Freight truck driving down highway

Is Uber Freight Taking Over the Shipping Industry?

Categories: Freight Forwarder.

On September 9, Uber announced an expansion of its shipping and logistics operation, Uber Freight. The company signed a 10-year lease in Chicago, where it will open a new office and hire 2,000 people in the area over the next three years, mainly for the freight unit.

After Uber and Lyft disrupted the taxi industry, people are concerned about Uber taking over trucking as well. Will Uber Freight be able to successfully disrupt the industry?

What is Uber Freight?

Uber Freight matches carriers with shippers on an on-demand basis. Shippers provide information about their freight loads, view rates based on real-time market conditions, and book in advance.

Uber Freight is not alone in this space. Other companies in the digital load board business include Amazon Freight, Transfix, Loadsmart, 123Loadboard, and Cargo.

What are the benefits of Uber Freight?

The main benefit is that Uber Freight theoretically eliminates the need for traditional freight brokers and negotiations, saving time and money for both shippers and carriers. Prices can be locked in when a load is booked, allowing all parties to plan ahead with no surprises.

The digital system also ensures that trucks are as full as possible and following optimized routes, reducing the costs associated with underutilized space and deadhead miles.

Will Uber Freight disrupt the industry?

It may impact the industry, but it’s unlikely to cause the same level of disruption that we saw in ride-sourcing. Uber Freight experienced significant losses last year, and continues to face challenges such as the driver shortage and overall industry slowdown.

While Uber Freight offers convenient, accurate pricing, cheaper isn’t always better — shippers value dependability as well. Trucking is largely based on trust. Shippers like to book loads with carriers they’ve worked with before, and are likely to choose these established relationships over handy app features.

Additionally, requirements for Uber Freight drivers are minimal (an active USDOT and MC number, satisfactory safety rating, and proof of insurance) and aren’t sufficient for many carriers, especially in the case of high-value or specialty loads. Products like food and medicine, for example, need meticulous temperature monitoring during transport, and require a driver with the right equipment and experience to get the job done.

The complex and fragmented nature of shipping logistics makes it a difficult field to master. In such a vast ecosystem, trucking is just one link in the supply chain, and shippers need multi-faceted logistics solutions. When it comes to warehousing, last-mile delivery, and solving unforeseen issues, Uber can’t compete with industry veterans.

Uber Freight may be expanding, but it’s not going to monopolize the industry anytime soon.

Logistics isn’t one-size-fits-all. That’s why Globecon offers integrated, custom-tailored trucking and warehouse solutions. Learn more.