Uber’s stated goal of transforming the long-haul trucking industry by replacing brokers could face stiff resistance from existing players as well as fresh startups.
Uber’s acquisition of Otto, a self-driving truck startup, has opened the doors for it to tap the long-haul trucking business. It now aims to establish itself as a freight hauler and a tech partner for the trucking industry.
Significantly, Otto’s co-founder, Lior Ron stated during an interview that Otto plans on expanding its fleet of trucks from 6 to 15. It also plans on partnering with independent truckers.
From 2017, Otto branded trucks will begin plying the roads with Otto technology and will begin hauling freight bound for stores and warehouses, said Ron.
Already Uber has started delivering its sales pitch of truck fleets, shippers and independent truck drivers. Its services could well go beyond Otto’s initially stated aims of outfitting trucks with self-driving technology.
Significantly, Uber also plans on competing with brokers who go between and connect the fleets of trucks with the shippers.
However, according to industry experts, fully automated autonomous trucks are still a few years away. Otto’s vehicles are currently manned by a driver and an engineer.
Uber plans on transforming the fragmented and highly competitive low margin $700 billion-a-year trucking industry with its technology.
Uber will face a host of widely established players ranging from publicly traded companies, including XPO Logistics and C.H Robinson, to countless others trucking businesses.
From the beginning of 2016, Otto has received motor carrier permits from both the U.S. Department of Transportation and California Department of Motor Vehicles.
As per Ron, “thousands” of owner-operator truck drivers have reached out to the company.
“We are talking with everyone. We don’t want to develop technology just for the sake of technology,” said Ron.
Although with Uber’s financial backing and its technology could help Otto’s prospects, industry experts remain sceptical, since both companies have little experience to shake up the long-haul trucking industry.
“The transportation industry is a relationship-backed business,” said Kevin Abbott, a vice president at C.H. Robinson. “There’s a lot more to it than just finding a piece of equipment.”
Significantly, Abbott noted that Uber is only the latest entry in a long list of companies who have tried to replace brokers in the trucking industry.
Otto and Uber also face competition from fresh startups who are eyeing this industry, including, Convoy, Cargo Chief and Transfix. All of these are aiming to unseat brokers by matching shippers with carriers using complex algorithms. Trucker Path has built a popular navigation app for truckers.
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