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BLOG: “Uberization” of the Trucking Industry?

The term “Uberization” has become a popular topic in the commercial trucking industry over the last two-plus years, as more and more companies explore mobile applications to deliver smarter, faster, better logistics and supply chain management solutions. According to a recent study by Frost & Sullivan, it is estimated that mobile “brokering” will affect $26.4 billion of all truck/freight revenues by 2025, paving the roads for evolution in the industry.

One of the reasons that the concept of “Uberization” has gained traction in the transportation industry may be the number of potential benefits that mobile applications can offer. The concept of “Uberization” promises drivers exclusive access to more payloads on shorter timetables, allows them to realize additional revenues, and reduces empty miles and congestion on the roads. Additionally, the overall transaction between shipper and carrier can be made quicker so that shippers are billed and carriers are paid without unnecessary delay. Sounds pretty good, right?

Of course, with innovation also comes challenges. An industry-wide movement into mobile applications like this will require significant consideration of licensing and regulation, as well as acceptance from drivers, which may be one of the main reasons adoption has been slow up to this point. Implementing this “Uberization” dynamic into a heavily fragmented industry will also require a certain uniformity as it relates to legal, compliance, insurance and contracts that currently doesn’t exist.

Keep in mind there remains significant variance between shipper-carrier, shipper-broker, and broker-carrier contracts. Ambiguity around governing these contracts and the legal process is high. Regulation is increasingly complex and vague. And, shippers are getting more extreme with the assumption of liability that they demand out of carriers and brokers in the ongoing “push” for common ground. With all sides so far apart regarding who ultimately takes on the risks, amplified with the fragmentation in the industry, one can only speculate where the evolution of technology will take us. Until the industry implements a more uniform platform regarding regulation, insurances and contract liabilities, it’s going to be difficult for the “Uberization” trend to take hold. Furthermore, in many cases, large carriers and shippers have developed long-standing relationships over the years that they may not be willing to sacrifice for the thought of an “app” despite its efficiency.

So, can what Uber did to the Taxi industry be accomplished by a similar organization in the commercial trucking industry? Consider the Motor Carrier Act of 1980 which served to deregulate cooperative price setting, ease of entry into the market and price controls. Now, consider how the Taxi industry operates and the effect Uber has had on it. Technology can certainly do great things to create a free marketplace, and Capitol Hill can also help by passing legislation for a more competitive transportation environment.

While experienced shippers who have already developed a network may not want to switch to using the mobile applications, others may find that doing so will allow them to run their businesses more efficiently. Whether you’re “old school” or “new school”, it’s ultimately about bringing the best of technology and applying it to improve the transportation industry. It will be interesting to see what that looks like over the next few years as technological changes continue to occur at an exponential rate.

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