Ever since Uber became an international success, every transportation service has wanted to follow in its footsteps and even surpass it in terms of popularity. We’ve already talked about how to create a software solution for the logistics industry and transport management systems, focusing on freight transportation in the era of digitization of trucking. This article will address inquiries we’ve had from clients who are considering Uber for trucking app development.
By the end of this post, you’ll know how to build Uber-like shipments mobile or web platforms and have insights on how to successfully carve out your niche in this highly competitive market.
The problem in the logistics market
According to the American Trucking Association, trucks move about 71 percent of all freight in the US. Revenue from freight trucking in the US surpasses $700 billion annually. But local trucking businesses are often inefficient and unprofitable.
One reason for this is that truckers often drive back empty, making so-called deadhead trips that are almost as costly as moving a full load. According to FreightWaves, 15.63 percent of all miles driven by dry van fleets were empty as of September 2019.
In order to achieve a full truckload (FTL), carriers usually work with freight brokers, who connect them with shipping companies. However, there are a number of downsides to working with a freight broker:
- Shipping companies need to pay brokers up to 20 percent commission.
- It’s difficult for brokers to ensure business processes automation to match shippers with carriers, as brokers still heavily rely on email and phone calls to coordinate shipments.
- Coordinating shipments is time-consuming, as a broker has to win the load, find drivers, and negotiate shipping rates.
This management system is outdated. So what’s the way to go?
Connecting shippers and drivers without intermediaries
Much like Uber connects taxi drivers with passengers, your shipping app can connect truckers with shippers, eliminating the need for an intermediary. Such an app will help you lower expenses, improve visibility across your company’s entire supply chain, and most importantly, prevent trucks from having to return empty.
But this idea isn’t new, and if you decide to enter the market, you’ll face stiff competition. So make sure you’re ready for an arms race. On the other hand, according to Dan Lewis, CEO of Convoy, a Seattle-based digital freight network, over 90 percent of heavy trucking is still booked through traditional methods. This is promising for freight companies interested in disrupting the industry by means of technology.
Prominent players in the US trucking industry
Some companies are using mobile technology to seamlessly connect shippers with carriers. Let’s check out the most successful of these companies and examine the reasons for their success.
One of the largest and most popular online freight marketplaces, uShip is designed to facilitate any kind of shipment. uShip works with almost any carrier, regardless of their specialization, and cooperates with both large companies and solo truckers.
How uShip works
Those who want items shipped post them on uShip. Then transportation service providers place bids to compete for hauling those shipments. For items in some categories, customers can choose from upfront quotes or state an acceptable price to be matched with a transportation provider.
uShip is easy to use and has a lot of advanced features for carriers, shippers, trucking businesses, and even brokers: for example, price estimates, real-time tracking and notifications, and a built-in secure payment system.
What users don’t like about uShip
We’ve explored user reviews of uShip and have identified common reasons for avoiding the service.
One of them is the high cost. uShip charges both carriers and shippers around 15 percent for each load. This pushes consumers to seek more affordable alternatives.
Other reviewers complain that getting a good deal on uShip is time-consuming. The rates that shippers see initially are really high. It might take a week for carriers to bid down so a shipper gets a good deal.
For full details on how uShip works and a consideration of its strengths and weaknesses, check out this article.
Cargomatic is based in Long Beach, California, and targets B2B shippers and local trucking companies, helping them fill their trucks for all legs of a trip. Cargomatic is currently operating only in Southern California, Northern California, and the New York Metro area.
How Cargomatic works
Cargomatic offers two apps: the Cargomatic Shipper app and the 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, which pings nearby carriers on the network.
Carriers can accept jobs using the Cargomatic Driver app. 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 the location of their freight in real time all the way to the destination. After the shipment is delivered, the driver takes a photo of the bill of lading using the Driver App and proof of delivery is emailed to the shipper.
Based in Seattle, Convoy, an online marketplace for shippers and carriers, is one of the fastest-growing trucking startups that takes loads from coast to coast. Convoy’s aim is to introduce changes to the trucking industry through the latest technologies. Just a few months after getting investment from CapitalG, Convoy announced a breakthrough: automatically matching loads and trucks without any human involvement.
How Convoy works
The US trucking market is mainly made up of small trucking firms that have a few trucks. Convoy uses data-driven software to match big shippers like Home Depot with these small firms. Shippers use the app to post requests, find matches, and track shipments.
Drivers can set limitations in the app in terms of their destination, times they plan to drive, and the type and size of load they can take. All paperwork is handled electronically.
Lessons to learn from the market leaders
In the first quarter of 2019, venture capitalists invested almost $27 billion in US-based startups across all domains on PitchBook. Out of nearly 1,880 deals, four of the five largest went to businesses specializing in moving people or items from one place to another. There would never be billions of dollars in investment funds pumped into transportation startups if there wasn’t an opportunity.
To take full advantage of your truck app development idea, do the following:
- Ensure the most favorable working conditions for carriers to attract and retain them.
- Find areas that are least covered by developed competitors; start locally with the idea to expand.
- Try to define a demand of shippers that is poorly satisfied by other trucking services (for example, uShip is appreciated by shippers that have special handling needs, such as for carrying fragile or oversized items).
- Try to minimize the time spent arranging deliveries.
Now that we’ve viewed trends and ideas on how to enter the market, let’s take a quick look at the particularities of developing efficient digital trucking solutions.
Developing an Uber for shipments
If you would like to create a trucking app for cargo shipping that establishes a direct communication channel between a carrier and a shipper, you’ll need to create a set of tools such as a mobile app, web app, and server to store user data.
Your role in this process is to grow the network of carriers by establishing partnerships with them. You also can choose to go the no-contract way and make carriers free to use the platform whenever they want. Keep in mind that ensuring a steady supply of carriers will help you attract shippers. Provide drivers with educational materials on how to navigate your app, like Cargomatic does. Read this post for more information on how to attract and retain drivers for a delivery business.
An Uber for shipping requires two types of apps: one for drivers and one for shippers.
The goal of a mobile app for drivers is to let carriers fill the empty space in their trucks all the way to their final destination.
You should enable all drivers in a given area to view a list of available shipments. The driver that accepts a shipment first gets the job. You should also make it clear to shippers that they can’t cancel a shipment once it’s been accepted by a driver.
To sum up, a mobile solution for drivers should let them do the following:
- View a list with shipment requests
- Accept requests
- See a shipper’s contacts details
- See freight details including type of load, pick-up and drop-off locations, and scheduled pick-up time
- Chat with a shipper in real time
- See 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. for new delivery requests and payments)
How to ensure reliable delivery to retain shippers
One more important question that needs to be addressed when it comes to developing a reliable logistics service is how you accept drivers to the platform.
Well-thought-out terms are vital in the logistics business. The more reliable your carriers, the more shippers will be willing to move their freight using your logistics app. That’s why the first and greatest requirement is to provide your customers with legitimate carriers.
Carriers can get access to shipments through a logistics service under different terms. Like Uber and other on-demand solutions, Cargomatic accepts any carrier with a valid Carrier Identification or Motor Carrier number and cargo insurance, then trains them through an onboarding process. Only after onboarding is completed and all relevant certificates are provided does Cargomatic accept the carrier. You can’t even download the Cargomatic app unless you’re a shipping company or a certified carrier services provider.
Pre-screening of drivers will allow you to meet the highest industry standards and earn trust in your service. And a well-organized rating system will help your platform maintain that trust.
Shippers should be able to use your transportation app to find a truck in their area. To develop a mobile app for trucking services, you should aggregate carriers for shippers to choose from and notify shippers when a shipment request has been accepted.
Ideally, a service that connects commercial shippers with carriers will also handle issues with documentation, insurance, payment processing, delivery confirmation, and anything else that might 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 pick-up and drop-off location on a map
- Upload documentation
- See available trucks on the map
- Get shipping quotes
- Pay for shipping
- Chat with drivers
- Track shipments in real time
- Get push notifications (e.g. notifications on delivery, entering a geofenced area)
- Rate drivers
In addition to developing the app itself, you’ll need to ensure a smooth stream of income. This will require determining the proper monetization strategy.
How do logistics apps make money?
An app like Uber for trucking should not only automate processes, fill trucks, and make the world a better place. It should also offer a user-friendly pricing policy. That’s why it’s a good idea to think about a pricing algorithm for your Uber-like app for trucks.
Provide competitive pricing and price transparency. For instance, Cargomatic makes sure truckers get paid shortly after a job is completed. The company provides pricing transparency by determining how much a driver makes based on the weight of goods and the distance they’re moved. Pricing transparency is essential to take into account for those who want to build a cargo trucking app.
For example, uShip’s fee is 10 to 20 percent of the estimated value of the freight. Uber Freight’s pricing is based on distance (as Uber’s is).
Cargomatic might look more expensive than other on-demand truck aggregators, as they charge 20 percent of a total transaction (like traditional brokers). But it’s honestly worth it given the opportunities they offer: higher container utilization, the ability to avoid time-consuming administrative work, and guaranteed payments with few delays. The average Cargomatic order entails moving one ton of freight 20 miles and costs about $145.
What monetization strategy should a newcomer choose?
For a new software solution for the logistics industry, it’s best not to set high fees. If you start with 10 percent, for example, you can increase the price as you add new features. You may also offer an advanced set of tools that are paid (for drivers, shippers, and businesses).
Transparent pricing and quicker transactions will help you build trust with your clients and grow your business. Attracting a carrier to your platform is not so difficult once you demonstrate the real value of your service. The success of trucking platforms like Uber Freight and Lyft has shown that people are willing to pay a premium for the ability to secure transportation via their smartphone.
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 by allowing freight vehicles to take fewer empty trips.
Thinking it’s time to develop an Uber freight tracking app? We look forward to helping you with custom trucking software development.