Innovative transportation solutions : Uber for Freight

Abstract

As part of standard business cycles, new technologies continue to emerge that disrupt industries and capture market share from stagnant incumbents. In the trucking industry, Uber for Freight (UFF) is one of these innovative business models. Loosely defined as platforms which seek to more efficiently match shippers' loads with truck drivers, these companies are seeking to 'uberize' freight transport through algorithm-based applications. By eliminating the middleman of a carrier or broker, these startups' value proposition is cost savings and increased efficiency gained through a frictionless interface. While process automation has its upsides, many industry veterans have questioned the potential success of this business model. Furthermore, experts have expressed uncertainty regarding the operational mechanics of an UFF company as well as the true distinction between UFF and a traditional broker. This research seeks to address these questions about the UFF model by first developing a clear description of its players and processes, compiled based on interviews with existing companies in this space. Secondly, this research determines that UFF is best classified as a subdivision of brokers, providing similar services through a different business model that eliminates some degree of human intervention. More than simply automation, UFF provides additional benefits through its rating system and efficient payment processes. As a case study, this research then investigates the applicability of UFF within a specific company. The sponsor company, a large, multinational chemical company, maintains an extensive product offering that reaches customers across almost all industries. These products vary widely in format, hazardous material classification and service level requirements. Based on interviews with sponsor company representatives across functions and geographies, this research examines the challenges and benefits of incorporating UFF into a company's transportation strategy. From these learnings, it was recommended that UFF be implemented gradually, starting on a U.S. lane that transports non-hazardous products with lower service level requirements. If safety and service levels prove satisfactory, the sponsor company can scale accordingly to more complex products or lanes. While UFF has clear benefits and disruptive potential, it must be utilized with the appropriate products and customers; it is not a one-size-fits-all solution.