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Digital Freight Matching: Why ‘Uber for Trucking’ is a Misnomer

August 1, 2016 By: Trucking News Staff Tags: Fleet Management, News, Technology
Digital Freight Matching: Why ‘Uber for Trucking’ is Seen as a Misnomer

A report published Friday by Armstrong & Associates Inc. (A&A) highlights what the third-party logistics market research firm terms the inaccuracy of the term “Uber for trucking.”

A&A said it profiled 27 companies providing “Uber for Trucking” solutions. Its research concludes that “digital freight matching” is a much more apt description. The findings are published in a new report, titled Digital Freight Matching — Capturing Technology-Based Efficiencies in the Trucking Industry.

The principle is simple: digital freight matching (DFM) companies use digital platforms to match a shipper’s freight with available carrier capacity. The goal is to better utilize motor carrier capacity by offering a convenient, digital app to connect shippers and carriers.

The numbers are compelling. The U.S. trucking market is valued at $700.3 billion. Global investment in on-demand technologies soared to $18 billion in 2015 — a record high. The digital freight-matching sector has attracted more than $180 million in venture capital investment since 2011 — including $67 million this year alone.

Empty miles estimates range from 10-23 percent while e-commerce fulfillment costs are increasing. The natural response is to improve inefficiencies in the trucking industry with an Uber-like solution. After all, Uber addresses a similar problem (underutilized capacity in taxis) with a similar solution (a mobile app matching demand and supply).

But one of the key components of Uber’s model is the commodity-like nature of the ride-hailing service. A&A’s analysis shows the principle behind digital freight matching may be simple, but the trucking industry is not. Domestic transportation is not a simple commodity. Complexities arise in the form of specialized equipment types, shipments transported via multiple modes, and necessary exception handling for service issues such as equipment breakdowns.

Shipments are high-value and time sensitive. Placing an Uber-like app atop a complex industry doesn’t truly address the problem. Shippers and carriers alike will be disappointed if this is the extent of the solution.

Still, the transportation industry will benefit from efficiencies offered through improved technology. In fact, A&A found most digital freight matching companies aren’t simply mimicking the Uber model. Many even adamantly reject the term “Uber for Trucking.”

Instead, DFM apps incorporate technologies in novel ways, accounting for the complexities and nuances of the trucking industry. Apps include some of the functionality popularized by Uber – algorithmic pricing, API map integration, track-and-trace, and mobile transactions — along with features specific to trucking, such as trip planning, digital document storage, and TMS integration. These apps aren’t just “Uber for Trucking,” And that, says A&A, is a good thing. By leaving the term “Uber for Trucking” behind, A&A hopes to instead focus on specific technologies and business models, and assess how they may help the industry move forward.

Valuable technologies are emerging and A&A recognizes the potential of these technologies to efficiently match freight. Digital Freight Matching — Capturing Technology-Based Efficiencies in the Trucking Industry summarizes the DFM landscape, a valuable topic for those in the trucking, technology, or third-party logistics industry. The report includes an overview of transportation and technology market conditions and trends, comparisons of product offerings, an assessment of five overarching DFM business models, a discussion of industry challenges, and profiles of 27 DFM companies.

The report is available for purchase from Armstrong & Associates or complimentary for A&A Expert Information Services subscribers.