What’s App: How Tech Will Meet Truckload in 2017

Sunset’s Truckload and Heavy Haul Analyst John Sutton weighs in on the access-economy apps and how they may affect the 3PL industry in the coming months.  

The cloud of the autonomous access economy, or “uberization” has been looming over the third party logistics industry since the mid-2000’s.  But, logistics experts and longtime 3PL owners are sharing a growing consensus on the implications of this trend — staying hopeful but realistic — when it comes to Uber, Otto (and other self-driving vehicle companies) and Amazon entering the freight brokerage arena.

Autonomous, self-driving trucks like Otto present a simple concept:  a shipper could move a commodity from point A to point B without ever having a human in the vehicle. Uber’s August 2016 purchase of Otto‘s startup technology indicates plans for a freight network that will connect shippers and carriers, similar to Uber’s model of matching passengers and drivers.

Read any logistics trade magazine and you’ll see confirmed news about Amazon’s impending entrance into the truckload brokerage market. After years of quiet, diligent work under the radar, Amazon’s rollout of its “uber for trucking” app is projected for Summer 2017.  The app is expected to be a full-service suite for drivers and shippers, featuring a load board, turn-by-turn directions for freight movements, load acceptance within the app, in-route truck stop information, and more.

The common denominator

What do these apps and emerging technologies have in common?  They embrace what 3PLs have been doing for decades…creating advanced technology solutions for maximum efficiency.

The idea behind the general term “uberization” is to streamline the process of marrying an empty truck with freight that needs to be shipped. We’ve seen many “uber for trucking” apps arrive and fall short in recent years competing with load boards, routing tools, and regulatory roadblocks.

The goal of enabling better technology remains paramount to the brokerage industry’s success.  It’s often that complexity the Amazons and Ubers are oversimplifying.  To say that hauling freight is as easy as hailing a ride to your local watering hole is deceiving.

As Sunset weighed in on the matter in March 2016, we offered a positive suggestion into how 3PLs offer something shippers want:

“Just because a shipper may have easier access to find trucks and qualify them, doesn’t mean they will want to handle this piece of their business.  They’re not concerned about controlling each shipment. They want that responsibility and liability taken care of for them.  Smart shippers want bigger solutions.”

A year later, we have even more evidence of this to be true.  The buzz of new technology and the desire for shippers to close the gaps in their supply chain is constantly evolving, but the desire to manage freight at that level is almost nonexistent to for complex supply chains and larger shippers.

Who’s panicking and why? 

Underdeveloped brokerages are panicking at the thought of what Amazon is bringing to the table. These 3PLs often have a small book of business that operates at very high margins, and likely haven’t adapted readily to emerging technology and regulations. Small 3PLs find themselves lacking the network and capacity to bring much value to the table for larger shippers.  They get stuck in the spot markets and often relying on pricing instead of relationships.

By leveraging its global market densities, Amazon’s focus on last-mile hauling could compress margins to the point of putting these stunted 3PLs out of business.

In stark contrast, larger 3PLs & 4PLS over-automate only to have their shipper customers suffer from poor customer service, lack of accurate information, and the headaches of making the process of moving a load much harder than it needs to be.

The sweet spot between the behemoths and the small brokerages is adaptability.  Agile 3PLs welcome idea of Amazon joining the marketplace as a source for additional capacity and resources. Brokers will look to both utilize and embrace Amazon as a competitor if they make the splash Wall Street expects them to.

Additionally, Amazon’s app is claimed to have underlying support with an industry-leading web service API (Application Programming Interface) provider. This will allow 3PLs to pair with the service to add their volumes to the marketplace as well as pick up a few tips and tricks from what Amazon is doing right. It should come as no surprise to see many repackaged versions of Amazon’s product within a year’s time of its release.

Waiting to exhale

A few competitive advantages remain between heavyweights Amazon and Uber for now. Amazon’s research on self-driving vehicles lacks in substance compared to Uber. Uber’s advancements in self-driving technology make them and industry incumbent, but their blatant lack of an established network and recurring load density poses a large challenge.

Stay tuned for more commentary on this matter as the year progresses and we see real-time implications of accessible supply chain tools making their mark in the brokerage world.  For now, the use of APIs and SaaS technology is already commonplace in many mid-market and large 3PLs, and the opportunity to improve the supply chain is a welcomed notion as the access economy platforms evolve.

About the Author

John C. Sutton is a business analyst with Sunset Transportation, specializing in carrier and business operation analytics.

John’s background in asset-based Truckload & Heavy Haul operations prior to his joining the 3PL industry have provided a strong foundation for multi-modal pricing, procurement, and consulting at Sunset.  John is an active member of the Specialized Carrier & Rigging Association (SC&RA), an advocate of market intelligence, data-driven decision making, and Cardinals baseball.