Will Uber Freight Lower Shipping Costs?

Uber last month rolled out its long-anticipated trucking brokerage solution in the US. Uber Freight matches truckers with loads to haul. Some worry it will disrupt logistics the way Uber has impacted ride-hails while others dismiss it as simply one more brokerage among thousands.

In the end, however, will Uber Freight make any difference to the shipper? Only time will tell.

Is Uber Freight All About Robots?

Uber Freight sprung from the company’s $650 million acquisition of Otto in 2016. Otto developed driverless truck technology which Uber used to make the world’s first automated long haul last October.

In that part demo, part publicity stunt, the company earned $470 (the market rate) to deliver 45,000 cans of Budweiser over 120 miles of highway. The truck’s owner-operator sat in for the ride, but for the most part, not at the wheel.

Because of the relative predictability of highway driving, observers predict the trucking industry is likelier to adopt autonomous vehicles sooner than other sectors. These trucks could roll out as early as 2022.

Considering truckers represent anywhere from 26% to 35% of the cost of a haul, suppliers stand to save a considerable amount on fulfillment. Robots may knock the cost of that Budweiser haul down from $470 to $305.

What About Now?

Uber Freight connects shippers with trucks through an app not too different to its ride-hail cousin. Uber developed the service over six months with shippers, carriers, and independent drivers in Texas.

The service seems tailored to owner-operators, the 350,000 freelance truckers who already contract for individual hauls through the 17,000 brokerages in business today. To sweeten the deal for truckers, Uber Freight highlights payment within days of a finished job.

This not a small deal. It can take anywhere from 30 to 90 days after a haul to see a check, leaving truckers to either put up with inconsistent cash flow or pay a “factoring” service to expedite invoices.

But Uber Freight is unlikely to impact the cost to suppliers to fulfill orders. Uber bases fees on distance, cargo type, and “overall marketplace dynamics to surge prices overtime to match supply and demand.”

The brokerages that negotiate with logistics companies or directly with shippers do this already, pretty much. The only difference is that, as with Uber’s hail-ride service, the more drivers join and stay on-call, the more convenient the service becomes to the supply chain.