Portland, Maine—The presence of AIFleet founder and CEO Marc El Khoury at a showcase of entrepreneurs and startups here, sponsored by payments provider and freight tech investor WEX, seemed slightly out of place.
At a Chatham House rules presentation by officials from those startups, the focus tended to be on zero emission vehicles and other green technologies. And here was El Khoury talking about trucks that for the foreseeable future are running almost totally on diesel.
But the AIFleet presentation—the contents of which can not be published—put El Khoury on the cutting edge of transportation occupied by other presenters, as he discussed his roughly 200-fleet truckload carrier whose future success is contingent on harnessing AI in its operations. Hence its name.
AIFleet raised $16 million last September in a Series B fundraising to bring its total investment up to about $50 million. In an interview with FreightWaves following his presentation at WEX, El Khoury–whose past positions in the trucking sector include being chief strategy officer at truckload carrier U.S. Xpress, now part of Knight Swift (NYSE: KNX)–demurred on whether his presence at the WEX showcase could be viewed as a sign the company was seeking additional funding.
“We’re always interested in finding the right partners,” El Khoury said about the possibility of taking on new investment.
While the broad cross section of companies at the WEX conference were in applications where government policies and funding of the energy transition may end up as a determining factor of success versus failure, El Khoury’s company, despite its high tech long-range plan, more immediately must confront the same weak truckload market that even the smallest fleet is facing.
Growth in its fleet size
AIFleet is now a 200-vehicle company, up from about 150 vehicles a year ago, El Khoury said. The money raised in September was not used to buy assets like trucks, which El Khoury said are leased vehicles. (However, the drivers are not leasing their vehicles to the company, he said; they are all drivers that receive a W-2 statement from the company at tax time.)
“Historically, we never used the equity capital we raised to acquire equipment,” El Khoury said. “Where we use the equity capital is to continue building our operations.” A recent focus with the company’s financial backing has been to boost its sales operations, he added. “And there is quite a bit of additional capital that we could use right now.”
But the heart of the AIFleet business plan is to use AI to increase fleet productivity. “We’re investing heavily in generative AI and finding an amazing return on investment by just essentially utilizing the increasing productivity of our office employees, but also in optimization,” El Khoury said.
Making operations more efficient in the office is not going to change a fleet’s operations radically. That needs to happen on the road. And according to El Khoury, “we are finding more and more through the data amazing opportunities to get even more loaded miles per truck than we did today. That’s typically where we’ve invested the capital that we raised.”
El Khoury said he believes AIFleet is the only trucking company of its kind that has such a strong focus on bringing AI into its operations. That doesn’t mean it’s the only company in the trucking and logistics sector like that; C.H. Robinson (NASDAQ: CHRW) has touted its recent financial turnaround to the use of AI in its operations.
Why 3PLs and not fleets?
That led El Khoury to note that venture capital money seeking an outlet in logistics has gone heavily toward 3PLs like Convoy (now out of business) or Uber Freight (NYSE: UBER). “And we were always surprised, because the inefficiency is not really on the broker side,” he said. “The inefficiency is really on the carrier side.”
A brokerage can be “the most efficient in the world,” El Khoury said, “but the freight still needs to be moved on assets, and the inefficiency in the assets is what we are focusing on.”
“A broker can not optimize a truck,” he added. “The best you can do is maybe reduce empty miles.”
To make AI work in route planning and driver scheduling, El Khoury said there needs to be more data inputs on factors such as drivers’ available hours of service, whether a load is spot or contract, the need for home time and so on. “These are not optimization problems that a broker can work on,” El Khoury said. “This is only something a carrier can work on, and that is our focus.”
Asked for a specific example, El Khoury said AIFleet’s AI tools “can optimize 200 trucks and assign them loads for the next week with no human intervention.” The outcome, he said, maximizes the use of the asset—the truck—and the driver within regular hours of service restrictions and the goal of getting drivers home after no more than a week on the road.
With more than 200 trucks in the fleet, El Khoury made a declaration: “This is not a proof of concept anymore. This is an actual fleet running almost entirely autonomously from an operational standpoint.”
He added he knows of no other truckload carriers with a similar model. While there are software developers selling AI solutions into the trucking sector, El Khoury said they run into the problem of knowing where to sell their offering.
“Which department are you selling to?” he said. “Planning, dispatch, order acceptance. Those departments exist because they’re building workflows around the human.
He said the AIFleet approach is “to start with the question, how should a trucking company run? You then end up with a very different operating model.”
Some of the other current features of AIFleet, according to El Khoury:
- It’s running about 50-50 on spot versus contract business
- The company it wants to have a base book of business that is 75% contract
- If it has a niche, it’s in moving paper products
- AIFleet’s current model would have limited success in LTL which has a different set of inefficiencies than truckload
- Drivers get paid by the mile but also have a guarantee in their pay levels
- AIFleet’s increase to about 200 trucks from 150 in the past year was tempered by the fact that “we’re just being mindful of growth right now in this market,” El Khoury said.
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