Uber Technologies yesterday officially launched Uber Freight, a cloud-based, on-demand, full truckload, freight brokerage. They have been piloting the service in Texas with dry vans and refrigerators between Dallas, Houston, San Antonio and Austin, and are now rolling it out nationwide.
The app offers one click sign up for loads and they guarantee payment in seven days. And when everything doesn’t go as planned they also provide accessorial rates:
- Detention – $75 per hour (after 2 hours)
- Layover – $300 per day
- Truck Order Not Used – $200 +2 dollars per mile deadhead
- Driver Assist – $75 per load
Uber’s First Step
Uber seem to be learning what matters to truckers. The convenience of a one click load sign up versus numerous calls to brokers is a big plus as is the guaranteed payment. But the app itself is still in its early rudimentary stages. Uber have entered a very competitive space that includes companies such as Convoy, Flexport, Loadsmart, HaulHound, Cargo Chief and others who all offer more advanced features.
For example with the Convoy app you can bid up the price if you find the offering price is not profitable. With Uber Freight you only have the flat rate which you either accept or don’t. Other services offered by competitors include real-time load tracking, fleet management apps, and convenience apps that enable truckers to find truck stops rest stops and other amenities.
Uber Have the Depth of Resources
But as quoted in a trucks.com article
“Uber brings the tech capability and depth of resources and talents that nobody in this space can match,” Uber Freight Director Bill Driegert stated.
Which essentially means watch this space for further developments! Another considerable advantage is bringing the Uber brand name to the freight business. Not one of the competitors can compete with Uber’s level of brand recognition.
A Price War or Market Disruption?
Uber are also very aware of freight broker’s average 12% margin on every shipment they broker. Ryan Peterson, CEO of Flexport, puts it very succinctly
“There’s plenty of fat in today’s brokerage business. Most truck brokers are pretty human-driven, with dialing for dollars on both sides. Turn that labor into software, and you’ve really unlocked some volume.”
Uber have said they would be quite happy with a third of that margin, which critics say has the potential of unleashing a price war. There will certainly be some casualties but isn’t this what disruption is all about?
The Winners are the Truckers
If Uber give truckers the ability to negotiate rates and also expand their services to include flatbed and step-deck freight, they have an opportunity to capture a significant share of the market. The real beneficiaries will be the truckers. As quoted in trucks.com:
“I signed up for Uber Freight this morning because I believe that the more tech tools I have in my toolbox, the better armed my business is to compete for success,” said Jimmy Nevarez, an owner operator from Chino, California.
“The message that we want to send is that we are driver-centric, and as we are building the application we want to make it a better experience for the drivers,” Driegert stated.
If you’re interested in learning how shipping by rail might better meet your freight transportation needs call New Mexico Transloading at 505 – 908 – 1911. We’d be delighted to have a conversation with you.