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Is Uber Coming to the Trucking Industry?

December 10, 2015

Uber’s success as a crowdsourced taxi company has led to a flurry of business start-ups based on their business model. You can find “Ubers” for grocery delivery, haircuts, laundry, and a host of other services. Now the logistic crowdsourcing that made Uber such a success may be coming to the trucking industry—for better or worse.

Cargomatic and Transfix

Venice, California-based company Cargomatic made waves when it quickly raised $8 million in venture capital to develop a smartphone app connecting local truckers with shippers. Further north, in New York, Transfix is using similar technology.

The strength of an Uber-like trucking app lies in its logistic capabilities. The system ensures trucks are never driving empty. Cargomatic even allows shippers to add loads to deliveries for other shippers. If, for instance, a truck was two-thirds full with a delivery for one shipper, a second could add their load to the remaining one-third. The trucker profits, while the shippers share the delivery costs.

Uber Ups and Downs

On the surface, an Uber-based trucking system seems like a great opportunity for independent truckers, but there are concerns. Uber, for instance, allows private individuals to act as taxi drivers. Training is not always adequate according to Forbes, which can put both driver and passenger in jeopardy. If anyone with a driver’s license and a pickup is allowed to join a trucking version of Uber, dangerous situations are sure to develop. Hopefully that won’t be the case, but with entrepreneurs scrambling to profit from crowdsourcing, it’s a plausible scenario.

Uber’s also come under fire for its policy of surge pricing, which uses algorithms to set fares based on demand. The system backfired badly in Australia during Man Haron Monis’ 2014 hostage-taking at a Lindt chocolate café in downtown Sydney. With Sydney residents desperate to leave the downtown core, fare prices skyrocketed to a minimum of $100. Uber caught serious flak for apparently profiting off a terrorist attack. If trucking “Ubers” also use surge pricing, shippers may sour on the deal pretty quickly.

Should trucking Ubers succeed, they’re likely to focus on local deliveries initially. What we find fascinating are the system’s logistical capabilities, which handle large numbers of drivers, shippers, and deliveries in a coordinated manner. With proper oversight and well-screened drivers, trucking Ubers could provide excellent opportunities for independent truckers. Whether or not that oversight will exist, however, remains to be seen.

Resources

http://www.forbes.com/fdc/welcome_mjx.shtml

http://www.entrepreneur.com/article/242336