Uber Facing Opposition in Technology Shake-Up of the Trucking Sector

Uber Facing Opposition in Technology Shake-Up of the Trucking Sector

The latest digital technology in the world has disrupted the traditional balance of a lot of industries over the past decade or so. First Amazon and eBay took on the established bricks and mortar retail giants. TripAdvisor and Airbnb roughed up the hospitality and hotel industries. More recently, Fintech challenger banks and non-bank financial services have been making inroads in consumer finance and, of course Uber and Lyft have rattled cages in the traditional taxi and urban transport sector.

Recently, both Uber and Lyft have been taking steps for a vertical move down the booming sharing economy transport industry in the shape of ebikes and electric scooters. Uber has also been attempting to gain ground in another sector of the transport industry – commercial logistics. The truck-based freight industry is a hugely valuable sector. Much more valuable than the taxi industry. Gross revenues from trucking freight are worth $738 billion in the US alone and the industry employed around 3.5 million drivers in 2016. That compares to 300,000 taxi and ride-hailing app drivers. Truck driver is the most common profession in 30 out of 50 US states.

Uber’s move into trucking has gained little media attention, probably because it’s not a service most of us come into contact with on a daily basis in the same way as urban transport. It’s also an industry technology has, until now, largely passed over. The industry has barely changed in decades and that’s reflected in its output per employee. While output per employee saw growth of 156% in the train freight sub-sector and 96% for air freight between 1987 and 2010, truck freight’s figure was measly 34% over the same period.

The industry still relies on a network of brokers who take freight orders and then pass them on to trucking companies for a fat percentage. The system is also inefficient and trucks are empty during over 30% of the miles they drive. They are also often at significantly less than full load capacity.

Uber Freight, a unit of the company established a year ago, aims to eradicate much of that inefficiency in much the same way as the latest GPS tracking and algorithm tech automated a swathe of the taxi sector. The idea of Uber Freight is that sending freight by truck is also as easy as pressing a few buttons on an app, while simultaneously bringing down end user costs.

Over the past year Uber Freight has rolled out over the USA. Like the company’s struggles in the taxi industry, progress isn’t proving trouble free. While the company hasn’t released any figures, industry insiders believe sign-up has been slow and there is a trust issue in an industry where personal contacts, reputation and history count for much more than in Uber’s main business. There is also competition. Convoy, backed by Jeff Bezos, is another tech start-up attempting something similar. Uber believes its tech is superior with routing algorithms able to take into consideration the preferences of individual truckers, such as passing through towns where friends or relatives live.

The industry is also suspicious and it is well-known that Uber Freight’s ultimate goal is to operate a fleet of self-driving trucks. That will probably happen anyway as once the technology is available, and it almost is, it will be the natural industry development. Nonetheless, truckers don’t appear keen to give those who would replace them obsolete by helping them increase revenues now.

Uber still has high hopes for the sector and many analysts believe that it will have to start making some serious progress soon in the high value sector if it is to justify its current valuation of over $70 billion (£50 billion).

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