April 24, 2017 2:30 AM, EDT
Will Uber Replace Freight Brokers? ‘Absolutely Not,’ Tech Expert Insists
Roger W. Gilroy/TT

This story appears in the April 24 print edition of Transport Topics.

ORLANDO, Fla. — The emergence of Uber-style transactions in the freight industry will not replace brokers, experts in the segment said while acknowledging a surge in both the number of new motor carriers and mobile apps to locate freight.

They spoke during a technology session at the Nasstrac Shippers Conference and Transportation Exposition here April 9-12.

Uber will “absolutely not” replace brokers, said Lance Healy, chief innovation officer and co-founder of Banyan Technology, a provider of connectivity for transportation management. “What do they bring to bear? What technology does it bring into the market that we don’t already have?”

But if Uber comes in as a broker, “That’s great. Technology and efficiencies they bring in will force the game of everyone to step up. I don’t see it as a disruptive shift like it was in the taxicab industry,” Healy said.

At the same time, there are about 211,000 active for-hire motor carriers, said Jeffrey Tucker, CEO of Tucker Co. Worldwide Inc., a 3PL.

“That’s the largest number of carriers in history and up pretty dramatically from five years ago,” during which time the number of carriers that own one to six trucks almost doubled, Tucker said.

Better data on available freight will allow these independent drivers and the smaller fleets to “not go under the flag of a large carrier, and [still] survive,” he said, by getting shipments through mobile apps. Tucker expects trucking will rapidly increase the use of dedicated lanes “or what feels like dedicated lanes because of the certainty of there being a load at the other end,” over the next few years because of the better data.

“The technology is better this year than it was last year,” he added. For instance, load matching is just one element that his company provides customers. For some of his chemical-refining customers, he said he is saving them up to 16% on their inventory and giving them visibility into their supply chain in ways they never had.

That compares with saving a couple of percent on rates for loads generated by apps, Tucker said.

But he predicted better technology and data will compress brokers’ margins as options for shipping increase.

Ultimately, the truck itself may be the best predictive tool for drivers when it comes to analyzing the available onboard capacity for additional pallets that could be added along a route, said Greg Carter, chief technology officer at GlobalTranz, a freight brokerage.

“I just think the truck is a better computing platform via the cloud than just your phone. I just think there is more opportunity to do something interesting there,” Carter said.

At the same time, there is a huge proliferation of apps available to drivers, Healy said. “Everybody wants [fleets] to download their apps for visibility and leverage.”

Looking beyond apps, GlobalTranz has automated 25% to 30% of its shipments, and those are handled without a person involved other than someone calling for a truck and the load being put on. “So Uber can’t do much more than that,” Carter said.

The effect Uber may have is to soften the technology barrier for some shippers, he added.

“I think without a doubt Amazon is the bigger threat than Uber largely because [Amazon is] creating from start to finish their entire supply chain from scratch,” Healy said.

Amazon has bought planes, warehouse and is investigating a direct-to-driver program with 30,000 independent drivers using vehicles, some with liftgates, that can be operated without a commercial driver license, he said. The result is likely to be a new supply chain — independent of brokers, carriers and warehouses. Yet, one that freight forwarders can tap into.

Amazon also owns the customer, so it has the ability to affect what the metrics are, what’s the technology platform and the performance requirements, he said. “They are going to measure the living heck out of everything all the way through the supply chain.”

Carter said Amazon will try everything at once and “is not afraid to screw up.”

“What works, works,” he said. “Uber is not quite as aggressive, especially on the technology and expanding how they operate. Amazon will try 10 different modes. If five of them fail, they just chalk it up and chuck ’em out.”

Also, Tucker maintained that the freight industry is only a year or two away from having the same visibility that consumers buying through e-commerce already enjoy. “From a technology and broker’s standpoint, if you can go in there and solve problems [such as lowering demurrage charges], you’re in business.”