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Home » "Uber for Trucking" name not an asset for companies, report contends
Forward Thinking

"Uber for Trucking" name not an asset for companies, report contends

August 1, 2016
Supply Chain Quarterly Staff
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Companies marketing themselves under the "Uber for Trucking" title but expecting not to provide services beyond a basic freight-matching model should probably re-think their messaging, according to a consultancy report issued Friday.

Armstrong & Associates Inc. said a number of companies providing legitimate "digital freight matching" services have chosen to associate with the now-famous "Uber" name. The problem is that the on-demand car-sharing model popularized by San Francisco-based Uber Technologies Inc., represents a commodity service that doesn't compare with the complex and value-added solutions delivered by truckers and third-party logistics (3PL) providers, according to the report.

On its face, the two models seem similar in that they try to achieve better vehicle utilization in their respective areas by efficiently matching consumers and providers. That is especially true in trucking, where between 10 percent and 23 percent of miles run empty and where the costs of e-commerce fulfillment are rising. However, that basic premise is where the similarity ends, according to the report.

"Domestic (freight) transportation is not a simple commodity," the authors wrote. "Complexities arise in the form of specialized equipment types, shipments transported via multiple modes, and necessary exception handling for service issues such as equipment breakdowns." Placing an Uber-like app "atop a complex industry doesn't truly address the problem. Shippers and carriers alike will be disappointed if this is the extent of the 'solution,'" the report said.

Armstrong's report affirmed what many veteran industry players have long been saying: That although digital freight matching has its place in the mosaic of daily freight, it is no substitute for the depth and experience of providers that understand the business and can deploy both people and technology to improve a customer's business or resolve a problem.

The report did find that most digital freight matching companies are taking functionality popularized by Uber and tailoring it to trucking by adding features unique to the industry. Capabilities such as algorithmic pricing, automated programming interface (API), map integration, track-and-trace, and mobile transactions are becoming key components of a freight-matching provider's value proposition, the report said. Many of these providers "adamantly reject" the Uber sobriquet, according to the report.

"Valuable technologies are emerging" that will enhance the digital freight-matching function, Armstrong said.

According to the Armstrong report, which was based on a review of 27 companies, digital freight matching firms have attracted $180 million in venture capital funding since 2011, with about $67 million coming in the first seven months of this year. Global investment in on-demand technologies in 2015 hit a record high of $18 billion.

The report is titled "Capturing Technology-Based Efficiencies in the Trucking Industry."

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