What On-Demand Shipping Will Mean to the Trucking Industry
Services like Uber and Lyft have changed the way people travel. Both for the passenger and the driver, it’s become incredibly simple to receive and offer car services. Drivers can choose what assignments they want to take, work when they want and even rate the passengers they’ve had. In turn, passengers can easily connect with drivers, right from their digital device.
The rest of the world has followed suit and is also becoming “Uberized.” The smartphone, paired with increasingly pervasive internet connectivity has enabled a revolution in on-demand services. Home cleaning, food delivery, flowers, laundry… you name it, you can easily get it, and you can get it now. Technology is revolutionizing the service industry. What’s next? Big changes are coming to the trucking industry, as they become the next industry to provide on-demand services.
Using on-demand models similar to Uber and Lyft, trucking companies are attempting to create a marketplace where drivers and customers can connect remotely. Customers who need goods shipped will put in their request digitally and nearby freelance truck drivers will answer online in real time.
How will technology companies deploy on-demand services for trucking?
Trucking is a big industry, adding up to more than $600 billion dollars in the U.S. during 2011. So far, the industry has proved impervious to industry disruption to any significant degree – but this is not to say massive disruption isn’t coming.
Several newly launched companies are working to massively disrupt the way the trucking industry operates, using the new on-demand model. Generally speaking, today, much of the industry runs through brokers. These brokers may field hundreds of inquiries daily, all over the phone. The typical commission for a broker might be 20 to 45 percent. This is a significant percentage of the industry’s costs – and a service that is ripe for reinvention through the use of online marketplaces.
The concept is simple and proven in other industries: Using a web platform and the omnipresent smartphone, carriers and shippers connect directly to professional drivers. For those owner-operators who jump on board, this means more opportunity in a bigger and connected marketplace, which allows them to make more money. For shippers, it will lead to savings in both overhead and time (and where there are savings, there is demand).
What are the benefits?
With a web platform to bridge the gap between shippers and truckers, you squeeze margin and costs away from the broker. But as is often noted, the market rewards those who adapt best, and nobody today weeps for the horse-and-buggy brokers of the early 20th century.
Each party has a direct, on-demand connection to help:
- Lower expenses
- Improve visibility across the supply chain
- Prevent trucks from moving when empty
- Better utilize containers
- Automate the process
- Reduce administrative tasks for both parties
Truckers will see several benefits from an on-demand model. Being connected to a marketplace that cuts brokers out of the picture means more money in the trucker’s pocket. Truckers will also have fewer empty hauls, since all marketplaces should offer more opportunities. On-demand platforms even make payments easier. Drivers could get paid online almost immediately after delivery or even during transport.
What services are out there?
Overhaul is the first trusted online marketplace using the Uber-technology model in the commercial trucking industry. With extensive contacts in the industry, Overhaul aims to connect high-end shippers to trusted owner-operators. Its technology includes advanced safety and security features, so that both drivers and shippers can be sure where their information is stored and used. Freight – especially sensitive and time-critical cargo – moves securely and efficiently.
Overhaul plans to launch its mobile app this year, with some key benefits, including:
- Route planning
- Driver assistance
- Nearby pit stops
- Law enforcement and road safety alerts
There are other services available, such as Convoy, Cargomatic, Transfix, and others. So far no single player is winning the market. But this writer believes that most demand will run through a single marketplace, the marketplace that delivers the most value to shippers and truckers.
There will be bumps in the road for such a new platform. Switching drivers from a traditional model can be a struggle and this model’s success is based on the availability of both parties. Consider brokers that take a 20 percent fee: If they push 10 percent savings to the shippers and a 10 percent bump in pay for the drivers, the broker game will slowly die.
The on-demand solution for trucking has been needed for decades. As with in the taxi industry, this model can revolutionize trucking for both shippers and operators. In an industry that employs 8.9 million people in the U.S – including 3.5 million drivers – the “Uberization” of trucking can help ensure the best drivers – the most efficient, the most productive, the most timely – get their due, so they can build and maximize their businesses.