Will Startups Disrupt the Trucking Distribution Model?
How Startups Are Rethinking Trucking and Distribution
The trucking industry may be facing a revolution much like the one Uber imposed on taxicabs – a change of astronomical proportions. Startups are popping up around the country with intentions similar to those Uber had when it was just a fledgling, but with the trucking industry in their crosshairs. A number of startups want to give consumers the power to control their own carrier costs for the first time, threatening a major disruption to the global industry. Here’s what you need to know about this potential alteration to the trucking distribution model.
Startups That Are Pioneering the Market
Frost & Sullivan, a global consulting firm, recently published a study titled “Start-Ups Disrupting Global Connected Truck Market 2016-2017.” In the study, the firm found a number of startups with the potential to change the trucking industry’s distribution model. The global vice president of research and mobility at Frost & Sullivan stated that trucking is not the most optimized industry, and, as such, it leaves huge openings for innovators to make changes.
One such innovator is the San Francisco startup Otto – an automation company recently purchased by Uber. Uber’s Otto made the first successful commercial truck delivery without a driver. The truck completed the 120-mile trek through Colorado entirely using automated technology, overseen by a driver from the sleeper berth. This is just one example of many startups disrupting the trucking industry.
Yet automation startups are not trucking companies’ main concern – those involved with the distribution model are. For instance, the startup Freightera is an up-and-coming company that promises “all-inclusive freight quote” comparisons online, 24/7. The app lets customers compare the prices of different carriers and choose the cheapest option. With this type of power at the fingertips of customers, leaders in the trucking industry need to learn how to use technological innovations to their advantage.
The Future of Trucking Distribution
Just as Amazon changed consumer expectations in terms of fast and cheap shipping, startups plan to change the way trucking industries operate. One startup, Convoy, has built an algorithm based on different types of loads to pair shippers with the ideal local carrier based on payload, capacity, distance, and equipment. Convoy is the Uber of trucking, eliminating haggling between carriers and shippers. With Convoy, carriers can decline or accept a job based on the listed price.
Customers controlling freight costs and carriers avoiding haggling may seem like the end of an era, but it doesn’t have to mean the end of profitability for trucking companies. In fact, smart companies can use the success of these budding startups to their advantage. Fleet managers can use innovations from different startups to make jobs more cost-effective and efficient. For example, a company could use Convoy to keep drivers happier and lower their turnover rates.
Outfitting trucks with thousands of dollars’ worth of equipment and technology may seem like a major investment, but it can lead to a safer, more profitable fleet. Trucking apps and technologies can automate tedious processes, make the workforce more productive, and improve driver amenities. Leaders in the industry shouldn’t look at changes to the distribution model as negative changes, but rather as steps toward a more optimized future.