Uber revolutionized the way that people travel from one place to another with its app that connects passengers and drivers. Now, the company has entered the long-haul freight industry with hopes of making the same strides for freight. Check out Uber Freight and its plans for the future of freight booking.
This article is for Premium Members only. Please login below to read the rest of this article.
Not a Premium Member yet? Join today.
[login_form redirect=’https://www.ethanhathaway.com/uber-enters-long-haul-freight-industry’]
[show_to accesslevel=’Premium Members’]
Situation: Uber Freight Launches
In July 2016, Uber acquired Otto, a self-driving trucking company, for approximately $650 million. Otto primarily creates self-driving truck kits for installation on freight trucks, but it also boasts some leading logistics technology. With this acquisition, Uber launched a new company division, Uber Freight.
Fully autonomous vehicles won’t find their way to American roads for another decade or more, but Uber Freight plans to lead the efforts. Otto comes with new technology that handles tracking, mapping, and navigating. Uber Freight has already started building its freight network and pitching its freight services to trucking companies as a broker.
Approach: Replace Traditional Freight Brokers
Uber and Otto are working together to build a network of shippers and carriers. Through this network, companies can find freight solutions more quickly, much like consumers can hail a ride in a matter of minutes with Uber’s ride hailing app. Currently, most companies spend around five hours arranging freight for their goods. Uber Freight wants to eliminate the middleman and decrease that time to mere minutes. Uber already excels at matching passengers to drivers and plans to use the same logistics expertise in its Uber Freight network.
Uber Freight’s goal is to transform the trucking industry by improving the notoriously low margins. The company states that it can decrease costs for shippers by matching freight more quickly and routing vehicles more efficiently. Industry experts remain skeptical, however, because freight decisions require input from multiple people, including truck dispatchers, drivers, dock managers, and more.
Kevin Abbott, a vice president at C.H. Robinson, told Reuters, “The transportation industry is a relationship-backed business. There’s a lot more to it than just finding a piece of equipment.” He implied that Uber Freight needs more than just technology to survive.
Impact and Advantage
Uber Freight is setting itself up for success by building its freight network now, but the company also faces several direct competitors in the self-driving truck space, such as Cargo Chief, Convoy, and Transfix. These companies all want to replace traditional brokers and pave the way for autonomous freight.
Eric Berdinis, Product Lead on Uber Freight, told Business Insider, “Even though we started with the announcement of the self-driving trucks, we were always intending to build a marketplace that would allow self-driving trucks to flourish”. That’s why a partnership with Uber is ideal for creating the freight network. Uber Freight acts more like a broker now, but eventually self-driving trucks will give companies even more freight options.
Uber Freight has more capital, expertise, and technology advantage than its competitors. If Uber Freight can find a way to manage all of the parties involved in freight decisions, it’s posed to be successful in the trucking space. [/show_to]
