Uber Technologies Inc. is taking a huge new risk by entering the trucking business. The company has introduced an app called Uber Freight that’s designed to connect shippers with truckers.
If it works as planned, Uber Freight will enable businesses to order a big-rig like Millennials use Lyft to order a car. Uber’s engineers think they can attract business by speeding up the process of ordering a truck and reducing costs, Wired reported. The ride-hailing service hopes to lure truckers by promising to pay them within a week.
The Road to Uber Trucking will be rough
Entering trucking is going to be a lot harder than taking on taxis because many of the logistics companies and brokerages in the industry are well-entrenched and technologically sophisticated. It will have to figure out to how to sell to hardnosed businesspeople; and big corporations, which will be tougher than marketing to college kids.
Another problem will be unions; such as the Teamsters, who are established in some facets of the industry. Truck drivers who require a commercial driver’s license (CDL) will also be harder to deal with than limo or cab drivers.
The service is limited right now only available in three Texas markets; Dallas-Fort Worth, Austin, San Antonio and Houston. Not coincidently Texas is a right-to work state that’s historically been very hostile to unions.
Will Uber build an Integrated Logistics Platform?
The challenges would be worth it if Uber were able to build a consolidated logistics and delivery platform. Profits would be vast if Uber Freight can be integrated with Uber Delivery.
One potential business model would be an Uber semi that picks up a cargo container; full of orders from the Amazon fulfillment center, and hauls it to a community say North Platte, Nebraska. Once there it meets the local Uber drivers; who pick up the presorted orders and take them to the final customers. The semi might even drop off a full cargo container and take an empty one back to the fulfillment center.
Uber is already experimenting with offering same-day delivery services for Kroger (NYSE: KR) and Walmart (NYSE: WMT). Uber Freight would be a logical extension of that, but it faces tough competition, Amazon (NASDAQ: AMZN) is developing its own trucking app.
Is Uber Planning to Replace Truckers with Robots?
Uber’s endgame might to be to deploy fleets of self-driving semi-tractors that would replace truck drivers, MIT Technology Review speculated. Last year Uber acquired the autonomous trucking startup Otto, and demonstrated its technology by delivering a load of beer in Colorado.
Since then Otto and Uber have run into big trouble after Alphabet (NASDAQ: GOOG) sued accusing Otto’s cofounder; Anthony Levandowski, of stealing thousands of files from Waymo. Recently there’s been speculation that both Levandowski and Uber management might face criminal prosecution for theft.
That means Uber will have to resolve its legal troubles before making any more beer runs. It also means that competitors like Daimler and Tesla Motors (NASDAQ: TSLA) might beat Uber’s truck to market. Elon Musk is scheduled to unveil the Tesla semi this fall, which will presumably be equipped with Auto Pilot, and Daimler (OTC: DDAY) has tested self-driving trucks in Germany and Nevada.
Despite the problems Uber might be on the verge of creating a massive money maker here. Merrill Lynch estimated that Waymo might be worth $70 billion as a standalone company.
Uber trucking and automated trucking would certainly be disruptive; Goldman Sachs Economics Research estimated that self-driving vehicles would kill 25,000 jobs a month and 300,000 jobs a year, if implemented on a large scale. It looks as if Uber is about to try to do to trucking what it did to taxis. Lyft Trucking cannot be far behind if Uber is in the business, Lyft is already competing with Uber in delivery.