Uber Keeps on Trucking
When one of Uber’s self-driving trucks drove 200 kilometers from Fort Collins to Colorado Spring to deliver a shipment of Budweiser, it seemed Uber was primed to disrupt the estimated $800 billion trucking industry. Optimism was bolstered by Uber’s acquisition of the self-driving trucking startup, OttoMotto, last year.
After the acquisition and successful test run, Lior Ron, OttoMotto’s co-founder, told Reuters he “expected truckers would be using the firm’s driverless technology to haul freight by 2017 as part of a suite of trucking services offered under the Uber banner.”
Despite these early efforts to pair automation with hauling services, Uber’s trucking application, titled “Uber Freight,” attempts only to connect truck drivers with cargo needing to be hauled. Bill Driegert, Uber Freight’s director of operations, reported the company’s self-driving truck initiative and freight hauling service are on “separate tracks.”
Uber’s concentration on matching shipments to carriers means entering a more competitive environment. Uber Freight is similar to competitor services like Convoy, Doft, and Trucker Path, which also connect drivers to shipments.
Convoy, perhaps Uber Freight’s most serious competition in this space, may hold the advantage at this time due to their partnerships with existing trucking companies. Convoy CEO Dan Lewis believes this is what differentiates the two companies; “Uber had to essentially go out there and build all their capacity. They had to go get people to drive cars. They had to set up this whole system that didn’t really exist before,” whereas Convoy leveraged “existing trucking companies.”
Amazon is also said to be working on a similar capability, scheduled to launch this summer, that would cut out third party middlemen — who typically charge 15% commission — by matching shippers to truck drivers. The app will also offer “real-time pricing and driving directions,” in addition to “truck-stop recommendations and a suggested ‘tour’ of loads to pick up and drop off.”
Then, of course, there are traditional trucking companies. Many are family owned businesses, like RoadStar Trucking in Hayward, CA, which has been in business for fifty years and relies on long-standing partnerships with companies shipping products.
With the trucking industry already populated by both traditional and newer, more technologically integrated companies, will Uber struggle to differentiate its offering? Uber Freight product manager, Eric Berdinis does not believe this will be a problem.
According to Berdinis, Uber Freight’s commitment to drivers, first and foremost, will set them apart. “The service promises to pay truckers for their deliveries within seven days, with no fees, and to show them price quotes before they book.” The current trucking industry practice, conversely, has drivers “wait[ing] 30 days or longer for a paycheck,” Uber reports.
Uber Freight will also take a cut “depending on the level of demand,” similar to how it determines surge pricing for its car service. Despite this, Berdinis reports “this [cut] will be less than the roughly 15 percent traditional brokers usually take.”
Though driverless trucking may still be around the corner, Uber’s new emphasis on hauling could still make waves in the trucking industry.