Amazon building Uber for Trucking

Amazon (NASDAQ: AMZN) is building an app that will function as an “Uber for truckers.” The solution is supposed to connect drivers; most of whom are independent contractors, with customers.

The app, which is being built by a team of Amazon engineers in Minneapolis, Seattle, and India, is supposed to launch next summer, Business Insider reported. Amazon’s public relation refused to comment on the story, but it should be noted that Jeff Bezos is an investor in Business Insider.

The story did not say where the app will be tested or who would test it. Nor did it say if Amazon plans to roll the app out in India or the United States. There might be as many as 100 engineers working on the app at Amazon’s Minneapolis office so it will most likely be tested in the American Midwest.

Middle Mile Transportation

The most likely use of the app is for middle-mile transportation, the hauling of cargo between transportation networks like trains and planes and warehouses. Another use would to be to move packages between fulfillment centers and post offices or other pick up points.

A major purpose for the app is to eliminate third-party brokers that arrange jobs for truckers and pickups for customers. The app has the potential to be very lucrative because such middlemen can charge commissions of up to 15%.

Amazon’s Uber aims to attract truckers with such amenities as real-time pricing, truck-stop recommendations and suggested schedules and manifests, Business Insider claimed. One reason for that is to get around the growing shortage of truck drivers in the United States, possibly by offering truckers higher pay.

App is designed to Counter Walmart

Amazon is also trying to reduce its logistics costs with the app. The online retail giant is locked in a fierce competition with Walmart (NYSE: WMT); which operates a massive fleet of trucks in the United States. It is also trying to develop its own air freight system which could be easily integrated with the Uber for truckers.

Another obvious purpose would be to expand the app to cover local delivery drivers. Walmart is experimenting with such apps with the help of Lyft, Uber and Deliv in various American cities.

The app will also fit in with some of Amazon’s other plans such as construction of brick and mortar grocery stores. Such stores are designed to serve as pickup locations for Amazon merchandise, and one called Amazon Go is being tested in Seattle. Walmart already has such stores operating in Colorado and Alabama.

The app would enable trucks to connect Amazon’s network of fulfillment centers with retail stores. This seems to verify the speculation that Amazon is planning to develop a fleet of brick and mortar stores.

The revelations about the Amazon trucking experiment now raise the intriguing question:” how will Uber respond.” Since Uber’s subsidiary Otto Motors recently tested a self-driving semi-truck it is highly likely that Uber will launching its own trucking app at some time, possibly in conjunction with Walmart.

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