Back in 2009, modern transportation underwent a major shift thanks to a ride-sharing system called Uber. With other companies like Lyft joining the scene, the tide of urban traffic shifted from a time where independent drivers fended for themselves or used taxis to more than 8 million people who now use app-based ride-sharing services.
Now, with Uber rising to a reported valuation at over $60 billion, technology companies are looking to take the ride-share model to the shipping freight industry. Drivers and freight companies could find their industry revolutionized by the new “Uber for trucking.”
An Uber-like app to connect trucks with people who want to ship freight
Amazon and eBay are financing start-ups like Convoy and TugForce to bring more efficiency and transparency to the freight-shipping system. These companies intend to replace traditional brokerages with a streamlined, user-friendly app. Effectively, they will cut out the “men” in middlemen.
While Convoy and TugForce work differently from each other, the mechanism is the same; a consumer or company starts by placing an order for goods through either app. That order is matched with a driver based on available location and proper equipment. The user gets instant quote for shipping costs based on an algorithm. The route is mapped out turn by turn, and the user has the ability to track the shipment in real time. Either app takes care of proof of delivery, billing and payment for the driver.
Could Uber Work for Trucking?
It might seem crazy to think that consumer goods could be summoned across the country as easily as a chauffeur to take you across town. But in fact, the trucking industry could well be transformed by these “Uber for trucking” apps. A change to app-based shipping could be beneficial for many of the stakeholders in the trucking industry.
While the value of these apps is yet to be fully proven, here are some of the advantages and disadvantages that could result from an Uber-like app for truck drivers:
Pros & Cons
The use of these Uber truck driving apps could offer motor carriers lower operating costs, higher revenues and better fuel efficiency and asset utilization. Particularly for smaller “mom and pop” operations (which make up more than 90 percent of US trucking companies), these apps could make them competitive with larger firms.
In addition, “Uberization” (as it’s known) could increase visibility and transparency for everyone across the supply chain. New load-matching apps will allow trucks with excess capacity to fill up their extra space, making the truck’s trip more profitable and efficient for suppliers, customers and everyone in between.
On the shipper side, larger app-based marketplaces should give small shippers more access to on-demand capacity, at price points that they can more easily control. And large shippers should be better able to manage “exception freight” that falls outside of their typical contract agreements, such as freight surges prior to holidays.
One possible down side, however, is that the apps would be available for use by noncommercial drivers. Since the apps’ main purpose is to meet the growing consumer demand for immediate delivery (anywhere from next-day to within hours of placing the order), they may create a demand for last-mile drivers, who can easily be owners of vans and sedans who don’t possess a commercial drivers license.
What It Could Mean for Truckers
One advantage these “Uber for trucking” apps promise is streamlining the hours that truckers often spend trying to find loads. Rather than calling freight brokers or checking load boards, drivers could simply consult the app for available jobs and have their whole trip mapped, processed and priced for them. This could also lead to truckers having more independent control over their careers as a whole.
If it happens, this conversion to “Uber for trucking” will not happen overnight. Unlike the technology sector, the trucking industry is not quick to adopt new practices simply by virtue of their innovation. A complete conversion to Uber truck driving will require not only embracing the new technology but also figuring out how to adapt existing shipping infrastructure for both the companies and the customers.
App developers will have an uphill climb to convert the industry to this Uber trucking company model. However, Convoy cofounder Dan Lewis expresses Silicon Valley’s confidence that their product will ultimately speak for itself:
“If the new way is better than the old way, then people using the Uber-for-trucking model will do better than those who don’t.”