When Uber first announced its intention to get into the trucking business by offering a freight matching app, a lot of critics said it wouldn’t work. They claimed the San Francisco tech company wasn’t really disrupting trucking in the same way it revolutionized livery transport. Rather, Uber was merely offering a new way to present something that already exists. Such criticisms have not slowed Uber at all.
Uber released their much-touted app earlier this year under the moniker Uber Freight. The app helps connect independent truck drivers (owner-operators) directly with shippers, thereby eliminating freight brokers along the way. Drivers can use the app as a primary source of work or just to get a few extra loads when they have the time and space.
The Dallas Morning News reports that Uber chose routes around Dallas, Houston, and San Antonio to test its app prior to public release. Thus far, roughly 70% of the business serviced by the app comes out of Texas. Uber will undoubtedly roll out Uber Freight nationwide should its performance in Texas meet or exceed expectations.
Though Uber may only be reinventing the mousetrap, traditional freight brokers should be concerned. The following three reasons demonstrate just why independent truck drivers are willing to use freight apps:
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1. Faster Payment
Driving a truck as an independent operator is a career that does not involve huge margins. Cash flow is critical to keeping the wheels turning mile after mile, and it has historically been a problem for freight brokers. It’s not unusual for truckers to have to wait a month or more for payment, according to the Dallas Morning News.
Uber Freight is much quicker at securing payment. The average payment takes just a week, which is huge for truck drivers. An added bonus is that owner operators do not have to chase down payments from freight brokers slow to pay. Uber handles all the payment processing for them.
2. Lower Broker Fees
The second reason is a big one, according to Utah-based C.R. England: lower broker fees. Owner-operators are no different than any other business owners looking to maximize profits by keeping costs as low as possible. Broker fees take a sizable chunk out of the paychecks of owner-operators. That’s money drivers want back.
One driver interviewed by the Dallas Morning News claims that switching from the traditional broker model to app-based load finding has increased his pay by up to $400 per trip. That is a lot of money saved on broker fees.
3. Speed and Convenience
Lastly, the speed and convenience of arranging loads through a smartphone app just cannot be beat. A driver stopped for a dinner break can pull out his phone, tap a few buttons, and instantly arrange to pick up a new load at the end of the day. There are no phone calls to be made and no dispatchers who need to be schmoozed.
The speed and convenience of the Uber model works equally well for truckers who are using the app for most of their loads and others who simply want to pick up a little more freight so that they don’t have to deadhead on the way back home. It essentially offers truckers a use-as-you-go option that was not available to them before.
The critics have said that Uber doesn’t offer anything that is truly disruptive to the trucking industry. But truckers who use their app, and similar apps as well, would beg to disagree. Traditional freight brokers would do well to sit up and pay attention. On-demand freight forwarding isn’t going anywhere.