Following months of speculation, Uber has finally made a decisive move into the trucking world with its acquisition of Otto, a self-driving trucking platform. The firm’s long-term goal of setting up a national digital freight matching network now appears to be one step closer to reality.
Venture capital firms have been looking beyond consumer transit for quite some time now and trying to make some inroads in commercial transport. Armstrong & Associates reports that in the past five years alone, more than $180 million in funding has been pumped into this sector, with $67 million of that coming just this year.
Uber might have revolutionized the consumer transit sector, but could its brand of on-demand ride sharing realistically shake up the commercial transport sector as well? There’s every reason to believe that they could be successful, particularly when it comes to smaller carriers and shippers, but they’ll have to overcome several challenges if they want to be a viable option for bigger shippers.
Challenges Facing DFM Solutions
First of all, there’s the matter of cost optimization. Many shippers could find that the cost savings derived from on-demand pickup in the short term are not enough to outweigh the type of long-term savings they see when they work with strategic partners. Some of the bigger retailers require adherence to very restrictive delivery policies, and long-term relationships with carriers can bring about a familiarity with these practices that can prevent rejected loads and fines for noncompliance.
The security of cargo also needs to be considered. The logistics industry simply cannot afford to rely on drivers who have not been properly vetted and licensed. Current DFM apps are trailing behind 3PLs when it comes to traceability and insight. The DFM approach could also be vulnerable to breaches from highly sophisticated cargo thieves. Liability and compliance will also need to be managed very carefully in order to get companies on board.
This blog post was based off an article from Multi Channel Merchant. View the original here.