Digital Freight Matching - Why "Uber for Trucking" is a Misnomer
Jul 29, 2016, 02:15 ET
WEST ALLIS, Wis., July 29, 2016 /PRNewswire/ -- A report published Friday by Armstrong & Associates, Inc. (A&A) highlights the inaccuracy of the term "Uber for Trucking." A&A, a leading Third-Party Logistics market research firm, 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 over $180 million in venture capital investment since 2011, including $67 million in 2016 alone. Empty miles estimates range from 10-23% 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's 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.
ABOUT ARMSTRONG & ASSOCIATES, INC.
Armstrong & Associates, Inc. (A&A) was established in 1980 to meet the needs of a newly deregulated domestic transportation market. Since then, through its leading Third-Party Logistics (3PL) market research and history of helping companies outsource logistics functions, A&A has become an internationally recognized key resource for 3PL market information and consulting.
A&A's mission is to have leading proprietary supply chain knowledge and market research not available anywhere else. As proof of our continued work in supporting our mission, A&A's 3PL market research is frequently cited in media articles, publications, and securities filings by publicly traded 3PLs. In addition, A&A's email newsletter currently has over 30,000 subscribers globally.
A&A's market research complements its consulting activities by providing continually updated data for analysis. Based upon its unsurpassed knowledge of the 3PL market and the operations of leading 3PLs, A&A has provided strategic planning consulting services to over 30 3PLs, supported 16 closed investment transactions, and provided advice to numerous companies looking to benchmark existing 3PL operations or outsource logistics functions.
Source:
Armstrong & Associates, Inc.
10401 West Lincoln Avenue, Suite 207
West Allis, WI 53227 USA
Phone: +1-414-545-3838 Fax: +1-414-545-3906
Website: www.3PLogistics.com
SOURCE Armstrong & Associates, Inc.