Small Truckers, Truck Stops Pool Buying Clout to Take on Industry Giants

Smaller players in both the trucking industry and the truck stop industry are challenged to match the efficiencies of their larger competitors.

Trucking companies with fleets of 20 or fewer vehicles can’t negotiate the same discounts as larger firms when it comes to their greatest expense — fuel — which accounts for 40% of their costs.

Similarly, among the truck stops that sell the fuel, mom-and-pops and smaller regional players are hard-pressed to compete with the marketing and other resources of the three national truck stop chains.

Seeing this, the co-founders of Mudflap — CEO Sanjay Desai and Head of Product Sharon Yapp — decided to create a solution: a mobile app that provides discounts on diesel to truckers and draws new customers to truck stops.

“We said, ‘If we can aggregate hundreds of thousands of owner-operators and small fleets, we can effectively create the largest virtual fleet in America and create that group buying power,” Desai told PYMNTS.

Instant Gratification

Driven by word of mouth, Mudflap now has more than 500,000 commercial drivers using the app on a regular basis. And when drivers hear about Mudflap from other drivers, they can immediately download it and start using it.

“That instant ability to get savings — that instant gratification — turned out to be really powerful,” Desai said.

Once they’ve seen how simple and fast it is to use the product — and get the savings — they tend to stick with it, Desai said.

Collecting, Disbursing Payments

Mudflap is the merchant of record for the transactions, collecting payments from drivers and then settling with its merchant partners.

“There’s no funds exchanged between the driver and the fuel stop; it all happens through us,” Desai said.

Each time they buy fuel, drivers open the app, pick the fuel stop, hit a button, get a code that’s unique to that transaction, show the code to the fuel stop and then fuel as much as they need, Desai said.

The fuel stop has a terminal with which to recognize and redeem the code. When the truck has been fueled, Mudflap collects the funds from the payment method on file.

“We take all the risk, by the way,” Desai said. “If that driver has fueled, we guarantee payment to our merchant partner. We’ll go collect those funds and then we disburse that payment to them.”

Mudflap typically settles with smaller merchants on a nightly basis and larger merchants on a weekly basis. Merchants with many locations tell Mudflap it’s more convenient for them to settle on a weekly basis.

Driving Business to Merchant Partners

Mudflap receives price feeds from its merchant partners at least daily, and then its system determines the best discount it can offer drivers at that merchant, at that time. Mudflap charges no fees to drivers.

“When you check the Mudflap app at any given time, you will see what the retail pump price is at that time, at that merchant, and you will also see the Mudflap discount price, and we stand behind that price,” Desai said. “So, what you see in the app is what you’re going to get; you’re not going to get charged up any more.”

While Mudflap currently focuses solely on diesel, the company is working on adding other transactions. Possibilities include other fuels, diesel exhaust fluid (DEF), convenience store items, restaurant meals, repairs, truck washing and paid parking.

“We’re hoping to soon be able to announce additional non-diesel products that you’ll be able to buy through Mudflap, to save on through Mudflap, and it’s going to drive more business to our merchant partners as well,” Desai said.