There’s a lot of recent news to digest from the trucking industry today. That’s why we want to take today’s blog post to dive into some of the most recent developments and what they mean to trucking companies and truck drivers. As the years fly by the trucking industry will continue to change and evolve. But how will those evolutions manifest themselves? Let’s take a closer look.
The Uberization of Trucking
You may have heard, but Uber is now in the self-driving trucking business. That is until they sold the unit to Waymo and created a partnership with them to create the Aurora program. Still, Uber operates “Uber Freight” and its digital freight network. The Uber Freight network connects shippers and trucks. It also wants to use a hub-to-hub model. The hubs will act as starting points for the fast deployment of autonomous trucks.
According to Uber, they want to help usher in a future where autonomous trucks and human truck drivers work together in a hybrid environment. By utilizing a hybrid network to help lessen the burden of freight demand, trucking companies help create a better work environment for their truck drivers. It also helps ease supply chain pressures.
Uber recently released a whitepaper stating that once autonomous big rigs become the norm, the hub-to-hub model would be the best way to manage the network of trucks. Once the autonomous truck reaches a second or third hub and begins navigating complex city streets, the human will take over. Uber foresees the truck operating independently of the human only when it operates on highways.
Under the Aurora program, a truck driver will pick up a preloaded trailer from the shipper and then haul it to a transfer hub near a highway. This is what Uber is referring to as “the first mile.” The trailer is then connected to an autonomous rig. From there, the tractor-trailer heads up the highway to a receiving facility. Uber refers to this as the “middle mile.” Once at this middle mile transfer hub, a truck driver picks up and delivers the freight in the “last mile.”
Uber Acquires Transplace in a Bid to Change Freight Logistics
To understand how Uber Freight’s partnership with Waymo has evolved, we must go back to July of this year when a major acquisition took place. Without Uber’s acquisition of Transplace, their partnership within the Aurora program would not be as robust.
First, let’s start with Uber Freight’s acquisition of Transplace. Transplace powers one of the largest managed transportation and logistics networks in the world. According to their website, Transplace has nearly $15 billion worth of freight under management on their system. They also boast of over 62,000 unique users on the platform. The company’s goal is to improve supply chain outcomes by providing trucking companies and shippers with greater control over their logistics networks.
On July 22, Uber Freight announced it would acquire Transplace for around $2.25 billion. Their goal is to create one of the largest logistics management technology platforms in the world. They also want to use the partnership to create a comprehensive managed transportation and logistics network. Once set up, Uber Freight would provide fleets with the ability to work directly with shippers in a combined marketplace. They also intend to cover intermodal, cross-border, and less-than-truckload markets.
The announced buyout happens during a a time of massive change in the transportation logistics sector. The world is dealing with multiple crises, market volatility, and an increasingly complex globalized logistics environment. From capacity constraints to higher transportation costs and more – shippers and trucking companies must utilize technology solutions to adapt to and modernize their logistics and supply chain operations.
How the Uber/Waymo Partnership Evolved
Uber and Waymo put together a long-term agreement allowing Waymo Via to reserve billions of miles of its goods-only capacity for use on the Uber Freight network. But what exactly does this mean for shippers, trucking companies, and truck drivers?
First, let’s look at how it impacts shippers. For shippers, the scale and depth of the Uber Freight, Transplace, and Waymo partnership are quite broad. Working together, these companies will be able to seamlessly integrate their shipper networks together and adjust their supply chain strategies to accommodate a hybrid autonomous driving environment.
With the acquisition of Transplace, Uber Freight now has a combined $17 billion of freight shipments under its management. The goal will be to harness the scope of that $17 billion in freight shipments to maximize the utilization of autonomous and human-driven big rigs. Once the technology is mature, they plan to continually optimize the routes to ensure trucking companies and shippers are getting the most out of the partnership.
Since Uber Freight has already developed an extensive digital network, many industry analysts assume that out of anyone who could try this strategy, Uber and Waymo have the biggest chance of pulling it off. The companies are uniquely positioned to become the preferred network for autonomous rigs, whether they operate in the hybrid hub-to-hub model or not. In the end, if they succeed, we could see the autonomous trucks’ marketplace explode rapidly.
The Hub-to-Hub Freight Model Could Be Deployed Nationwide
By utilizing a nationwide freight model, Uber said that most major metropolitan areas could be covered. Mixing autonomous trucks with human truck drivers in a hybrid environment could save big on fuel expenses and time behind the wheel. The biggest winners in this model are long-haul trucking companies, where the fraction of cost relating to first and last miles is far less significant.
The question is, how many trucking companies, shippers, and municipalities will adopt this model? It is assumed that deployment of the Aurora program will start in states where routes, weather, and regulations are more favorable. One example of such a state is Nevada, where autonomous vehicle testing has been ongoing for years and there are thousands of miles of uninterrupted stretches of freeway. Nevada also has relatively mild weather, with excessive heat being the only major weather event.
Uber has stated that it will lure trucking companies into the program by demonstrating financial value. For example, Uber conducted historical research and determined the Aurora hybrid model is perfect for 80% of trucking companies reaching a middle mile cost of $1 per mile and 40% of trucking companies operating with a $2 per mile middle mile cost.
Uber also recently conducted a survey of Uber Freight users and Transplace shippers asking how many of them are expected to utilize an autonomous freight solution at some point in the near future. And their findings? A slight majority of shippers, at 52%, are extremely likely to use an autonomous freight solution. Another quarter, at 24%, said they are at least somewhat likely to utilize an autonomous freight solution soon. Clearly, shippers are aware of autonomous technologies and have been weighing their benefits.
Truck Drivers Would Also Benefit from The Hub-to-Hub Model
Uber Freight has also asserted that truck drivers would benefit from the Aurora program’s hybrid hub-to-hub model. How? First, this methodology will help fill the trucking employment gap. Trucking companies are not under so much pressure to fill cabs. They also avoid employment capacity problems. But how did Uber come to this determination?
First, Uber utilized a nationwide model of freight movements. The goal? To find out how many truck drivers can cover 18 billion miles by 2050. Once they had that number, they conducted a secondary analysis. The follow-up analysis determines how many miles are driven in a hybrid hub-to-hub model.
Overall, Uber found that autonomous trucks running long-haul routes could optimize the middle mile. How? By removing a human trucker. This would then allow them to shift to local deliveries. Under this model, truckers can retain more flexibility over their schedule. They can also stay closer to home. The hybrid model eliminates long-haul routes that take them away from home for extended periods of time.
Ultimately, it all depends on when, how, and by whom the hybrid autonomous trucking model is adopted. Expect to see Uber and Waymo put a lot of time, energy, and marketing resources into this project. Because they want to ensure it not only survives but thrives. If it does thrive, big innovations from other trucking industry and freight logistics players won’t be too far behind. The autonomous truck sector has already undergone big technological innovations. Get ready for more to come!