The Uberization of Trucking Part 3: Problems
In order to create a live-load uberized freight marketplace, the fundamentals of how the entire business operates have to change. According to
Matthew Kane
, the founder of the MyRiteLoad shipper-to-carrier connection marketplace, the hope is to fulfill the promise of what has been
called the " elusive holy grail" of load matching
, providing load-board-like spot market connections for independents and small fleets to direct shippers rather than brokers."
While trucks and taxis may both be on wheels, moving packages and people isn't as simple as just affixing one business template over the other. New technology still has to solve the same old problems the trucking market has always faced.
Credit
When a fare hails an Uber it's a complex transaction made simple. The fare enters their credit card info and a destination. The app enabled GPS
does this rest and is instantly able to provide a price and a pick-up time. While freight may sound similar, e.g. "I need X amount of boxes to go from Y to Z" it's everything that occurs in between that makes estimating time/cost much more of a challenge.
Everything has a price and everybody wants to get paid. Unlike an Uber, where the average trip costs $13.36,
less-than-truckload (LTL) shipments
cost hundreds to thousands of dollars. This presents a substantial risk to carriers who may consider entering the market.
While redesigning MyRiteLoad, Matthew Kane aimed to address this issue, "Independent owner-operators pay membership fees to participate in the platform — "$180 up front when they sign up," Kane says. "$80 is for a full background check, $100 a year is the fee" to participate in the matching service.
The company vets its shippers, too. "We do full credit checks on the shippers," Kane says, to make certain "they don't have bad reviews for not paying their bills."
Shippers don't pay a subscription/membership fee, but are paying for their connections to carriers on a per-contract basis."
Accessorials
Accessorials may be a necessary evil but there a few things that leave a more sour taste in a shipper's mouth than a bunch of undisclosed fees being tacked on after the fact. Under the current model, accessorials are nearly always dealt with in hushed whispers, if your broker even mentions them at all. Fuel surcharge, detention, truck-ordered-not-used payments, lift gates, specialized equipment, etc are all common charges that end up on the bill after a price has been agreed to to.
Uber Freight hopes to add some transparency to the process by offering detailed lists of what exactly may lead to additional fees for shippers.
" But what happens when things don't go as planned? We want our carriers to know Uber Freight has their back when it comes to accessorial charges too. We are publishing our accessorial rates so that our users know what they can expect when they take an Uber Freight load."
Since the Uber Freight app is essentially your "broker" disputes by both carriers and shippers would be settled by them...via email.
"Now there's a few things to know about the rates above. First, if there are extraordinary circumstances that don't neatly fall into one of
the categories above, email us and we'll work it out with you. Second, you have to be using the app for us to guarantee these rates. The app's GPS helps us track what's going on with the load, and it helps us prove to our shippers when you arrived at the facility."
How their customer service team handles such disputes remains to be seen.
Time
We mentioned detention above but with the new ELD mandate in effect pick-up and drop-off times have become more sensitive than ever.
"If you're a shipper that doesn't like paying detention and you're a mess to load and unload, carriers will drop [you]. Those shippers could end up paying more or not being able to find carriers," Kevin Hill president of CarrierLists
With capacity already strained and ELD enforcement only adding another stressor, it's a truckers market. They don't need to uberize their freight if it means playing in a sandbox full of slowpoke shippers.
Next week the next article in this blog series The Uberization of Trucking Part 4: Shipper Solutions + A Conclusion
Read the first part of this blog series The Uberiztion of Trucking Part 1: An Overview
Read the second part of this blog series The Uberiztion of Trucking Part 2: The Players
