Think Tank

The Future of Freight: 'Uberization' and Self-Driving Trucks

For all the dramatic advances in technology, the fundamentals of commercial transportation have remained constant for centuries: the shipper books a load, and the driver delivers it. But the next few years could see a radical transformation in the way that event takes place.

Signs of change are already evident. Chief among them is the potential “Uberization” of freight – the arrival of on-demand haulage that sidesteps the traditional booking process.

The instigator is, of course, Uber Freight, an initiative to apply the principles of the sharing economy to the commercial sector. In theory, a shipper should be able to fire up a smartphone app and order a truck on the spot. Gone is the need for long-term contractual relationships and old-style trucking companies.

Uber Freight is still young, with far less market penetration than Uber, its passenger-friendly predecessor. Yet it’s already operating in six continents, more than 80 countries and 500-plus cities, according to director Bill Driegert.

“Uber has changed our perception of transportation,” he said at a recent panel on “The Future of Freight,” hosted by the San Francisco Roundtable of the Council of Supply Chain Management Professionals. “We believe there’s a similar opportunity for how we think about freight.”

Uber Freight wants to enable what it calls “liquid access” to transportation. “Tap a button, book a load” is its marketing slogan. Driegert likened the experience of booking a truck today to that of securing a taxi in 2010, before Uber, Lyft and a handful of other ride-sharing services disrupted that industry.

Driegert claimed the company has experienced an “excellent response” from shippers in its early days of operation. He noted that the service isn’t solely for last-minute bookings. Uber Freight also participates in requests for proposals, and holds a broker’s license at the back end of the operation.

To succeed over the long run, Uber Freight will have to match or exceed the service provided by traditional carriers. Panelist Brian Stoufer, senior director of transportation procurement and operations with Conagra Brands, said customer expectations are on the rise, a result of the decision by shippers to carry less inventory, and rely on efficient service by carriers to fill the gap.

Conagra depends heavily on mid-sized and small carriers who provide regional and niche services. But a steady supply of capacity isn’t always assured. If apps such as that of Uber Freight bring more drivers into the network, “then we’re open to that,” Stoufer said.

In fact, Uber Freight could find itself benefiting from propitious timing, given the tightness of trucking capacity that shippers have experienced in recent months. Stricter regulations on hours of service, new requirements for the installation of electronic logging devices (ELDs), and fewer purchases by carriers of new equipment, have combined to create a seller’s market for transportation.

Uber Freight isn’t the only recent development that promises to transform the transportation landscape. Of equal importance, although further away from becoming an everyday reality, are self-driving trucks. Again, a technology that was first developed for passenger vehicles has quickly migrated to the commercial sector – along with a host of questions.

They include public acceptance of big rigs barreling down the highway without a human driver in the cab. But pioneers are already moving forward with application of the technology. Uber led the charge with its acquisition last year of Otto, a venture launched expressly to create self-driving trucks.

Stoufer believes autonomous freight transportation to be a certainty. “Supply and demand are going to drive it faster,” he said. But of all the transport modes to which it can be applied, he noted, trucking could be the most problematic.

While autonomous vehicles promise to have a “huge ripple effect” on the network, they raise a number of big questions. “The biggest concern,” said Stoufer, “is that our infrastructure isn’t set up for anything other than a human driving a vehicle.”

The human element also poses a substantial obstacle to self-driving technology. “The valued driver has driven millions of miles, and gotten experience,” Stoufer said. “There are so many variables in the equation.”

But the biggest hurdle could be psychological. “The motoring public isn’t completely ready to drive by a truck with nobody in that seat,” said Stoufer.

Driegert suggested that self-driving vehicles would be a perfect fit with the Uber model of on-demand freight booking. They would benefit from access to a vast existing transportation network. “It’s coming,” he said, “but I don’t want to give an official number. Soon.”

The current state of self-driving technology, coupled with the issue of public acceptance, suggests that “soon” might be an overly optimistic forecast – at least when it comes to the widespread deployment of autonomous vehicles. A more likely scenario is that they will be phased in gradually, appearing on select routes and initially with humans in the cab, even if they aren’t actually controlling the truck. It could be a decade or more before self-driving trucks are a regular sight on the nation’s highways.

In the minds of shippers, however, the future state of transportation technology pales beside the more immediate need for improved service by carriers. In the era of the omnichannel, it’s becoming increasingly difficult to satisfy consumers’ ever-escalating demands for rapid delivery. As Driegert put it: “Every provider will have to do things differently down the road. The market will change.”

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Wednesday, 20-12-17 13:04

Unless UBER can bring shipping price lower, they should stay transporting people.


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