Uber Freight faces long road ahead

Uber Freight is taking on the trucking industry in the US. Photo/123RF

The American trucking dream conjures up certain romantic, analogue notions: long days on the highway, enormous portion sizes at roadside restaurants, and a generous helping of country and western music.

It is hardly an image that fits with that of Uber.

The world's biggest technology start-up is best known for its taxi-hailing app, which is widely used by metropolitan millennials, and on-demand food delivery service.

But rightly or wrongly, Uber has never been one for conventions, and the company has its sights set on a potentially much bigger prize than urban transport: the open road.

Uber Freight, launched by the US giant two years ago, aims to do the same thing to the trucking industry that the company has done to taxis: slash costs and take a big slice of the market by replacing tradition with a smartphone and a GPS signal.

The unit, part of an "advanced technologies group", is seen as playing a big part if Uber is to one day justify its US$72 billion ($104.1 billion) valuation.

If it is successful, the company will have conquered a market much bigger than taxis.

Around 3.5m truck drivers were employed in the US in 2016, and it is the most popular job in 30 of the 50 states.

Some 70.9 per cent of US freight is transported by truck, with gross revenues of US$738.9b.

In comparison, there are just over 300,000 taxi, limousine and ride-hailing drivers.

Despite its size, Uber claims that the technological advances of recent years have passed the industry by.

Output per employee in long-distance trucking increased by just 34 per cent between 1987 and 2010.

In comparison, air transportation increased by 96 per cent and trains by 156 per cent.

Eric Berdinis, who runs Uber Freight's product development, says the trucking industry still relies on many of the same systems and protocols that have existed for decades.

A network of "brokers" will accept orders from distributors before hitting the phone to find a truck driver willing to take the job, and taking a sizeable margin for the work.

"It's a hugely exciting transformation for how things are moved around the world.

There hasn't been a lot of change in the last 30 to 40 years, since the advent of the shipping container," Berdinis says.

Uber Freight is taking on the trucking industry in the US. Photo/123RF

"About a third of all miles are driven empty, ultimately the consumer pays for it at the other end. There's a lot of waste."

Many of the inefficiencies seem similar to those in the taxi industry that smartphone apps began to disrupt around a decade ago.

Algorithms, GPS tracking and automation could in theory revolutionise the business of moving cargo.

Berdinis says orders that once took hours to arrange can now be sorted instantly: "Just like Uber is able to make booking personal transport as easy as pressing a button... we make it a more seamless and efficient experience."

Uber Freight launched a year ago in Texas, and has since expanded across the US to all states besides Alaska and Hawaii.

Using a smartphone app, truckers can sign up to deliver loads weeks or days in advance.

Berdinis says the company is currently focused on the US, but the model could be applied around the world.

The commission Uber takes varies, but is described as being significantly lower than the 15 to 20 per cent taken by traditional brokers.

That is the theory. The reality, as Uber has repeatedly found since gatecrashing the taxi industry, is often much more complicated.

The company has not revealed many statistics about its trucking business, but in just a year of operating, there have been signs of struggles.

In March, it introduced a series of incentives for truck drivers, subsidising fuel, tyres and new vehicles purchased from certain sellers, in what was interpreted by some as a sign that it is failing to sign up enough.

Uber Freight is taking on the trucking industry in the US. Photo/123RF

A few days later, Lior Ron, the division's head, left the company, with it declining to comment on his departure.

Trucking veterans say the company has struggled to establish credibility.

While Uber requires that truckers using the app are licensed, the industry is one that has been built up around trust, with long-time relationships, excellent safety records and specialist expertise in demand.

Berdinis says that shippers will learn to "trust the system" and that Uber will earn a reputation.

Nor is using an algorithm to arrange freight a new idea. Logistics firms are not the pre-digital caricature they are often painted as, says Evan Armstrong of logistics consultancy Armstrong & Associates.

"A transportation management system with an algorithm to help select carriers to match loads isn't anything new," he says.

Uber is also far from the only tech start-up invading the scene. Convoy, a similar service backed by investors including Jeff Bezos, was known as the "Uber for trucking" long before Uber itself started making inroads.Berdinis claims the company's algorithms are more sophisticated.

Uber Freight was launched two years ago. Photo/123RF

Truckers can be routed via their children's university towns or take into account their preferences.

But perhaps the biggest thing putting truckers off Uber is that the company may ultimately want to make them obsolete.

One of Uber's first moves into self-driving vehicles was the purchase of driverless truck company Otto, whose executives then went on to lead much of the firm's research into autonomous cars.

Uber's self-driving ambitions have been blunted since then by a string of crashes, but it remains a major priority for the company.

In March, it began using self-driving trucks to deliver cargo in Arizona, where they are used for long stretches of highway.

Berdinis says driverless trucks are a "major part of what the future of freight looks like", but its current tests still require drivers after the highway.

In contrast to the taxi drivers whose industry has been upended by Uber, when it comes to truckers, the company wants to be more friend than foe.