Uberization of the Freight Industry: Optimizing First to the Last Mile with the Internet of Things

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“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” Theodore Levitt, Harvard Business School Professor, 1960.

What Professor Levitt described in the 1960s is just as true today as it was then. Car-sharing companies such as Uber have put cars, drivers, and journeys on a platform. This platform is a medium to provide the service (customizable, comfortable, and flexible transportation) without the need for ownership of the tool (the car).

Imagine if Uber’s model were applied to the freight transportation system, a platform that brings together the transporter, shipper, freight forward operator or the trucker, drivers, and the customer. It would be a platform able to leverage the sharing economy in order to transform the logistics systems from product to value-added services and solutions of the next generation. Let us examine how

Less Than Truckload:

Less than truckload or Less Than Load (LTL) shipping is the transportation of relatively small freight. The smart freight carriers are embedded with sensors that measure the capacity of each load, providing additional insight into unused space in vehicles. With trucks talking to each other—and to the central command system—through an Uber-like platform, the leftover cargo space can be paired or consolidated with other freight carriers to consolidate trips and optimize routes.

The First Mile:

The first mile represents the flow of goods from the retailer to freight carrier, courier service or anyone who will carry the finished product to its next destination in the supply chain. Products and freight carriers connected through a common Uber like platform and the Internet of Things can improve the processes including storage and transportation. An efficient and lean first mile will ultimately lead to an efficient last mile.

The Last Mile: 

The last leg of the trip, when the freight is transported from the unloading hubs to the retailers or consumers, is often less efficient and comprises 28% of the total transportation cost.  This potential platform could enable crowd-sourced delivery options, which would alert pre-qualified drivers of a pending delivery. The driver could simply pick up the merchandise from the retailer and deliver it directly to the customer.

Empty Miles:

Any kind of freight transportation can generate empty vehicle movements. These movements account for about 40% of the total transportation cost. Another shipper, who subscribes to this platform, could use these empty miles to reduce both fuel consumption and carbon dioxide emissions.

As a result, tracking and tracing occur in real-time and are simplified with the Internet of Things. Connecting drivers to other connected vehicles and operators through an Uber-like platform can help optimize the truck load, empty miles, and first and the last mile parameters.

The following outline a few other benefits of the sharing economy model:

•        An optimum utilization of resources such as trucks and containers through platform-based allocation

•        One-stop billing to transport companies based on the miles covered by all their trucks

•        Real-time location checks for transport company resources

•        Real-time communication between all actors in the freight transportation ecosystem

•        Pick-up and drop-off updates or alerts transmitted by truckers

•        Load or capacity forecasting based on historical data

Although the Internet of Things and the application of the Uber model to the freight industry seem to bring in attractive benefits, some questions still lack answers:

·         Is the freight transportation industry ready to embrace an Uber-like model?

·         Are there any regulatory barriers in adopting this business model?

·         How else can the Internet of Things be leveraged to bring efficiencies in the supply chain logistics?

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