It has almost become an archetype in society. Someone gets out of something late and can’t get a ride. Rather than spending countless hours wasting time, they pull out a smartphone and order an Uber. Uber has changed the game for the public transportation industry, and the ride-sharing giant is well on its way to changing logistics. Enter: the Uberization of trucking.
Unfortunately, similar startups have failed to deliver on the promise of Uberization of trucking, and others are paving the way for e-commerce giants, like Amazon, to shatter standards in carrier and trucking selection. Since this technology is headed toward nationwide deployment, small to medium shippers, as well as their Big Box counterparts, need to know a few things about it.
What Is the Uberization of Trucking?
The uberization of trucking is using app-based technologies for making the most use of empty space in trucks. This concept is not new at all. It is freight consolidation, pure and simple. What makes it exciting is how it could enable even more shippers to take advantage of direct-to-trucker shipping rates. But, this direct-pay model might not be as cost-effective as some suggest, reports the American Journal of Transportation (AJOT).
Problems in the Uberization of Trucking.
Unlike calling a car for a ride, there are risks in the Uberization of trucking that must be considered. Goods may be perishable. Shipments need intermodal transport options. Compliance is always growing stricter. Shippers demand more versatility in pick-up windows and back-house costs. Meanwhile, demand on the trucking industry is already threatening to burst at the proverbial seams. While some may argue Uberization could replace the value of third-party logistics providers (3PLs), but these concerns must be addressed first. In the interim, the Amazon-Effect looms over this breakout industry.
Amazon Is Prepping for Its Own Uberization of the Industry.
If any company were to achieve large-scale success through the Uberization of trucking, it seemed likely to be Uber itself. But, the real threat to startups considering Uber-like trucking is not Uber at all. It is Amazon. The relentless powerhouse of e-commerce and record-breaking low prices appears on the verge of launching an Uber-like app for trucking. According to Todd Dills of Overdrive Online, Amazon is working on app-based systems that would make truck-stop recommendations and include pick-up and drop-off options for payment and order tracking. This comes on the heels of greater advancements in PrimeAir, which will probably enter national market within the next year. As a result, companies considering Uber-like technologies face an uphill battle.
3PLs Must up the Ante in Services, Strategy and Value.
3PLS have focused on increasing a company’s rate options for years, but the inside-report of Amazon’s plans have shifted the focus toward more value-added, strategic services. 3PLs can no longer wait on the sidelines for companies looking to save a buck in logistics.
They need to make their technologies easier to use for both inbound and outbound logistics needs, like the Cerasis Rater’s easy-to-navigate dashboards. In addition, 3PLs will face added pressures to implement strong freight consolidation programs, and compliance costs must be driven as close to zero as possible. In addition, 3PLs that offer transportation management systems (TMSs) must have the capacity to integrate their systems with possible Uber-like apps in the future. For some, this may involve the creation of apps for TMS systems, getting ahead of the trend.
3PLs will also be vital in ensuring companies are really getting what they pay for. In other words, 3PLs will be among the first entities to uncover hidden costs and issues with Uber-like trucking apps. Meanwhile, the trucking shortage will worsen, and the capacity crunch will threaten to cut off the air to the industry. Rather than devoting endless resources to the Uberization of trucking, shippers need to look for strategic partnerships that can leverage the increasing data and power of the Internet of Things (IoT) while providing services that will be standard in such apps.
Don’t Abandon Your 3PL Ship Yet.
Uber has faced its share of challenges, and many of these challenges only hint at the possible trouble in building an Uber-like app for trucking. What happens to insurance premiums if a company outsources shipments to these apps? What about delivery, and if a shipment arrives late, will the app’s developers work to improve the experience for the customer who complains? The vulnerabilities in the Uberization of trucking are vast and growing, and while Amazon prepares for launching a similar product or service, small and mid-sized businesses must use what works today.
The value of 3PLs for strategy and deriving actionable insights into operations, building a better brand through enhanced customer service and delivering on its promises is not lost. In time, app-based trucking may become reality, but it is not likely to happen, not on the scale that could replace 3PLs entirely, within the next year or two.