“Uber for Trucking” is Coming: What Does That Mean for the Supply Chain Industry?

January 10, 2017

 

On the Argentus blog, we’ve done a few updates about Amazon’s increasing attempts to vertically integrate and control every aspect of their Supply Chain. They’ve made forays into the wholesale market, and begun a roll-out of brick and mortar stores. Now, it appears Amazon is set to disrupt the 3rd Party Logistics industry by releasing a new app this summer: an “Uber for Truckers.”

Eugene Kim at BusinessInsider profiled this development a few weeks ago, discussing how this new development is the latest step in Amazon’s quest for global domination – or at least end-to-end Supply Chain domination. The company that got its start as an internet bookseller before becoming an “everything store” and eCommerce juggernaut is now moving into becoming its own logistics company, seeking to have complete ownership over the flow of its goods as well as those goods themselves. Kim mentions how Amazon has spent the last year beefing up its transportation stock, buying thousands of trailer trucks and dozens of cargo planes to provide infrastructure backbone to its emerging logistics operation.

This summer, they’re also set to release an app that will connect truck drivers to shippers the same way Uber connects drivers to those seeking rides. This will potentially cut out the middlemen – the brokers and logistics service providers who currently connect many companies’ production to retail customers. Drivers will be able to pick up orders through the app as customers request them, instead of relying on 3rd party logistics brokers who handle paperwork and phone calls in arranging deliveries.

Kim lays out how Amazon is competing with a number of other start-ups threatening to disrupt 3rd Party Logistics including Convoy, Trucker Path, and Uber itself. The difference between Amazon and these players, however, is that Amazon has a huge amount of guaranteed demand built in for its own app: the benefit for them is that they’ll be able to use the service to help with delivery of their own products. The thinking is that this will make Amazon’s freight network more efficient, similarly to how Uber uncovered efficiencies in the cab business – while putting a lot of 3rd Party Logistics providers on ice.

Similar sharing economy websites – Uber, Lyft, AirBnB – have completely upended the way that we order rides and book accommodations. When you think about the fact that the trucking industry is worth $800 billion, you start realizing the huge potential for disruption should Amazon move into the space with a similar venture. It would mean greater autonomy for freight service providers, would force 3rd Party Logistics companies to adapt, while extending Amazon’s tendrils even further into every facet of the Supply Chain.

Uber is a venture capital darling, with massive growth and disruption of an existing industry. But many have questioned its business model, and it still has problems turning a profit – with many suggesting that low ride costs and subsidies for Uber Drivers mean that investors are paying for a significant portion of every ride the app delivers, rather than customers. But Amazon isn’t afraid to play a similar way: they’ve long held a strategy of accepting razor-thin margins and front-end losses in exchange for growth and penetration into new markets. With this “Uber for Trucking” app, they’ll probably be willing to accept the same thing – with the added benefit that they’ll gain cheaper freight costs for their own deliveries.

It’s not hard to see how ventures like this are table-setting for the emergence of self-driving trucks, which is part of Uber’s foray into the freight space, and threatens to massively disrupt the entire economy by putting many truck drivers – who number 3.5 million in the U.S. – out of work. It’s not hard to see how these marketplaces could be a precursor to that technology, especially as these companies also invest in self-driving tech themselves.

However this plays out exactly, it’s clear that the trucking industry is poised for massive disruption in the next 5 years.

We’ll have to see how it plays out, starting this summer. But we’re interested in hearing from Logistics and Supply Chain professionals in our network: what do you think of an “Uber for Truck Drivers” app? How will it disrupt 3rd Party Logistics and the Supply Chain more generally? 

3 Comments

  1. Anjana

    This article about the entire disruption trend in 3PL industry is truly insightful.

    Meanwhile in India, there are many such startups coming up with a similar concept. The entire startup landscape of the country is growing at a tremendous rate as a result of which it has led to existence of many more B2B startups supporting ecommerce, 3 PL companies and SMEs.

    There are quite a few logistics aggregator helping Truckers and Shippers connect directly in the Indian market. These Shippers also prefer having a tech based, modern and convenient aggregators over the traditional Local Truck market! Instavans, Shippo, Black Buck, Porter are some such names . There is no doubt that these smart tech based startups that focus on services as well as customer’s convenience are definitely being highly preferred by small growing startups as well as the well-established ones! Also the point to consider here is that these startups specialize only and only in logistics and that is how they are different from big players like Uber and Amazon. It is quite interesting to see these innovations and trends in the B2b industry!

    Reply
  2. Anupma

    Uber for trucking is a great news for the supply chain industry. However, there are many startups already in India which come up as on-demand platform that offers price transparency, ease of access, and a better end-to-end experience for both shippers and truckers. One of the best one is Instavans, it’s based out of Bangalore India, already expanded in the three major capital cities of the country.
    its aggregating a large number of local truck operators and it’s building a virtual fleet larger than any other local provider.

    Reply
  3. palash mohane

    Here,s something interesting.
    In the case of supply chain and supply chain management, the disruptive force has been Uber! Uber Technologies Inc. created in 2009, is a transportation network company that has disrupted the entire taxi industry. Uber is only six years old and is valued in the billions of dollars.

    Reply

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