An Uber Trucking supply chain model seems like the perfect answer to increase efficiency, maximize truck utilization, and reduce costs. Shippers connect directly with truckers removing freight brokers from the transaction. Truckers maximize utilization by making sure that no truck drives empty – all resulting in increased transportation efficiency.
According to Business Insider, the U.S trucking industry is hovering around $650 billion net worth (and growing). This, combined with the need to decrease transportation costs, it was just a matter of time before we started hearing about uber trucking supply chain models popping up all over the place.
Source: Business Insider [INFOGRAPHIC]
The Uber Trucking Vision
It could not have been a better vision, an Uber-like business model for the trucking industry.
The premise was an Uber-like app/service that matches undesignated shipments with empty loads, thus connecting shippers and drivers while seamlessly removing the middleman – brokers.
This will ultimately lowers costs and remove friction in freight transactions.
For truckers this means no truck drives empty! Empty truckloads considerably increase costs, especially for smaller companies with fewer than 20 trucks.
As per the American Trucking Association (ATA), 97.2 % of carriers operate fewer than 20 trucks. An Uber like platform addresses the issue of empty truckloads and optimizes capacity utilization.
For shippers this means being able to always have trucking capacity that meets destination, time, and financial needs. While at the same time removing the intermediaries, decreasing friction in transactions, and lowering costs.
You get to piggyback on a load already in transit and deliver goods at a considerably lower price.
The table is set! Well, not so fast.
Challenges and Realities
Despite the excitement, challenges and realities settled in. The fact is that the cargo transportation industry is a lot more complex than the taxi industry.
1. Differences in Cargo
While Uber does not have limitations as to the type, size, or weight of the person that it needs to transport, the cargo transportation industry does. Not every cargo is the same and in occasions, a specific cargo type will require a very specific type of truck.
For example, shipping electronics versus shipping food. While both being cargo, each have very different transportation needs in terms of truck type, ride time, and more.
2. The Trust Factor
There is very little room for error. The possibility of unreliable drivers and the increased chance of compromising the security and integrity of the cargo can bring down major trust issues with an uber truck model. When hiring on-demand, you have no certainty that the cargo is in good hands or that the trucker is going to be on time – there is no history of success.
High value cargo shippers might prefer to continue using well-trusted partners to move their cargo – peace of mind is worth the extra dollars. After all, the cost of damaging, losing, or not moving the cargo on time might be higher than the savings yielded by using an Uber like model.
Bottom line, the one size fits all Uber-like model does not apply to the freight transportation industry.
Regardless of the challenges, a new Uber truck model has emerged to bring shippers and truck owner operators closer, reduce intermediary costs, and increase supply chain visibility.
The Uber Trucking Metamorphosis
Welcome to the virtual broker! Online freight marketplaces with mobile applications where shippers and carriers connect freight loads with on-demand trucking capacity.
Mobile brokering will enable $26.4 billion of all truck freight movement revenues by 2025.
Source: Uber for Trucks
This new kind of virtual broker/online freight marketplace provides a load board platform where shippers can place the freight they need transported and drivers can choose the cargo from the convenience of their smartphones. Our research indicates that the most successful of these online freight marketplaces are those that have specialized their services on specific niches
Benefits of using this virtual brokers/freight marketplaces
|For Shippers||For Carriers|
|Access to trucking capacity on demand
GPS tacking capabilities
Real-time status updates
Drivers Background Checks
Desired destinations and prices
|Extra shipments and capacity maximization
Real-time truck tracking capabilities
Increased profitability per mile driven
Prefer destinations and prices
Some of the most recognized virtual brokers/online freight marketplaces that have made important inroads in this new form of Uber trucking business model include:
There is no doubt that the need to increase efficiency in the freight transportation industry was long overdue. The vision of an Uber like business model combined with the size of the U.S industry ($650 billion and growing) made it the perfect combination for the next revolution in freight transportation and the digitalization of trucking.
Although the adoption and evolution of this new technologically driven business model will continue to evolve, there is no doubt that the benefits will outweigh the risks and/or limitations and the systems will adapt to balance (or overcome) current challenges.
While the Uber model (one-size fits all) does not fit the freight transportation industry, these new forms of virtual brokers/online freight marketplaces will put pressure on traditional freight brokers and shift the freight transportation industry into a new era – The Digitalization of Trucking.
In addition to the the advancement of trucking, learn about Warehouse Digitalization by clicking "Get the Guide" below.
What are your thoughts, can an uber model for trucking really work?
Feel free to post comments, questions, or topics that you would like us to later discuss in the comments section below. Or send them to us on Twitter and Facebook.