Ever since Uber became an international success, every service that deals with transportation has wanted to follow in its footsteps or even surpass it in terms of popularity. The so-called "Uberization" of the logistics industry is occurring at a rapid speed. We have already talked about logistics app development technology which focuses on freight transportation. This article is going to address the inquiries of our customers who would like to create Uber for delivery trucks.
The Problem on the Logistics Market
According to the American Trucking Association, trucks move almost 80 percent of total freight in the US. At the same time, the gross revenue from freight trucking barely exceeds $700 billion annually. Local trucking industries are often inefficient and fragmented. One reason for that is empty containers, the repositioning of which is almost as costly as moving a full container.
Containers are repositioned empty because cargo cannot be found for a return leg. To move empty trucks that will not make any money on shipping, the industry has to spend on average, $16 billion per year, which accounts for 15 percent of all operational costs related to container assets. The longer the truck waits to be filled, the higher is the cost of maintaining and repositioning it.
In order to move freight, a shipping company usually needs to contact freight brokers that will connect them with a carrier. The freight broker serves as a liaison between these two parties performing a very important role in the movement of cargo. However, since shipping companies pay these brokers up to a 20 percent commission, and because the whole process is anything but transparent, middlemen might not be the best option for shipping companies in the 21st century.
The Solution for Logistics Service Providers
Much like Uber connected taxi drivers with passengers, your transportation app can bridge the gap between shippers and truckers, eliminating the need for a middleman. The service that establishes a direct connection between trucks and those who need them can certainly be dubbed an Uber for trucking.
The logistics industry would surely benefit from having a mobile transportation app serve its needs. It will help lower expenses, improve visibility across a company’s entire supply chain, and most importantly, prevent trucks from having to move while empty.
The "Uber for Trucking" Market
There are, in fact, already a few companies that have picked up on the idea of using mobile technology to seamlessly connect shippers with carriers, and who market their apps as "Ubers" for the trucking industry.
New York-based Traansmission is a platform that connects freight requestors (shippers, brokers, freight forwarders) with their preferred carriers to reduce time spent covering, tracking and delivering freight. Traansmission is focused on creating a private network of partners to instill high trust to the service. Other features of the Traansmission app include:
real-time location tracking
targeted freight sharing
freight schedule management
integrated payments (coming in 2016)
According to Jason Cahill, the founder of Traansmission, the idea of his platform is to help the brokers, not eliminate them. He argues that brokers still own and manage the relationship with shippers by and large, and shippers, too, have complete faith in and reliance upon their brokers.
A Los Angeles startup called Cargomatic, which recently picked up $8 million in funding, is often called Uber or Lyft for local shipping. The startup targets shippers and local trucking companies with full or partially empty vehicles.
Cargomatic offers two types of apps: Cargomatic Shipper app and Cargomatic Driver app. In the app for shippers users can list jobs by specifying freight dimensions, and pick up and delivery information. This information is sent to the Cargomatic virtual dashboard that pings nearby carriers on the network. The carriers can accept the job using the Cargomatic Driver app. As soon as a shipment is accepted, Cargomatic sends a text or email notification to the shipper notifying them that the driver is en route to pick up the freight. Shippers can track location of their freight in real time all the way to the destination point. After the shipment is delivered, a driver takes a photo of a bill of lading using the Driver App, and the proof of delivery is emailed to the shipper.
Cargomatic also makes sure truckers get paid shortly after a job is completed. It also provides pricing transparency by determining how much a driver should make based on the weight and distance of goods that they move.
Another app with similar functionality is Keychain Logistics. The app helps commercial truck drivers find freight from both shippers and brokers while on the go. Keychain is a digital online marketplace broker that enables shippers to directly book freight carriers, bypassing the expensive commissions demanded by traditional brokers. The core of the company’s platform is their network of tens-of-thousands of carriers throughout the US who are connected via Keychain’s iOS and Android apps.
Keychain has developed a pricing algorithm that generates instant rates for shipping anywhere in the US. The algorithm calculates the price based on 78 different variables such as diesel prices, routes, capacity in certain areas, and traffic. Keychain also has instant messaging tools and notes that the shipper can fill out to communicate details of their shipments.
You can check out a whole list of promising logistics startups here and come back to read our insights into a trucking logistics app development.
How Do Logistics Apps Make Money?
Uber for shipping should not only automate processes, fill trucks, and make the world a better place. It had better also offer a much more user-friendly pricing policy. Traansmission, for example, is free for carriers and charges shippers 3 percent of load value as a per-load transaction fee.
Keychain Logistics offers a transparent pricing scheme with no hidden fees and a much lower cost in comparison to traditional brokers. Its margin is between 6 and 12 percent of the shipment. Transparency and fair rates – if you put them next to what brokers are actually charging – gives Keychain a competitive advantage. That’s why it's a good idea to think about a pricing algorithm for your trucking logistics app.
Cargomatic might look less price friendly than other apps, as they charge 20 percent of a total transaction. But it's honestly worth it given the opportunities that the app offers: higher container utilization, the ability to avoid time-consuming administrative work, and guaranteed payment with fewer delays. The average Cargomatic order entails moving 1 ton of freight 20 miles and costs about $145.
Transparent pricing and quicker transactions will help you build trust with you clients and grow your business. Attracting a carrier company to your platform is not so difficult once you demonstrate the real value of your service. The market success of Uber and similar apps, such Lyft or Hailo, has shown that people are willing to pay a premium for the ability to secure transportation via their smartphone.
"Uber for Shipments" App Development
In order to establish a direct communication channel for a carrier and a shipper, you would need a real-time location-based system. This system would require the building of a set of tools, such as a mobile app, a web app, or a server side to store user data.
Usually, all carrier companies have their own GPS systems that identify the location of every vehicle they operate in real time. In this case, you would only need to get access to this data, and store it on your server. If a given carrier doesn’t have such system, you could either help the company install one or explore additional options.
As a mobile app development company we can take care of the logistics app development for both the iOS and Android platforms, as well as backend. Your role in this process is to establish partnerships with carrier companies and grow the network of your Uber for truckers. The data associated with each vehicle, such as type, size, and real-time location, is necessary for making the app work.
Uber for shipping requires two types of users — drivers and shippers.
Mobile Solution for Drivers
The goal of this solution is to let carriers fill the empty space in their trucks all the way to their ultimate destination point.
Therefore, you should enable all the drivers in a given area to view a list of available shipments. The carrier that accepts the shipment first gets the job and loads the truck. You should also make it clear for a shipper that they can’t cancel the shipment once it has been accepted by the carrier.
To sum up, a mobile solution for driver should let them do the following:
view a waiting list with shipping requests
accept a request
see shipper’s contacts details
see freight details that include type of load, pickup and drop-off locations, scheduled pickup
chat with a shipper in real time
check out a map with routes for each delivery and real-time traffic information
take a photo of a bill of lading (or e-sign it)
get push notifications (e.g. new delivery requests, getting paid)
One more important question that needs to be adressed when it comes to developing a reliable logistics service is: how can you accept drivers to the platform?
Well-thought-out terms are vital in the logistics business. The more reliable a carrier is, the more shippers will be willing to move their freight using your logistics application. That’s why the first and foremost requirement is to provide your customers with legitimate carriers through the platform.
There can be different terms under which carriers get access to shipments through a logistics service. Like Uber and other on-demand services, Cargomatic accepts any carriers with valid CA or MT authority and cargo insurance and trains its new carries throughout the onboarding process. Only after this process is completed, and all the relevant certificates are provided, does Cargomatic accept the carrier. You can't even download the Cargomatic app, unless you are a shipping company or certified carrier.
According to Brett Parker, the co-founder of the startup, Cargomatic does in-person interviews, reviews the reputation of the service, inspects vehicles, checks online truck databases, and makes sure no illegitimate carrier gets access to the app.
Pre-screening of drivers will allow you to meet the highest industry standards and earn trust to your service.
Mobile Solution for Shippers
Shippers, obviously, should be able to use your transportation app to find a truck in their area. The app should aggregate carriers for a shipper to choose from, and notify shippers once a shipment has been accepted by the carrier.
Ideally the service that connects shippers with carriers will also handle issues with documentation, insurance, payment processing, delivery confirmation, and all the stuff that might actually slow down the transportation process.
Now, let’s list what shippers should be able to accomplish using your logistics app:
- make shipping requests
- specify the exact pickup and drop off location on the map
- upload documentation
- check available trucks on the map
- get freight quotes
- pay for shipping
- chat with drivers
- track shipments in real time
- get push notifications (e.g. delivery confirmation, entering geofence, finding a perfect match)
- receive a proof of delivery to email
- rate the drivers
By developing a solution for transportation you can help trucks move around more efficiently and less expensively. This way you can lower prices, shorten delivery times, and even reduce air pollution because trucks would take less empty trips.
Starting to think it's time to get started on your app? We look forward to helping you develop the ultimate "Uber for trucking".