Uber for Trucking? It’s a Misnomer, Says Armstrong Report
A report published by Armstrong & Associates, Inc. highlights the inaccuracy of the term Uber for Trucking.
A&A, a third-party logistics market research firm, profiled 27 companies providing Uber for Trucking solutions. Its research concludes that Digital Freight Matching is a much more apt description.
The findings are published in a new report, titled “Digital Freight Matching—Capturing Technology-Based Efficiencies in the Trucking Industry.”
The principle is simple: Digital Freight Matching (DFM) companies use digital platforms to match a shipper’s freight with available carrier capacity. The goal is to better utilize motor carrier capacity by offering a convenient digital app to connect shippers and carriers.
The numbers are compelling. The U.S. trucking market is valued at $700.3 billion. Global investment in on-demand technologies soared to $18 billion in 2015. The Digital Freight Matching sector has attracted over $180 million in venture capital investment since 2011, including $67 million in 2016 alone.
Empty miles estimates range from 10 percent to 23 percent while ecommerce fulfillment costs are increasing. The natural response is to improve efficiencies in the trucking industry with an Uber-like solution. After all, Uber addresses a similar problem, underutilized capacity in taxis, with a similar solution—a mobile app matching demand and supply.
But one of the key components of Uber’s model is the commodity-like nature of the ride-hailing service. A&A’s analysis shows the principle behind Digital Freight Matching may be simple, but the trucking industry is not. 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.
Still, the transportation industry will benefit from efficiencies offered through improved technology. A&A found most Digital Freight Matching companies aren’t simply mimicking the Uber model. Many even adamantly reject the term Uber for Trucking.
Instead, DFM apps incorporate technologies in novel ways, accounting for the complexities and nuances of the trucking industry. Apps include some of the functionality popularized by Uber – algorithmic pricing, API map integration, track-and-trace, and mobile transactions—along with features specific to trucking, such as trip planning, digital document storage, and TMS integration.