December 16, 2019. The FMCSA estimates that the ELD mandate will save approximately 26 lives and prevent 562 injuries every year. That’s based on the DOT estimates that of the 500,000 accidents involving commercial vehicles that happen every year, 87% happen because of driver fatigue.
You know what an ELD is, and you’re being required to purchase one that’s “approved,” so which one do you choose? Read on.
Choosing an Electronic Logging Device
As an owner operator, you’re being strong-armed into doing this, so try to spend as little money as possible and do as little work as possible. Simply buy the cheapest, easiest to use ELD that meets the mandated requirements – of which there are a whole truckload.
For an ELD to be compliant, it must be connected with the Engine Control Module (ECM) to automatically collect the required data. It also needs to connect with the driver’s cell phone since cellular coverage can be spotty. And a dozen other things need to be checked as well. The FMCSA has provided a handy “Choosing an Electronic Logging Device Checklist,” which suggests it’s something you actually need to worry about.
Who the heck has time for some checklist? Simply go to the list of self-registered ELDs on FMSCA website and then purchase the cheapest ELD on that list. It’s a very competitive space right now, so you should choose a larger provider so that they can enjoy the “economies of scale” that are required to sell a product cheaper than anyone else while still profiting from it. (Investopedia defines economies of scale as “cost advantages reaped by companies when production becomes efficient.”) A firm called KeepTruckin claims they’re the cheapest solution out there.
Just so happens, they’re also the #1 rated ELD provider and the easiest to use. Let’s learn a bit more about KeepTruckin, the company.
The Best Electronic Logging Device (ELD)
Founded in 2013, San Francisco startup KeepTruckin has raised just over $227 million in funding from investors that include Google Ventures to build out a network of more than 1,000,000 registered drivers, 250,000 trucks, and 50,000 for-hire carriers that are all connecting to the cloud through ELDs. The lion’s share of their funding came in the form of a $149 million Series D round that closed just weeks ago. The company’s newly hired VP of Product, Jairam Ranganathan, comes from Uber where he did a three-year stint as Senior Director of Product and Data Science. This tells us that KeepTruckin has some big plans for their big data. In the face of lots of competition, KeepTruckin lists two main competitive differentiators: a highly modular product that can be used by fleets of all sizes, and bottoms up distribution. In their words:
Drivers bring us into their companies and effectively sell on our behalf. Bottoms up distribution has given us a fundamental sales advantage vs. competitors that sell top down.
Update 06/17/2021: KeepTruckin has raised $190 million in new funding at a post-money valuation of $2.3 billion to double R&D headcount to more than 700. This brings the company’s total funding to $417.3 million to date.
Selling to truckers is a challenge unless you can relate to them. Walk around like a poseur saying “10-4 good buddy,” and it’s only a matter of time before you’ll be washing down a knuckle sandwich with some Hawaiian Punch. Don’t know what “good buddy” means? That’s exactly the problem. In order to sell to truckers successfully, you need to be a trucker. That’s why KeepTruckin says that for every fellow trucker you sign up, you’ll get $25 and they’ll get $25. In industry lingo, this is called an “affiliate program.” And the average trucker who signs up for the KeepTruckin affiliate program makes $250 on average – that’s ten referrals. Wanna make your first $25? Click this link or the below picture and signup.
We just got $25, and you just got $25. Most importantly, you’re now compliant with the ELD mandate.
KeepTruckin Keeps Truckin
Word of mouth is exactly how KeepTruckin has been able to sell their ELD product so quickly. Incredibly, the startup grew from $1 million in annual recurring revenues to more than $50 million in 12 months, one of the fastest-growing Software as a Service (SaaS) companies ever. Whatever genius decided to use “bottom-up distribution” nailed it. Imagine trying to sell 300,000 owner-operators this ELD product from the top down. Now, they just need to keep these customers and reduce “churn” which is a term used to describe the migration of existing customers over to competitors. This happens when customers become unsatisfied.
In competitive environments, price wars can break out. On the flip side, prices can increase as well. Owner-operators who are mainly concerned with price could quickly become unsatisfied if KeepTruckin raises their prices when contracts expire, but don’t count on that. KeepTruckin’s recent funding round shows their desire to scale and land-grab as much market share as possible. They’re going to make sure that they have as many ELDs in the field for fleets of all sizes, then they’re going to do some really cool stuff with all that big data and up-sell loads of functionality. As you can see, ELD compliance is just a small part of their future plans.
Their modular platform allows them to easily up-sell add-on functionality in the same way they sold the devices – word of mouth. Some of this new functionality is really impressive. Their dual-facing smart dashcam uses artificial intelligence to identify events on the roadway and make them instantly accessible remotely. Such a system allows for coaching and feedback, something that can result in up to a 52% reduction in critical safety events per 10,000 miles. All of this data might also come in handy when trying to train computer vision algorithms, and it will be interesting to see how this progresses through the stages of trucking autonomy in the coming years.
Economies of scale is about large companies doing things that a small company can’t. Investing in leading-edge technologies probably fall low on the to-do list for any small firm that’s trying to get by day-to-day. What we’re seeing with KeepTruckin is a firm that is developing product functionality that adds value to your operation. They’ll continue to up-sell these modules to their giant network of truckers. Anything that reduces costs will quickly be adopted by owner-operators who are always looking to improve their operations without having to make significant investments. Given how fragmented the trucking industry is, the ability to connect everyone and sell them a common solution provides endless opportunities to create efficiencies. If we had to pick a dog in this race, we’d put our money on KeepTruckin to get first place.
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