The Uberization

The Uberization of the Trucking Industry – Can it be the best thing for Firms in the next decade?

Trucking, in concept, is very much similar to the taxi business. Both of them transport or transfer cargo from one place to another. So we can assume that if a revolutionary technology has transformed the taxi business, it will work for the trucking industry as well.

Uber changed the way people traveled. It made immensely easier for passengers to hail rides, no matter where they were or what the time was, just by requesting a ride on their apps. The concept of Uber or other similar ride-hailing/sharing apps can be applied to a trucking business. But the question is – will it work?

For trucking, the concept is more than just transporting people from point A to Point B in urban areas. More than 70% of the freight carried in the U.S moves on Trucks with gross revenues amounting to a whopping $726.4 billion in 2015 alone. Compare that to the World’s Biggest Company by Market Capitalization, i.e., Apple, with a total market cap of around $800 billion, and you understand the magnanimity of the U.S Trucking Industry. Furthermore, you will understand the effects a disruption like Uberization can have on the trucking industry and the economy as a whole.

Will Uberization Work Differently in The Trucking Industry?

Certainly Yes!

Trucking and its needs are immensely different as compared to the Taxi business because it involves much more than just transporting cargo from Point A to B.

Firstly, unlike taxis, where the load, i.e., the people, come in a similar shape and size with similar needs, the freight that needs to be transported in a truck from Point A to B, can have vastly differing needs, depending on the shipper.

For example: Transporting a family in Santiago is not different from carrying a group of friends in Los Angeles or New York. However, carrying a freight of car bumpers from Utah to Mississippi is an entirely different task than moving a consignment of frozen meat from South Carolina to Florida.

The needs of the cargo vary widely in the trucking industry so we would need to weigh in the fact that specialized trucks are required for differentiated tasks, unlike the Taxi business, where a standard car is able to do the job anywhere in the U.S or even the world.

Secondly, in the Taxi business, the Uber transformation was more about bringing the idle asset, i.e., someone’s car to use. But in the trucking industry, the transformation will be more about filling in an idle capacity that is generated as shipments are dropped off in parts.

Thirdly, in the Taxi business, the users of the technology were, generally, people which included riders and drivers. In the trucking industry, the users of the technology would be firms, i.e., the trucking companies and the shippers. To make this relationship work and become more profitable, they need to work in close collaboration. It is important to note that the concept can bring about more efficiency in the trucker-shipper relationship and at the same time, eliminate the need for extensive paperwork.

Another important consideration is that a taxi business is city based. It has far lesser geographical confinement than the trucking industry which serves nationwide and would need multiple users throughout the country to operate successfully.

Can it be the Best Thing for Firms in the Next Decade?

The answer to this question lies in embedding more efficiency in the trucking industry through the use of such a disruptive piece of technology. There are too many manual tasks involved in booking an LTL shipment at this point in time. Most of them require endless phone calls and a high amount of paperwork, in addition to making the presence of traditional brokers necessary to handle the task of bringing the deal to a close between a shipper and a trucking company.

Smaller businesses or infrequent, small distance carriers, will be the first wave of firms that will benefit from such a transformation as it will allow them to bypass the need to have a healthy relationship with a broker to get a good deal (prices) on their shipments.

Backhaul Optimization, filling up excess capacity and picking up on their business more independently from the brokers, are some of the advantages that could help trucking companies gain more economic value out of this tech concept that enables more direct connectivity.

But having said that, the Uberization of Trucking can only take place if this new system can provide the same benefits to shippers and trucking companies, by involving brokers in their transactions.

Agents can offer a wider variety of specialized trucking options to shippers like refrigerating trucking to one while a trailer to the other. A simple ease in pricing won’t do much good to the cause of Uberization in the Trucking industry as transporting freight over longer distances is a complicated decision. The trust between trucking firms and shippers must be facilitated by brokers and until an app is able to develop and maintain that trust, very few will be joining the bandwagon anytime soon.

The Uberization of this industry is definitely a long-term process and will take as long as a decade to fully solve the complexities and prove to be a better fit for the model required.

The best chance is that people who intend to develop such app-based technologies would target larger trucking companies as they have wider access to shippers, making it easier to automate the process of “Hailing a Truck.” If that model is met with success, then it can be repeated everywhere until the whole industry benefits from it.

The future in today’s world is never far off as newer & more innovative technologies are continuously being developed at an unprecedented pace. Technology, as you are aware, has a positive impact on many industries previously thought undoable.

So we can’t write off the possibility of a technological disruption to come shortly – a Utopian scenario where trucks are hailed just by taking our smartphones out of our pockets, with live rates from different shippers flashing on our screen on a minute to minute basis.

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