Growth 500

How trucking startup Fleet Optics solved a major customer frustration

Ever wonder how those packages get to your front door so fast? Fleet Optics doesn’t. Its mastery of a problem that stumps many others makes it Canada’s Top New Growth Company for 2018.

Growth 500: Canada’s Fastest-Growing Companies

John and Vince, the ceos of Fleet Optics. (Photograph by Mark Sommerfeld)

Fleet Optics is a trucking firm that knows a thing or two about sprinting. Case in point: during one especially breathless week earlier this summer, managers at the Mississauga, Ont.-based firm watched as a customer went from prospect to all-in, in a matter of days. The three-year-old company, which is rapidly carving out a space in the burgeoning “last-mile” delivery market, had lined up a meeting with a Greater Toronto Area medical services firm looking to up its game.

As managing partner Vince Buckley tells the story, his sales team made its presentation and pitch on the Tuesday. On the Wednesday, the new customer—evidently eager to overhaul its hauling operations—hired five Fleet Optics drivers to make deliveries, as a test. But by Thursday, that customer had revised its order—to 38 trucks. “They just wanted to get rid of managing their drivers,” Buckley reports, cheerfully. “They wanted us to take over.”

In the aggregate, these kinds of anecdotes go some distance toward explaining why Fleet Optics—a trucking outfit with 2017 revenues in the $10- to $20-million range—sped into first place on the 2018 Startup 50 ranking of Canada’s Top New Growth Companies. Between 2015 and 2017, the firm grew its top line by over 6,468%—a blazing ride that reveals how an ambitious startup’s investment in agile, purpose-built technology allowed it to offer a novel and customer-friendly solution to one of the vast logistics industry’s nagging problems. Moreover, it does so at a time when the sector is being radically transformed by e-commerce and the promise of overnight delivery.

According to stats from the Boston Consulting Group, the global logistics market was worth $4.3 trillion in 2014, with courier and express parcel delivery accounting for $500 billion of that total. More relevant, however, is the fact that in the past decade, e-commerce has effectively strapped a rocket onto the consumer delivery sector, as even the largest shippers scramble to keep pace with surging order volumes.

Yet the last-mile segment is the most expensive to service—according to one recent study, it cost U.S. logistics firms $117 billion last year. The systems required to move a carseat made in an Ontario autoparts factory to an assembly plant in Mexico are far more straightforward and cost-effective than delivering a parcel from a giant distribution centre to a suburban cul de sac.

Of course, much of this frenetic expansion traces to shippers like Amazon, which have traditionally used giants like FedEx, UPS, the U.S. Postal Service and Canada Post for most deliveries. But as loads swell, many are looking for alternatives—especially for complex last-mile jobs. “The big [delivery companies] just can’t deliver everything,” observes Bill Cassidy, senior trucking editor for the Journal of Commerce, a U.S. trade publication, “so you have this explosion of small companies and startups using technology.” In this context, he adds, a firm like Fleet Optics is set to grow “really rapidly.” 

This is where Fleet Optics enters the picture. The company launched in early 2015, but its roots trace back to a Ontario-based local trucking outfit founded in 2004 by logistics industry veterans Buckley, John Mann and David Moore. Seeing the surging demand, the trio launched Fleet Optics as a new business devoted to offering shippers more cost-competitive prices for the last-mile, using an incentive-based driver compensation formula instead of traditional hourly rates.

The company’s earliest clients were business-to-business, but demand quickly tipped into helping retailers and manufacturers get products to end consumers—and fast. Help was definitely needed: People were buying more and more stuff online, producing both greater expectations (thanks to Amazon, same-day delivery is becoming the status quo) and agitation (what veteran retail analyst John Williams calls “the piss-off point”—that very familiar irritation of waiting all day for a delivery, only for it to arrive in the five minutes you’ve stepped out for an errand).

Buckley and Mann saw an opportunity to solve both problems with data. Working with a team of developers, they created an app that allows consumers to find out, in real time, exactly where their package is and, more important, when it will be delivered. Think Uber’s interface, but for boxes. “Our differentiator is combining final-mile logistics with transparency and visibility,” explains Trevor Priest, the company’s business development partner. Indeed, if you’re expecting a parcel from a retailer that uses Fleet Optics, you’ll get texts updating you on its ETA, plus links to the tracking status of the truck and driver bringing it to your door. Consumers, unsurprisingly, love it. 

Fleet Optics contracts directly with manufacturers or retailers—the company does not operate as a subcontractor to other carriers—and those clients love the data, too. The Fleet Optics app was designed to integrate into the discrete IT systems of shippers, giving them instant online access to invoices, proof-of-delivery forms and other key documents. That plug-and-play interface eases a pain point for clients, according to Kelly-Jo Wellings, a veteran of Canada Post’s e-commerce operations who joined Fleet Optics earlier this year to head up sales: “It makes their IT people love you.” 

The app was not an insignificant investment—Fleet Optics has sunk about $500,000 in software development since its launch—but according to Buckley, the data granularity and user-friendly interface has made it “like lightning in a bottle.”

It’s also helped Fleet Optics enhance its operations. Because all relevant shipping documents are linked electronically, the company has sharply reduced the cost of billing and payroll; one person now does work previously performed by a nine-person back office team. Similarly, the system’s tracking capabilities allow Fleet Optics to keep a tight lid on expenses associated with customer service calls, which typically cost a margin-gobbling $10 each.

While these efforts show that Fleet Optics, like many ambitious startups, is willing to do whatever it takes to win over clients, Buckley says the strategy goes beyond mere customer acquisition. “It makes us sticky.”

The global logistics sector won’t slow anytime soon. But it will continue to roil, as retailers re-cast bricks-and-mortar stores as “fulfillment centres” and consumers come to expect instant delivery of items ordered via Google Home and Amazon Echo voice devices. In this context, prospects appear good for a company devoted to taking pain out of the process. “There’s no magic to it,” Mann shrugs. Maybe not. But there seems to be plenty of business.