Truckers, whose work is essential to the world’s supply chains, are struggling to get compensated due to a lack of fast and seamless payment systems. A blockchain tech start-up claims to have the solution.
Trucks move over 70% of America’s goods producing about US$875.5 billion in gross freight revenues annually according to the American Trucking Associations (ATA), America’s largest national trade association for truckers.
ATA data also show approximately 3.6 million professional truck drivers in the U.S., with independent owner operators accounting for about 800,000 of the figure.
However, despite the industry’s importance, Philip Schlump, the chief commercial officer of TruckCoinSwap – a Wyoming-based fintech and freight company – told Forkast in an interview that the way many truckers are paid is fundamentally flawed and due for a complete overhaul.
“Millions of small trucking companies in the U.S. make up almost all of the shipping spot market, and if these businesses disappeared tomorrow, every grocery store and retailer in North America would be rationing products within a week,” said Schlump.
The trucking spot market, Schlump explains, is where many companies hire freight for an unexpected increase in demand. While many shippers hire truckers on long-term contracts or have their own internal fleets, the spot market allows supply chains to adjust quickly to fluctuating needs.
While the truckers operating in this market provide essential flexibility for supply chains, their payment terms are egregiously inflexible, often taking up to months to process, said Schlump.
Dale Watkins, a business service manager at OOIDA, a non-profit, American-based trucking advocate, told Forkast that freight payment terms have been a growing issue for truckers for decades and have only gotten worse as more third-party brokers have become involved in freight hiring.
According to Watkins, when a motor carrier receives a job to haul a load, it is safe to assume they will not get paid for at least 30 to 45 days. Thus, a trucker who accepts a job for a long haul could face months of operating costs before they get any compensation.
While other blockchain companies, such as , have advocated for the use of blockchain within supply chains for shipment traceability purposes, TruckCoinSwap appears to be one of the first companies to apply the concept of a blockchain marketplace to the issue of trucker invoicing, said Schlump.
