Transportation
Amazon's 'Uber for Trucks' May Disrupt Trucking Well Before Automation Does
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By Kashif, Investment Analyst at PrivCo, a private company financial intelligence platform
The trucking business in the United States is big. According to the Federal Motor Carrier Safety Administration’s (FMCSA) 2016 statistics (based on 2015 data), there are 11 million freight trucks on the road, carrying 14.5 million tons of cargo over 280 million miles. It’s the circulatory system of the material economy: 70% of all freight in the country is moved by trucks. Collectively, the industry employs almost seven million people –more Americans than almost any other– and driving trucks is the most popular job in 30 states. There are still driver shortages, and a major industry group predicts an additional need of 900,000 drivers—human or robot—by 2025.
All this is currently worth over $700 billion a year, about 4% of 2015 GDP.
With millions of businesses utilizing millions of trucks operated by hundreds of thousands of trucking companies, thousands of brokers are usually employed to facilitate shipments, charging about 10-15% of the gross shipping costs. The top 25 brokers in the U.S. earn (and cost trucking companies) over $23 billion annually in aggregate.
Amazon, already a giant in logistics and a self-proclaimed transportation service provider, is now rumored to be working on an “Uber for trucks”. Details are scant, but the goal is to eliminate third party logistics companies and their accompanying costs, replacing them with its own platform. While its Uberified name oversimplifies its function (freight and logistics are much more complex than ridesharing services), the end product will likely be a quotation system where companies can post shipping projects and be matched with the best bids submitted by freight truck operators.
The end result will likely be great for Amazon, good for manufacturers/retailers/wholesalers in need of cheaper shipping, negative for logistics firms, and unclear/neutral for trucking companies.
Amazon isn’t the first to attempt to disrupt this highly entrenched and lucrative business. Uber, for example, recently acquired the startup Otto to help it develop a self-driving truck. While initial tests have been promising, regulatory pressures and lack of enough real-life road data will keep automated freight at bay for several years. That buys Amazon lots of time to get companies to adapt its centralized trucking marketplace model before autonomous trucks and delivery drones reduce costs and render many workers obsolete–not too different than what’s going on in ridesharing.
We looked through PrivCo’s private company database to find some of the most prominent privately-held players in the trucking business–including both trucking companies and brokers–to determine how much of their businesses are exposed to Amazon’s encroachment on their turf.
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