“Taxi alternatives” Uber and Lyft are singlehandedly revamping the business model of the livery industry – making taxicab and limo companies nervous as these upstarts challenge and change the process by which people and (now with Uber’s new “Rush” offering) products are moved. Could there be a similar innovation for the transportation industry?
You may already be hip to Uber and Lyft. These companies offer smartphone apps connecting independent (pre-registered) professional and non-professional drivers with people who request car service using the app installed on their smart phone. This on-demand, crowd sourced approach to ridesharing is turning the livery industry on its head.
Not content to stop there, Uber now rolls out “Rush” in a Manhattan-only trial area (below 100th St. only for now). Their new offering uses the same app to connect couriers (whether on foot, bike, or car) to customers purchasing products online. Overnight shipping by FedEx not quick enough? Simply order your favorite product online and select Uber’s Rush as the delivery option. Within hours a bike messenger will show up at your designated pickup location to deliver your purchase. Pretty slick, no?
Always looking for the seeds of the next huge innovation in TMS, this story got us thinking about the implications for such a model if it were to be applied to securing truckload or LTL carriers. Is the transportation industry ready for a “Shypp” app, as part of a TMS solution? Could freight be moved via the crowd sourcing model propelling Lyft or Uber? Does the future include a “Shypp” function embedded within TMS solutions bringing the closest carrier to the dock to pick up the order placed via smart phone?
The short answer is “not likely”. Here’s why: whereas car services and parcel shipment have become commoditized, freight shipping is decidedly not; and there is no appetite for it to become so anytime soon. Too many barriers remain to the commoditization of freight shipping. For example, shippers are not about to enter into agreements with random carriers without the benefit of contracts. Moreover, carriers won’t likely be thrilled about their services being commoditized and shopped for pennies.
Most importantly, savvy shippers know there is more to carrier selection than simply rate or availability. Freight type, on-time delivery percentages, safety records, reliability and other critical factors play a big role in selection. None of which would be considered using the “Shypp” model of carrier sourcing.