What does the sharing economy mean for logistics? The sharing economy has already revolutionized how people travel between places – and now it’s beginning to transform how goods are transported.
Seven years after launching its car ride services, Uber is spreading into carrying freight – a sign of the major changes shaking up the logistics sector.
After a soft launch in Texas a few months ago, Uber Freight is now rolling out in other parts of the U.S.
It offers attractive seven-day payment terms to drivers as well as the use of an app which could enable them to carry a full load all the time, rather than making empty return journeys.
In theory, this should increase the capacity of trucks – even though these vehicles already carry 70 per cent of goods transported in the U.S., according to the American Trucking Association.
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But Dr Walter Kemmsies, Managing Director, Economist and Chief Strategist for JLL’s U.S. Ports, Airports and Global Infrastructure Group, sees the Uber Freight move as a symptom of an overhaul in logistics rather than as being the catalyst for revolution by itself.
“Its entry into the market is part of the e-commerce boom we are seeing in industrial real estate, but it may find, that unlike cars, truck freight movement is subject to very difficult regulations under the Federal Motor Carrier Safety Act which limits hours of service.”
Kemmsies predicts that e-commerce will double from around 10 per cent of U.S. retail sales to over 20 per cent within the next decade. However, even the e-commerce pick-up is increasingly being seen as part of a bigger story.
“The real trend is omni-channel rather than e-commerce,” he says. Under omni-channel customers buy goods and services through a range of means including mobile phones, visiting stores, fast home delivery and click-and-collect.
Rising Consumer Expectations
The real estate implications of these changes are numerous – particularly as consumers get used to almost instant delivery and as tastes change. For retailers it means developing fulfillment centers that can respond quickly to orders placed through different channels while also being able to re-stock stores at high speed.
Smaller retailers will increasingly pool their distribution and order fulfillment efforts and work more closely with the logistics sector – in order to cut costs, according to Kemmsies. And Uber Freight and similar organizations are expected to play a significant role at the small truck end of the market (under 1.5 tonnes) with a more muted effect for larger, more heavily regulated vehicles.
These changes are all taking place against a background of fast evolving technology. Aaron Ahlburn, Managing Director, Industrial Research at JLL, points to trends like emerging technology around freight APIs (Application Program Interfaces) and efficiency gains in freight brokerage through better matching of drivers and routes. They are also occurring across many modes of transport – not only trucking, but ocean, rail and air freight as well.
This is the kind of software which Uber Freight is using to help drivers avoid traveling without a full load. Various other companies are also operating in this space – including C.H. Robinson, project44, Cargomatic, Convoy and Traansmission in the U.S. (recently acquired by ShipLync), TimoCom and Teleroute in Europe and the newly-launched LoadMe in the UAE.
Self-Driving Trucks Take to the Roads
Achieving greater efficiency in the trucks sector is a matter of urgency, according to the American Trucking Association which predicts a growing shortage of drivers. This problem is one reason why so much interest is being shown – by Uber and many other logistics organizations – in self-driving trucks. Kemmsies expects to see fairly rapid developments as the concept gains traction but only in some parts of the U.S.
“In less than 5 years, maybe as little as three years, I expect to see autonomous trucks operating on high frequency, predictable routes where good weather prevails during much of the year and where there is a pro-autonomous trucking state regulatory agency – in Iowa, for example,” he says. Progress will be slower on mountain roads, for instances, and in congested locations.
With demand for ever faster delivery increasing, the pace of change is rising too amid advancing technology, new business models and new partnerships. Kemmsies predicts a huge amount of activity, with more logistics players innovating in the way that Uber is.
“The disruption comes from shifting consumer preferences,” he says. “Logistics providers are simply following the instructions of retailers who in turn are following consumer buyer preference trends. As a result, the global logistics industry of tomorrow will look rather different to today.”www.shipwatchers.com - 24/7 Support including Chat