Uber Freight and Amazon Logistics are trying to make transportation more efficient, but they are also affecting businesses already in the transportation industry.
Amazon and Uber are working on changing the way freight is moved by eliminating the middlemen and connecting businesses to truck drivers.
Will it work? Will these “disruptors” spell doom for the transportation industry?
How Uber Freight and Amazon Logistics Got Into the Game
Uber Freight was launched in 2017 and is now available in more than 45 states across the U.S., Netherlands, and Germany. Per Uber, a half-a-million truck drivers and thousands of shippers are using Uber Freight.
Amazon has also launched an online freight service that connects truck drivers with shippers. The Amazon Logistics website was launched in 2018 and is presently available for shipping between warehouses in five U.S. states — Connecticut, New York, Maryland, New Jersey, and Pennsylvania. Once the required shipment is delivered to the trucking company, complete shipment details are shared through a mobile app called “Relay.”
Both Amazon and Uber are working toward launching initiatives that connect businesses with truck drivers. The Uber Freight program is similar to Uber’s current passenger program, however, cars have been replaced by trucks. Amazon Logistics is more targeted toward becoming a worldwide freight booking platform by removing middlemen using an app that matches trucks with freight.
Even though Amazon and Uber are making it more convenient for businesses to directly get in touch with truck drivers by eliminating middlemen, there’s no denying that third-party logistics also come with a host of benefits.
Benefits of Third-Party Logistics
First things first: third-party logistics are cost-friendly. Pricing can be decided based on the volumes that can be handled by the freight services provider. Third-party logistics providers ensure truck drivers have larger freight orders than two-to-three shipments assigned to them sporadically. However, services like Uber Freight and Amazon Logistics function like a dynamic marketplace and won’t get truck drivers the best deals in the case of multiple shipments.
Third-party logistics providers work with truck drivers to provide them with shipments on a regular basis and cover their empty miles. Not only this but third-party logistics providers also help truck drivers efficiently manage processes, such as ensuring trucks have lift gates in case the delivery location doesn’t have a dock, and managing pickups and dropoffs.
The Role of Technology in the Transportation Industry
Even though technological advancements in different industries change almost every day, the supply chain is one area that does not demand a lot of technological attention — at least not in the years to come. Driving a customer from one point to another is much simpler than transporting freight. Therefore, middlemen or brokers play an essential role in the smooth movement of freight.
While Uber Freight and Amazon Logistics are launching new initiatives to streamline the movement of freight, businesses may find it difficult to assess the reputation of the carrier service they are hiring for their freight. Nevertheless, both services are in the initial stages of their development and it’s unclear that they will be able to provide more value to customers beyond cost-effective and easily accessible freight transportation services.
All in all, it’s too early to conclude whether Uber Freight and Amazon Logistics will emerge as game-changers, but it’s something the transportation industry needs to keep a close eye on.