Amazon has made a fortune off disrupting and changing the way retailers do business. Now the innovative giant has turned its eyes to another industry, revving up its considerable engines to transform the trucking industry – this time borrowing a model made famous by another disruptive entity.
The company is proposing the creation of an “Uber-for-Trucking” application that would connect truck drivers with shippers. If successful, this app would give small, independent gear-jammers (firms that make up the bulk of the industry) a high-octane boost in finding new business and a way to better compete and market themselves against the big national carriers.
The “Uber-for-Trucking” platform is Amazon’s initial foray into what is commonly called the “sharing economy.” Made famous by companies such as Uber, Lyft and Airbnb, the sharing economy uses websites and online applications to connect vendors (often, but not always, smaller operations or individuals) with potential customers in a new and unique way that is theoretically much cheaper and more efficient than older business models.
Uber, of course, hooks up people who prefer not to use established taxi services with contracted drivers operating their own vehicles for hire. Airbnb provides a way for consumers who want to stay somewhere other than a hotel to connect with homeowners offering their residences for short-term rentals. There is almost no limit to the number of products and services that can (and are) offered via the sharing economy. Without a doubt, the sharing economy has become the marketing craze of the 2010s.
And it’s not only vendors and consumers who have taken note of the sharing economy’s transformative potential. Investors are also casting their eyes, seeing sharing economy companies as a way to reap tremendous profits due to high demand and low overhead costs. In 2014, speculators invested $4.1 billion into sharing economy companies. They nearly equaled that yearly total just in the opening months of 2015. No recent figures are available, but the sharing economy ride doesn’t appear to be slowing down.
Now it’s Amazon’s turn to enter the market. If Amazon has the same effect on the sharing economy as its had on the retail business, small truckers may be poised to put the pedal to the metal as they stand the most to gain from such an app.
For most of the trucking industry’s existence, many small carriers and independent truckers often found new business by an informal “bulletin board” system. Just as it sounds, someone needing service and wanting to employ an independent trucker might have put a note on a board at a truck stop. Obviously such a system left a lot to be desired, for both the customer and the trucker.
An Uber-for-Trucking app could help these smaller outfits find new business and establish networks to obtain a steady stream of shipping contracts. With a handy electronic connection available, an operation with a single truck or just a handful of rigs could determine better ways to schedule deliveries and make the best use of resources, cutting down on waste, especially cost-draining less-than-full or even empty loads. Tracking and payment could also be conducted via the app, enabling the small-time operator to optimize operations as never before, lowering costs and potentially boosting profits.
Such an app could also offer other ancillary services for truckers, such as directions, fuel price information, and even truck stop recommendations for the weary driver.
Some trucking industry watchers believe Amazon’s proposed app could be a way for the giant to control the entire delivery cycle, from a package’s point of departure (the so-called “first mile”) to when it reaches its final destination (the “last mile”). Others think the app could be a way to make the “middle mile” more efficient and cost-effective for shipper and customer by eliminating third-party brokers, whose services add to costs and would no longer be needed if an app is successful.
Will Amazon be able to launch such an app and drive over the competition as it’s done elsewhere? Keep your eyes on the road as this race is getting into high gear.