In 2015, “Uber for Trucking” ventures—inspired by the famous ride-sharing app that’s disrupted the taxi industry—raised over $65 million from VC and other funding sources.
Imitation is the best form of flattery. It’s also apparently a good way to attract investors.
In October, Uber itself got into the game with the quiet launch of Uber Freight.
But are these start-ups really poised to reshape the future of trucking? Are they relevant to today’s shippers?
And what is “Uber for Trucking,” anyway?
Change is coming
Seen from afar, the trucking industry is ripe for change. Deregulation and downturns aside, evolution is notoriously slow. Most carriers and shippers are resistant to new technologies and business approaches. So it’s no surprise that investors see opportunities in disintermediation, cost reductions, and efficient marketplaces.
Where’s this headed?
In its purest form, an Uber for Trucking model would connect individual, independent truck drivers and shippers, acting as a freight clearinghouse and eliminating intermediaries like freight brokers and forwarders.
But it’s hard to imagine that large commercial shippers would work with an army of independent owner-operator drivers. Why? There’d be safety and security concerns, worries about cargo theft, as well as potential insurance requirements. For those reasons, intermediaries are almost certainly here to stay.
When I talked with large LTL (Less-Than-Truckload) carriers, I learned that there isn’t much interest in the Uber model, at least not for commercial freight. LTL carriers already work with large final-mile trucking companies to manage long-haul residential deliveries that come from distant locations—patio furniture that’s being shipped to a consumer’s home from a far-off Distribution Center, say. The idea of working directly with owner-operators presents too many risks and too little cost savings.
But an Uber for Trucking model might be very useful for personal goods, short-haul retail deliveries, and local transfers. Examples that come to mind are personal items being shipped to university for a student, barbeque grills coming from a local Lowe’s store, or couches moving across town in support of Craigslist transactions.
One of the biggest Uber for Trucking plays is being built in support of local market trucking. And here it might make sense. Imagine the strain of delivering short-haul large and heavy items to residences on narrow streets, with tight corners and steep grades. This is freight that commercial LTL carriers don’t want. If they do take it, they charge very steep rates to deliver it. Convoy is aiming for this market and making overtures to Amazon (which itself is reportedly building an app that matches truck drivers with shippers). For some shippers, especially those with a strong local presence, an Uber model for residential delivery could save on costs and provide a higher level of service to consumers.
It’s all about the app
But forget disintermediation—in my view, Uber for trucking is all about the App. In other words, what’s valuable to shippers and carriers isn’t the removal of intermediaries. It’s the ability to quickly and effortlessly connect all parties to a freight transaction.
What’s so intriguing about the Uber model is its simplicity on the front end. An easy-to-use phone app ties to a highly sophisticated routing and dispatch system that seamlessly connects users and drivers, tracks locations down to the meter (or closer), previews costs, and collects payments.
This would be a dream for the trucking industry. Transportation Management System (TMS) technologies are already used by sophisticated shippers and 3PLs to manage shipment execution. They are powerful, but they are also cumbersome to install, require complex integrations, and extensive user training. By contrast, Uber-inspired apps promise modern, up-to-date interfaces, easier installations, simpler integrations, and, perhaps someday, greater penetration across the market.
I am already seeing demonstrations of these new technologies, and shippers, brokers, and carriers are excited about the possibilities. Imagine being able to tender shipments with the click of a button on an uncluttered screen. Imagine quickly gaining access to real-time tracking, or making payments move easily and quickly through a standard portal… All these are huge improvements over a model that uses outdated technology and archaic forms of communication.
What’s the upshot?
As I mentioned earlier, I’m not convinced that Uber for Trucking services will replace intermediaries like brokers or forwarders.
But Uber-like TMS systems, interfaces, and connectivity are sorely needed to replace the messy screens and mash-ups of phone, fax, email, EDI, and XML communications in use today.
Forward-thinking shippers and carriers have already streamlined their workflows, eliminated waste, and improved visibility by including these capabilities in their TMS. If Uber for Trucking ventures deliver on their promise, it will soon be simpler for everyone to realize these benefits, bringing TMS capability to a much broader audience of users.
Jon Gilbert is an expert in logistics, supply chain management, marketing, and planning. He's helped BTG clients in diverse industries improve service, build revenue, increase efficiency, and integrate new technologies.