What’s With All This Fuss About the “Uber-ization” of Trucking?

September 21, 2015

When most people think of Uber—that is, if you’ve ever even heard of Uber in the first place—you might envision getting to your final destination with the help of your smartphone, rather than going through the frustration of hailing a taxi upon arriving at an airport after a tiring cross-country trip.

And while all of that seems fine as a personal transportation alternative to traditional taxi services, what about Uber and the commercial trucking industry? Well, that’s an entirely different fork in the road. Uber’s CEO Travis Kalanick has been quoted as saying, “The taxi industry has been ripe for disruption, but only technology has really allowed it to kick in.” And kick in it has.

First, a little more about Uber. The San Francisco-based company, founded in 2009 and now available in 60 countries and hundreds of cities worldwide, is a smartphone transportation app that connects people with local drivers who (after a thorough screening process) can take them from point A to point B for a fee. To find a driver, Uber users download the Uber app to a mobile device and create an account. The app will ask for the locations of pickup and destination and then provide options for a ride, including the length of time it will take for a driver to arrive and a fare estimate.

While Uber has stirred up its fair share of controversy, including legal challenges from the taxi industry, the company is apparently remaining open to other avenues of opportunity, including logistics services and the North American motor freight business. Will this disruption in transportation continue beyond the bounds of taxis? The trucking industry is certainly no stranger to the Uber-type concept. The industry has long relied on backhauling—the return trip of a commercial truck that is transporting freight back over all or part of the same route it took to get to its current location—to efficiently optimize the availability of trucks to ship goods.

UberCargo . . . a Potential Sign of Things to Come

The company has already launched a service called UberCargo in Hong Kong. It’s primarily a personal “moving service,” works similar to Uber’s taxi app and could foreshadow the beginnings of something quite profound in the trucking industry. Uber-like motor freight provider services are even popping up on a regular basis from start-up companies like Cargomatic, DashHaul and Transfix. Some of the services focus on short-haul LTL service in dense shipping and truck environments like Los Angeles, Chicago or New York City, while others are interested in truckload services and America-wide coverage.

A recent article in Forbes painted the following scenario about how Uber-type app technology might indeed bring disruption to the trucking industry:

Picture this: a bearings maker in San Francisco needs to urgently ship 20 boxes of bearings to an elevator manufacturer in Seattle. An “Uber”-type app for freight transportation can now connect the shipper to a truck that is scheduled to leave the shipper’s area for Seattle. The driver is happy, as she/he can now get more payload to carry (which otherwise could not have been located on an on-the-fly, ad-hoc basis), gain revenues, and reduce empty miles. The shipper is happy because he/she can ship freight on an ad-hoc, on-demand basis. The app provider is happy as it has created a new business opportunity in the market helping efficiently connect demand to supply, and finally other motorists and the environment are both happy as we reduced empty miles (hence congestion) and also emissions. Moreover, shippers are billed immediately and carriers are paid immediately, and the transaction is executed in a swift and seamless manner with the app provider benefiting from each transaction.

The same Forbes article also cited a recent study by Frost & Sullivan which forecasts that by 2025, $26.4 billion of all truck freight movement revenues will be enabled by mobile freight brokering. According to the study, smartphone/mobile device-based freight brokers are attempting to rise above traditional brokerage firms by offering higher asset utilization and expedited revenue allocation to carriers; peer-reviewed and rated carriers; and an expedited on-demand, ad-hoc demand response service to shippers. The same start-ups mentioned earlier—such as Cargomatic and Transfix—are targeting a host of market sectors such as long-haul, regional, and local trucking, and carrier types such as for-hire and private fleets.

Forbes goes on to contend that the growth potential of this industry is promising, and that has attracted an array of investors, ranging from truck makers, like Volvo, to logistics behemoths, such as UPS.

Best to stay tuned. The future of trucking is going to be interesting . . . very interesting indeed.

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