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On the road and on demand: Pros and cons of freight 'Uberization'

2/12/2016

What are the pros and cons of freight "Uberization" for both providers and customers?

Car share application Uber and others like it have changed the face of transportation, but will these same disruptive technologies make their way to freight services?

Maybe, but there's a lot of skepticism and ambiguity coming from the transportation industry as to what this innovative freight management model will operate and how it will be received by truckers and motor carriers alike.

Good for customers: Greater transparency, more communication and lower costs (presumably)
Admittedly, the trucking profession has been slow to adopt a broader appreciation for technology for a number of complicated reasons. Those aside, the Federal Motor Carrier Safety Administration's recent rule implementing mandatory electronic logging devices for all transportation companies by 2017 may signal a new era, one driven by data, beneficial oversight and efficiency.

'Uberization' of trucking stands to extend these principles to customers. From a smartphone or handheld device, clients can maintain a one-on-one connection with their drivers, confirm their whereabouts electronically and possibly even save a few bucks in the process. That last bit isn't set in stone, but by consolidating disparate freight services under a single app, truckers and motor carriers could potentially grant more leniency in pricing. Moreover, most of the "Uberization" movement is only concerned with less-than-truckload shipments, so back-end savings can do much to make customer costs more attractive.

Bad for customers: 'Wild West' of freight for now
When Uber hit the marketplace, it immediately separated itself from other car and ride sharing companies like Lyft. As of October 2015, Uber has overtaken the market with more than 30 percent of "total ground transportation transactions," as opposed to taxis (22 percent) and Lyft (93 percent), according to Certify.

That said, there is still no real breakaway winner emerging from the 'uberized' freight industry. A recent Overdrive poll surveying which "mobile-device-optimized freight services" were most popular revealed 85 percent of customers either haven't used any of the services listed or haven't used any at all. This could signal consumer reluctance to commit to the movement, possibly because of trust issues involving both the freight and the security of personal information transferred between users and operators.

Good for transportation providers: Paperwork reductions
As we mentioned earlier, integrating things like electronic forms and payment processes through a user-friendly smartphone app cuts out a significant portion of administrative work than can detract from a driver's timeliness, as well as a motor carrier's organization. Greater control over these clerical components means less quibbling over when and how they should be performed. This could be a huge efficiency win, given how regulated driver Hours of Service are.

Bad for transportation providers: Playing ball with a new paradigm
On the other hand, it's worth noting what these freight movers could lose in the process of gaining so much.

First, while haggling over rates with your taxi driver might land you outside city limits, logistics providers often "sit across the table" and negotiate with their clients. In an on-demand world, could the same freedom be possible? Or will "freight share" customers simply select the cheapest option and abandon brand loyalty altogether? It may be too soon to tell.

Second, HOS regulations have made the trucking profession far more manageable than it has ever been. More agencies are paying attention to driver health and lifestyle, as well as problems with motor carrier harassment. "Uberization" will undoubtedly impact these monumental changes to some degree as an on-demand, LTL-focused environment shapes trucking shifts. The question is, will things keep improving?

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