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How Uber Freight Will Affect Brokers (And Truckers)

July 21, 2017

If you are in the trucking industry, you know that there are a lot of moving parts that come into play when moving freight. Whether you’re a carrier or a supplier, a lot of information has to exchange hands so that accuracy is never shorted. Typically, the way that most companies handle this kind of dialogue is through a broker. However, with the recent launch of Uber Freight, among other apps, it could be the beginning of the end for this tight-knit relationship.

 

The Current State of the Industry

Right now, trucking is still stuck in a bit of a time warp. While other industries are adopting fancy new technology like mobile apps and tablets, truckers are still using traditional methods, such as faxes, telephones, and spreadsheets. Based on that information alone, you can tell that it’s an industry that isn’t quick to jump onto something new.

 

Part of the reason for resistance is because there is so much to do and so much freight that needs to be moved at any given time that it’s hard for companies, especially smaller operations, to take a break to assess the cost-benefit analysis. The phrase “if it ain’t broke, don’t fix it” rides heavily in this business.

 

However, just because it works right now doesn’t mean that it’s the best option. Brokers provide a necessary service as an intermediary between shippers and carriers, but they are prone to make mistakes, as well as give preference to certain companies. The ones who are most impacted by the current state of the industry are owner/operators and small fleets.

 

Going Mobile

The most important reason for brokers to exist is that they have a lot of contacts between carriers and shippers. It’s this expertise and abundance of relationships that make them so valuable. However, could it be possible to just cut out the middleman and have the two sides conduct business directly? With Uber Freight, it’s now possible.

 

The way that the app works is similar to the standard rideshare experience. A trucker (or fleet operator) logs in, sees available freight, and then books it right away. However, unlike Uber where you get “pinged” based on your location to the person in need of a ride, this app lets you book up to a week in advance, and you can pick the freight you want to move. There is also a same-day feature that resembles ridesharing as well.

 

So, as you can see, the biggest benefit is the expediency with which you can book a job. Before, waiting for a broker could take hours to fill a shipment, but now you can press a few buttons, and you’re ready to go. Best of all, payments are handled through the app, so you don’t have to worry about things like invoicing or, and this is another significant bonus, commission.

 

Who Benefits the Most?

As it currently stands, this app will most likely work in favor of helping truckers land truck driver jobs in smaller fleets, as well as owner/operators. Because brokers earn their money off of commission, they prefer larger companies that provide more stability and greater income. As a result, owner/operators are usually shut out completely. So, with an app like Uber Freight, drivers no longer have to scrounge around for odd jobs to fill up their space. Now, they can book a gig and get paid upon delivery.

 

Although the immediate beneficiaries are those who don’t currently use brokers that much already, that’s not to say that the technology won’t grow to take a huge bite out of the industry. Just like Uber now dominates the taxi business, it could be that they start putting brokers out of business as more people adopt the system.

 

In the long run, larger companies can also see some incredible results from Uber Freight, as long as it provides enough material for them to move. Right now, it’s perfect for small operations that only have to run one or two trucks at a time, but when you have two dozen trucks or more on the road at all hours of the day, you have to be able to book enough to make it a viable option.

 

Still, the ability to reduce the amount of time planning logistics, as well as the bonus of avoiding high commissions, can make adopting this technology a cost-effective solution. In an industry that tries to squeeze every penny to combat rising costs, this might be the next big thing.

 

What’s the Catch?

So far, the biggest hurdle is getting people to sign up for the app. As it stands, carriers will most likely be quick to join in, but if there aren’t enough shippers, then the whole thing can become moot. This is one of the reasons that other apps are struggling right now as the industry as a whole is generally resistant to change. However, with a brand name like Uber entering the fray, it could provide some much-needed legitimacy to the whole concept.

 

The other issue right now is that there is no negotiating regarding prices. This is a huge part of any broker’s business, and it can make a big difference for both sides to ensure that they both come out ahead. In this case, Uber sets the price based on the market, so you either take it or leave it. The head of Uber Freight, Bill Driegert, has mentioned that it could be possible down the line, but that remains to be seen.

 

The Bottom Line

In the end, this technology is still new. Uber Freight only launched in May of this year, and other apps like HaulHound and Convoy are still in their infancy. However, given the potential of such technology, and looking at how similar disruptions have happened in recent years (Uber for taxis, AirBnB for hotels), it seems likely that the change will ultimately transform the industry. It’s only a matter of how long it will take. Unlike automated trucks (which is another beast entirely), this is something that could take over in the next couple of years, rather than decades. All it will take is one major carrier fleet to adopt it, and then brokers will have to start worrying big time.


 

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