It’s a decades-old riddle worthy of the mythical Sphynx: What’s shapeless and weightless, yet costs global shippers billions of dollars each year to move?
The answer, of course, is air — as inside the air in empty shipping containers, those colorful, ubiquitous steel boxes that can be stacked on ships, railcars and trucks.
The adoption in the 1950s of standardized containerization and intermodal shipping revolutionized global logistics. But for all the efficiencies created, container usage also conjured up a new problem: wasted time and fuel and road use moving empty containers back and forth between journeys, movement that has increased with globalization and is now estimated to cost more than $20 billion annually.
For the past 60 years, most attempts at solving the problem have been local and limited in scale and success — until now. Or, more accurately, until 2014, when Todd Ericksrud applied big data and machine learning to match incoming and outgoing movement to reduce those empty trips. “What happens is that a container arrives at the port, it unloads, and goes to a shipper.
That shipper unloads it and it goes back to that port empty,” says Ericksrud, president and CEO of Matchback Systems Inc., the Green Bay-based company he founded in 2014 to address the dilemma.
“Conversely, an exporter says, ‘Hey, I need a container,’ sends a trucker to a port, or terminal, or a railyard. They pick up that container, and they bring it back loaded. You’ve got two full-loaded moves and two full-empty moves.
“The concept is to connect these parties and help them make what we call a matchback, or a street-turn,” he says. “We can get that down to two-plus.”
Essentially, what was once four trips in and out of a port or terminal is reduced to two, plus a connecting leg between two parties. Savings can range from $150 to $400 for each Matchback, Ericksrud says. Multiply that across the millions of containers in use, and there is a lot of money to be saved.
“You’re taking out millions and millions of miles for these participants and saving money, time, fuel and road wear,” Ericksrud says. “More than 50 percent of the containers you see on the road are empty. It’s a huge problem in the industry. People have reported there’s a $20 billion repositioning of container problem worldwide. That $20 billion is also massively bad on the environment.” Matchback System’s solution earned the company a 2016 Insight Innovation award.
It’s not just the money. Research by Matchback Systems shows using the technology to increase matches can:
• Boost trucker-loaded ratios from 50 percent full to 80 percent full
• Reduce emissions from less exhaust released into the atmosphere by 30 percent
• Increase driver productivity
• Improve container efficiency by 20 percent
• Reduce total costs by 30 percent
In addition to those savings, matchbacks reduce the traffic in and out of ports and terminals, cutting congestion and delays.
The solution seems so simple and the benefits, so great. But in the fractured world of logistics, where companies are extremely guarded about their shipping information, getting it done was anything but easy.
“I think people just got used to managing as best they could. It wasn’t seen as their problem to fix,” says Craig Dickman, CEO and founder of Green Bay-based Breakthrough Fuel, who has been a strong supporter of logistics and supply chain startups in the region. “What Matchback Systems is about is optimizing the system and creating a targeted platform.”
MATCHMAKER, MATCHMAKER Matchback Systems can trace its origins back to an innocent question Ericksrud fielded while working for Schneider National managing port trade and global logistics. A company asked if it could use an empty container in its inventory for which it had no use. The company also promised to take care of its return journey without charge.
When a couple more requests followed, Ericksrud realized there might be a greater opportunity.
“After you do this a couple times, you realize there’s something that somebody knows that I don’t know,” he says. “That was the whole concept of matchbacks.”
Though the idea of a matchback or street-turn was not new, they normally were done as a one-off arrangement, and there was no organization to them. Ericksrud began to ponder what would happen if he could find a way to create those matches on a broader, systematic scale.
“The technology just wasn’t there before to do this in real time,” says Dickman, whose company created a platform for maximizing fuel efficiency and rebates in the shipping industry. “Now, there is a very dynamic platform.”
Ericksrud quickly realized doing so was less a transportation function and more of a data and technology challenge. With Schneider’s core business focus on transportation, he made the decision to launch his own company, a logistics software company with the purpose of creating industry-standard software.
Deploying technology and data at the core of the new venture, he also reached out industry would not be willing to provide the essential data without assurances it would not wind up in the hands of competitors. The new company needed to develop a data security policy, and quickly. It paid off in short order.
“Ironically, two days later a customer asked for that document, and they gave us some great feedback,” Ericksrud says. “They basically said, ‘You change this one thing and we’re good to go.’”
The policy has continued to evolve in the company’s three years, but at its core is the principle that company data will only be shared between parties that have consented to do so.
Companies can’t use the system to track what a competitor is doing.
“You can’t just go out there and say, ‘Google, show me all of Todd’s pickup information,’” Leurquin says. “We go through a clearance process before we share any information. You can say, ‘I’ve got a container delivering in De Pere, Wisconsin,’ and we’re going to show you what would potentially match with that among the people you have said you will deal with and with people that have said they’ll deal with you.”
Regular client feedback was an early feature at Matchback Systems and continues to prove a critical element in the company’s ongoing development and strategy
MATCH GAME Matchmaking is all about information. It’s not that the industry has resisted the idea, it’s just that until Matchback Systems, there was no hub a shipper, trucking company or terminal operator could turn to see where they could make potential matches.
“By helping us identify potential import/export equipment matchups, we are able to get better utilization, which means we can achieve greater efficiency and offer our customers a discounted rate,” Bob Leef, senior vice president-east, for Container Port Group, which operates container facilities and terminals across the United States.
Prior to Matchback, the approach of most companies was to post a load board of its information and hope another company would see it and could make a match. A load board works a lot like the old college ride sharing boards — people who need a ride post their information to a bulletin board, and people who are driving somewhere post their information. If the parties can match a destination and payment amount, they can pair up and share the ride. The information on the load boards was useful, but there was no scale or reach to make it particularly effective.
“It’s just one A to B,” says Leurquin. “It just leads to one-at-a-time matches.”
It’s the scale of data, a global reach and its real-time capabilities that have allowed Matchback to shift the paradigm. “We always tried to look for the matches, but they have created an ability to bring in additional partners,” Leef says. “When you add additional partners, you get more opportunities.”
Now, companies can load their shipping container information into Matchback’s cloud-based system and, once it’s standardized and filtered for the company’s preferences, see potential suitors within a few minutes. As the system processes match data, it also uses artificial intelligence to look for larger trends that can create ongoing solutions for companies.
The information is delivered in a variety of formats to end users, ranging from emails identifying the top matches to users working in real-time on mobile platforms. Some are looking for matches with partners, while others are looking to improve their internal processes.
“For some companies, we help them figure out what are the top five things they need to be working on every day,” Ericksrud says. “For others, it’s help on matchbacks in their own organization. Our system helps marry their internal systems and processes. We make it easy for them, and we provide some genius behind the scenes to work that.”
EMERGING MARKETS Ericksrud describes Matchback Systems as a deliberate company with the purpose of creating a software as a service product that will become an industry standard. The company has a patent pending for its artificial intelligence technology and already has become a dominant player in the North American and European markets — markets the company essentially created.
In addition to its Green Bay offices, the company has established a physical presence in Rotterdam, Netherlands, which is one of the world’s busiest ports. That location also helps the company comply with differing data protection rules enacted by the European Union.
Ironically, the technology was developed in a port city where container shipping is not currently used, though many major players and startups in the shipping industry call the area home.
“We have a lot of logistics and supply chain talent in this region,” Dickman says. “We have folks who understand how to move all kinds of products by all the different modes. Now we are making that a competitive differentiator.”
Still, Matchback Systems is just scratching the surface. With the Pacific Rim continuing to grow in importance for international trade, Matchback Systems will be looking for opportunities to expand its platform into the logistics equation for that region, as well as emerging markets in Africa and South America.
More than just shippers can benefit from the technology Matchback Systems has developed. Port, railyards and truck terminals could gain — imagine reducing the bottleneck in Chicago — while air shipping also is on the radar.
“We talked to people that have operations like ports. We’ve talked to people that have ports and there’s people that want to build a smart port,” Ericksrud says. “If you’re moving it, we’ll help you. As we get more records and you get more options, you’re going to have even better results. Provide us with two months of data and we’ll find those patterns and trends, so we know what you’re doing next week.”