You may have already heard plenty about the sharing economy. Many in the industry have been ringing their hands over the prospects that the venture capital flowing into startups promising cheap, same-day delivery will up-end the trucking industry.
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Well, we’re here to tell you not to worry. It isn’t likely that companies like FedEx or Swift are going anywhere any time soon. Still, don’t expect companies like Amazon to sit idly by and stop innovating. There will be disruption, for sure, but that doesn’t mean the trucking industry is in danger.
The Sharing Economy Explained
At this point you may be asking yourself what exactly the sharing economy is. Sure, you’ve heard of Uber and AirBnB, but what does all of this actually mean? The sharing economy is defined by on-demand services provided by companies who aggregate that demand through online portals or apps.
If you are using a service to get help from regular people, as opposed to something like a taxi service or traditional hotel, then you are participating in the sharing economy. Even when you buy tickets to a show from an online reseller, you are participating in the sharing economy.
Nowadays, we are seeing an adoption of these sharing principles on a scale we haven’t seen before. Companies the likes of Amazon and Walmart – and even small operators like Shyp and Deliv – are hopping into the sharing economy.
How It Evolved
But how did this sharing economy come to be? For a company like Amazon, that meant fulfilling a consumer demand for a service the consumer didn’t even know she or he needed. This invention was called Amazon Prime.
When it came to ordering online, consumers want instant gratification. Amazon Prime, in its ability to answer shipping needs in a quick and efficient way, whether it be two-day or even same-day in some cases, created a raving need among buyers that hadn’t previously existed.
According to recent study, 88% of consumers value free shipping. Two-day shipping was held as most important among only 49% of survey participants. For frequent online shoppers, however, the speed of the delivery was almost as important as whether or not it was free. Conversely, people acknowledge that when shipping is not free, they may not get it as quickly.
So while all this makes for a great story, what does any of it actually have to do with trucking?
Trucking Industry Effects
So what does all this mean for the trucking industry? In the past few years a lot of money has poured into companies that are looking to redefine arranging cargo shipments online. Although the money is flowing in, many will flame out and miss second rounds of financing.
Many wonder how on-demand shipping would actually work. Imagine a customer orders online, then the order is routed to the nearest store. Any nearby truck driver would then accept the order whether through a web portal or an online app and then drive to the customer location.
But don’t think this means consumers will suddenly get near-constant one-day or same-day delivery. The costs are still too prohibitive for a number of operators to move towards that model. The fact is, when it comes to delivering stuff, there are only two very effective means of getting the job done.
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Although some say that drones and autonomous trucks will displace or upend the trucking industry, those systems are still in their infancy and are unlikely to make much change anytime soon. Although there will be a use for such means in the future, saying that they are likely to take over the industry is – at this point – quite a far-fetched conclusion.