Falvey Shippers Updates

Uberization of Freight: Risks To Consider

Posted: Mar 20, 2018 9:13:00 AM

Uberization of freight has arrived. This new type of technology is being integrated into the field at an increasing rate and has many companies asking questions: How will this change their business? Will this hurt or help current operations?

There are some clear benefits to adopting the technology, such as improved efficiency, saved money and resources, and reduced environmental impacts if more truck space is utilized. However, as is the case with anything new, there are a number of risks to consider as this technology makes its way into mainstream shipping.

The Status Quo: Working with a Third-Party Logistics Provider

Third-party logistics providers are at the core of the shipping industry — they serve as the intermediary between shippers and carriers and ensure all orders are properly fulfilled. They are well-versed in the constantly changing rules and regulations of the shipping industry, and over time, shippers develop solid relationships with their chosen 3PL.  Trust is an important component of this relationship, as a 3PL is responsible for advising on which equipment and mode are best for any given shipment — essentially doing everything in their power to make sure that the shipper’s cargo arrives safely at its final destination. They can also advise on the best ways to protect freight during the course of transit and secure the correct types of coverage policies needed for each and every shipment.

Another responsibility of third-party logistics providers is thoroughly vetting carriers. They will already have an existing network of quality carrier relationships at their disposal, and will know how to find the one that’s right for any given shipment. This human element of personalization is paramount in the shipping industry. Routes can be optimized and made more efficient when the right carrier is chosen. There are numerous things a 3PL looks for when hiring carriers, including selecting an authentic transporter that has the proper qualifications, evaluating safety ratings, and ensuring that the carrier has the ideal MTC coverage levels. This detailed process benefits the shipper in ensuring that not only does the shipment arrive safely and on time, but they can rely on the fact that they’re partnering with a trusted carrier.

Emerging Trends: Incorporating New Transportation Technology

This new Uberization approach focuses on automation and using app-based technologies for making the most out of empty space in trucks. There are clearly some benefits to this new system, as mentioned above, but there are also some risks to be aware of.

Increased automation goes hand-in-hand with diminished human involvement. Instead of having a go-between to handle your shipping needs, the shipper bears more responsibility for all the details associated with the shipping process that a 3PL would typically handle. That means it falls to you, the shipper, to make sure of certain aspects such as selecting the right mode of transport or ensuring the proper insurance coverage is in place. Even if this is taken care of, you may no longer have control when it comes to selecting a carrier based on certain qualifications such as their safety rating.

These app-based technologies require that carriers submit basic insurance information to the company, but beyond that, what else goes into the vetting process? What if any carrier can download and access the app? This means that your chance of working with a quality carrier could be lower than it would be if you worked with a 3PL with established screening procedures. Like the rideshare apps, notifications are sent to drivers that there are available loads, and they can then claim the loads based on their availability. The system utilizes each driver’s proximity to the load, which means shippers may not have a reliable way to know who will be picking up their cargo.

Time will tell what other potential benefits and risks are associated with this new technology as the industry gains firsthand experience with Uberization. However, with the knowledge we have, it’s important to have an understanding of how these changes will directly affect you. Due diligence becomes that much more important to ensure your shipments are in the best hands.


Recent Posts