Transportation News

Presence of Uber Freight and Other Players Raises the Stakes for Truckload Brokerage

Uber Freight, and other similar freight services, really has the potential to serve as a true disruptive influence sector in the world of truckload brokerage, creating a ripple effect of sorts.

Uber Resources

Companies

  • project44 is a forward-thinking technology company that provides standardized, secure web service API integrations that allow shippers and 3PLs to connect to carriers in real-time – eliminating the use of EDI and instantly creating a better experience for customers. project44 is an Integration Platform…

  • PwC focuses on audit and assurance, tax and consulting services. Additionally, in the US, PwC concentrates on 16 key industries and provides targeted services that include — but are not limited to — human resources, deals, forensics, and consulting services. We help resolve complex issues and…

  • SMC³ is the one-stop knowledge hub for less than truckload technology, data and education. The API-powered SMC³ Platform delivers unrivaled LTL analytical capabilities and shipment visibility data. Best known for its trusted

  • Uber is evolving the way the world moves. By seamlessly connecting riders to drivers through our apps, we make cities more accessible, opening up more possibilities for riders and more business for drivers. From our founding in 2009 to our launches in over 70 cities today, Uber’s rapidly expanding…

  • Company Quicklook

It basically goes without saying that changes are coming in regards to the frenetic pace of technological innovation in the world of truckload brokerage.

Last week’s news that Uber has officially become a player in the space, with the introduction of its Uber Freight app, created a ripple effect of sorts.

Where was this ripple effect?

Personally speaking, there was a bit of one in my e-mail inbox, with pitches from other like-minded digital freight matching/brokerage players clearly stating: “hey, we are here, too.”

Yes, we know you are out there. In fact, at this point, it may be easier to wonder who is not out there?

Back to the Uber Freight app for a minute. As we reported, Eric Berdinis, Uber Freight Product Manager, wrote in a blog posting that  “vetted users download the app, search for a load, and tap to book it, which is followed by a rate confirmation within seconds that eliminates a common anxiety in trucking about whether or not a load is really confirmed.”

Eric Berdinis, Uber Freight product manager

“Uber firmly believes it can make a significant impact in the future of trucking”Eric Berdinis, Uber Freight product manager

And in an interview, he explained to me that Uber firmly believes it can make a significant impact in the future of trucking with a new way of booking freight and a new way of connecting small fleets and owner-operators with the large tail of capacity out there in the market to the community of shippers that don’t traditionally have the resources to go out and find capacity.

He added that small fleets, with ten trucks or less, make up 90 percent of the registered motor carriers in the country, but a large Fortune 500 or mid-market company would not be contracting with these small fleets.

By building an app, Berdinis contends Uber believes it can finally reach into that carrier pool and be welcoming and provide trust to the small fleets, with those fleets bringing the same level or higher service to shippers.

Digital Logistics
As critical as the connected truck will be in bringing sweeping changes to the global transport of goods, its very connectivity will allow it to be fully integrated into the entire logistics effort. That in turn will fully enable two key elements of the effort: the integrated digital supply chain and freight matching.

  • The integrated supply chain. It will soon be possible to integrate the truck into real-time logistics data across the entire supply chain, from parts and materials suppliers to manufacturers to warehouses and distributors and finally to the end customer. Thus, for example, when a customer sends an order to a manufacturer, the system will send back a report on the availability of the goods and timing of shipment, enabling the manufacturer to optimize its just-in-time production schedule. Once the goods are available, the shipment will be dispatched from the warehouse along a predetermined route. If an accident or heavy traffic impedes the on-time arrival of the truck, the system can automatically determine a new route, and send a new estimated delivery time to both the shipper and the customer. Given the delay, the system will then calibrate changes in the shipping rate and cost of the goods. Moreover, manufacturing customers whose goods are delayed will be able to make immediate changes in their production sequences to avoid loss of production capacity while waiting for the missing parts. All that’s needed now is their approval of the changes.
  • Automated freight matching. Thanks to their ability to communicate with fleet management and with shippers of goods - and in the future with cloud-based solutions for freight matching - trucks will eventually be able to determine whether they can take on additional freight. The truck trailer itself will be able to determine through sensors its available space and weight, as well as scheduled route, ETA, and other relevant information, and communicate this data to a digital freight-matching platform.

Freight-matching information flow

In turn, the platform will notify the driver and fleet management about available freight-sharing opportunities, and an agreement can be struck between the truck operator and the shipper. Ultimately, with the aid of smart cloud-based solutions, goods sitting in a warehouse equipped with their own communication chips will be able to contact trucks directly to find their own transportation to their intended destination. At this stage, not only will the efficiency gains throughout the supply chain be significant, but freight brokers themselves will no longer be necessary, as standard logistics processes will be digitized all the way through to when the invoice is submitted to the customer.

A True Disruptive Influence
This all sounds pretty good, but as previously mentioned, this is a crowded marketplace, with new entrants popping up daily or so it seems.

Morgan Stanley analyst Ravi Shanker

“For shippers, we believe Uber’s lower net revenue margins offer superior economics to those of traditional brokers” Ravi Shanker, Morgan Stanley

What’s more, it also reinforces the thesis that Uber Freight, and other similar services, truly have the potential to serve as a true disruptive influence sector, according to Morgan Stanley analyst Ravi Shanker.

“The announcement…legitimizes the secular disruption threat that traditional brokerage business models face,” Shanker wrote in a research note.

“The Uber Freight app offers carriers ease of use, load transparency, and quick payment turnaround (7 days vs. several weeks) as main draws. For shippers, we believe Uber’s lower net revenue margins offer superior economics to those of traditional brokers. We believe this launch marks the first salvo in Uber’s trucking ambitions – in the coming years, we also expect Uber’s autonomous truck technology to leverage the carrier base built by its brokerage operation.”

“This move also marks an escalation in the truck brokerage disruption wars – thus far we have seen several startups vying to be the ‘Uber of freight’ achieve scale in the past two years, but Uber’s launch marks the entry of the first tech giant into this space, ahead of Amazon’s impending launch this summer (we hear that Amazon has already “soft launched” for internal use only).”

Shanker also observed that in the long-term his firm sees secular margin compression at all of the 3PLs given the threat of increased competition from: startups vying to crowdsource freight that continue to raise meaningful amounts of private capital; insourcing at eCommerce and other logistics giants; and vertical integration into the asset light business by asset heavy players including, eventually, OEMs.

Tommy Barnes, president of Chicago-based project44

“Right now there are a lot of players flooding the market and drivers see lots and lots of apps from lots of people”Tommy Barnes, president of Chicago-based project44

Tommy Barnes, president of Chicago-based project44, a technology services provider offering standardized, secure Web service API (application programming interfaces) integrations, said that given the proliferation of players in this space, the best product will win, specifically the best product that interacts best with individual drivers.

“Right now there are a lot of players flooding the market and drivers see lots and lots of apps from lots of people,” he said. “It is about the best product and what that best product brings to those drivers. It is about the experience of the driver.

A lot of times folks build an app and the reality is 9 out of 10, if not more, have no understanding of what the life of a driver feels like or looks like and the ones that win have the ability to understand how their lives work. They need to understand how they can enable the driver’s life to be more efficient productive and easier, which is the end game.”

Barnes was blunt in pointing out that some players will succeed in this pace, but many will fail. And with the proliferation of companies getting involved, he said that traditional brokers are going to suffer, because they are going to have less efficiency, with an offering like Uber Freight causing margin pressure, which is gross margin pressure because they are going to be operating more efficiently through their technology and can afford to do that in many cases.

Read: The Problem with the “Uber for Trucking” Model

Another point to consider raised by Barnes is that the traditional brokerage process, which is very manual, will have a very hard time surviving.

“Some will bring on good people to be more efficient,” he said. “As an analogy, if your gross margin is 15% and your net margin is 3% it is because you are not very efficient, and you are going to have a hard time when your margins compress. But if your margins are 11% and your net is still 9-10% because your technology is that much more efficient you are going to accomplish things others cannot.”

All told, these valid points paint an optimistic picture for those with the technological know-how to differentiate themselves in a challenging and competitive environment. Only the smartest will survive.

The Era of Digitized Trucking: Transforming the Logistics Value Chain

Driven by Technology
Perhaps the best way to understand the technologies that are already being implemented in the trucking industry, and how they will transform the industry’s many stakeholders, is to break them down into two primary areas: the truck itself and the logistics chain of which it is an essential part.

The six technological advancements that will transform trucking and logistics

Download The Era of Digitized Trucking: Transforming the Logistics Value Chain


Article Topics
Trends   Transportation   Transportation Management   Digital Transformation   Trucking   Truckload Brokerage   All topics


Comments
1 Comments (displaying chronologically) Post a comment
You must be logged in to post a comment. Login.

About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
 
Latest Transportation News
Global Online Logistics Community: If You Build It They Will Come, Sometimes
A global online logistics community should be a vibrant entity where transparency of information, pricing, and service levels empower enterprises, carriers, and suppliers to take full advantage of revenue…

Realizing a New Vision for TMS Design
A couple of years ago, we set out on a new project to redesign our user interface with the goal of setting a new standard by which all TMS user interfaces would be measured against.

Landstar System Joins Blockchain in Transport Alliance
Landstar System, Inc., a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services, today announced it has joined the Blockchain…

XPO Logistics Expects 750,000 European “Last Mile” Home Deliveries in 2018
XPO Logistics has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $15.38 billion freight and logistics behemoth, but its European expansion, for now, is being…


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles