Cargomatic Stuns Staff With Mass Layoffs
Mobile technology has created a larger opportunity for decentralized business models to succeed in all different types of industries. With the success of Uber, a driver service that operates largely on a peer-to-peer basis, more fields have been seeing similar types of options trickle in. Cargomatic, a well-known trucking company sometimes referred to as the “Uber” of the industry, has been utilizing apps and software to help give customers a greater range of options and provide better services.
But many were baffled when this modern and seemingly-successful company laid off over 50 employees in a period of a couple months. While it should be mentioned that Cargomatic’s workforce was small to begin with, these layoffs constituted nearly half of the entire staff. Though layoffs are sometimes common in the trucking industry due to economic fluctuations, a loss of jobs this substantial at a single company is noteworthy. This case is especially interesting given that the Los Angeles logistics startup raised more than $10 million in funding. But while many thought that this type of business model would be the next step in the evolution of the trucking industry, the numbers prove otherwise – at least in this instance.
While other trucking companies have benefited from using a predominantly decentralized method of matching customers with shippers via apps, Cargomatic was not as successful in this endeavor. Though a young company, the organization had been onboarding more new hires than ever before. This sudden burst in employment may have something to do with the layoffs when one considers how economic factors can affect the demand for trucking. When economic slumps occur, businesses may be inclined to actually pursue expansionary efforts given that owners assume consumption has shrunk. If they are incorrect in this assumption, it can mean that an increase in supply is quickly needed.
Unfortunately, quick changes in the economic landscape of this nature can actually be more beneficial to established companies that work with a select number of organizations on a consistent basis. These types of mutually-beneficial business relationships are still the most prominent in the trucking industry. While decentralized models present handy options that can certainly prove valuable in some instances, relying too heavily on such a model may have been what led to Cargomatic’s layoffs. Nonetheless, the company is still confident in its ability to change the industry with its new platform in spite of its place in an “old school” industry.