Will an ‘Uber for trucking’ drive off traditional logistics?
By: Phil Sneed
The Internet has revolutionized countless industries, and freight shipping is no exception. Logistics management companies and the truck carriers they work with are able to communicate seamlessly using technologies that simply were not available even ten years ago, such as smartphones and small computers, and this has created widespread gains in efficiency and overall shipping speed.
The widespread change that has already happened has many wondering what the next step in trucking technology will entail, and some observers are looking toward a different transportation industry as a model for what could happen in trucking.
Uber, the smartphone app from the company of the same name that allows private drivers to locate individuals who need rides, has been an enormous success, and dramatically impacted the traditional taxi industry. Given the prevalence of independent drivers in the trucking industry, many have speculated that the freight industry will be unseated by an Uber-like system that allows organizations to directly contact individual carriers or drivers.
While some companies have already introduced applications that apply this model, there are many reasons to doubt it will have the same massive impact that rocked the taxi industry around the globe. Shipping is a fundamentally different and exceedingly complex market, and logistics companies will continue to provide necessary services that a more decentralized system cannot match. In fact, Uber-like systems could become a more valuable tool for shipping companies than for individuals who need to transport goods.
How Uber works
The Uber model is incredibly simple, and the smartphone app has inspired several competitors. Planetizen, a site devoted to urban planning, reported that an individual enters his or her current location and destination into these apps and is automatically paired with a nearby driver who is directed to his or her location. These applications provide convenience at every stage of the transaction. They make it easy to hail a car without standing on a street corner, allow the rider to verify that the driver has been given the correct destination and incorporate automatic payment options from the passenger's mobile device.
This model provides incredible efficiency for the drivers and their fares. The automatic matching provided by a computer that can compare the relative locations of drivers and passengers means a driver can potentially take more fares in a given period of time. Many have noted that the increased efficiency offered by this type of system could be incredibly helpful in the trucking industry, which is currently gripped by capacity problems that drive up rates and make it difficult for organizations to procure the transportation they need.
How this model could work for trucking
The trucking industry is plagued with inefficiencies and is structurally messy. The key word when talking about trucking issues is "fragmentation." While trucks account for the majority of freight traffic in the U.S., the industry that supports that traffic is spread between an incredible number of smaller carriers, each of which is probably unable to accommodate the amount of shipping required by a larger business.
"The trucking industry is highly fragmented."
Traditionally, logistics companies have bridged the gap between these different organizations to provide a cohesive shipping experience for businesses that need to transport their goods across the nation. At the same time, a huge number of truck drivers are independent and not affiliated with any particular carrier. A new company called Transfix is applying the Uber model to trucking and attempting to give these independent truck drivers less downtime and direct contact with companies that ship goods, according to tech site Re/Code.
Transfix allows a company to put out a call to trucks in the area that have registered with the service. When a call comes in, the nearest trucks that can take the order are eligible to receive the shipment, which cuts down on time spent driving empty trucks to locations to pick up goods for transport.
Logistics still has a place
While there are benefits to the system proposed by Transfix, traditional logistics operations are still a critical part of the nation's transportation infrastructure, and that's unlikely to change. While Transfix and other applications can provide a way for individual trucks to communicate with interested shippers, more complex shipping needs that include a combination of trucks and intermodal transportation or require the coordination of several smaller shipping carriers will probably still be best handled by a logistics company that can serve as a centralized resource.
It may be that these location-based technologies allow the logistics organizations to better apply their wealth of preexisting industry knowledge.