The “sharing economy” has made it easier to get around town, visit a new city and even wash your clothes (thank you Uber, Airbnb and Washio).
In logistics, a similar crop of sharing economy startups are finding more efficient ways to move freight from A to B.
By using GPS and mobile technology to help shippers and carriers connect in real-time, sharing economy startups are unlocking underutilized capacity and bringing greater efficiency to regional LTL, full truckload and drayage shipping.
This post will explore:
- what a sharing economy is
- why the model has proven so successful
- how manufacturers, distributors and logistics providers can tap into the power of the sharing economy.
- why the sharing economy model works for local trucking.
What is a sharing economy?
A sharing economy refers to the peer-to-peer sharing of access to goods and services.
But what does that mean? Let’s use an example:
You need a tack hammer because you plan on spending the weekend reupholstering your living room sofa. I own a tack hammer, but I rarely use it.
In theory, you could pay me a small fee to borrow the hammer, rather than going to the hardware store and buying a brand-new tack hammer. Or I could sell it to you for steep discount because I’ve already reupholstered my sofa and don’t need it anymore.
The problem is that you don’t know I have an underutilized hammer lying around, and I don’t know that you need to borrow one. It would be very difficult to build a sharing economy for tools — or for pretty much anything — without the help of the connective power of the Web.
Check out the Journal of Commerce webcast:
Unlocking Underutilized Capacity
Before the Internet, there was no easy way for tool-needers to find tool-havers. Sure, you could browse the classifieds in your local newspaper, but you would be limited to the people living in your city. It was just more efficient to drive to the hardware store and buy yourself a hammer than to try and track down someone willing to sell or loan you one.
Ebay changed all of that. Suddenly, there was a place where someone with an unwanted tack hammer could find someone who wanted to buy a used tack hammer. And it didn’t matter where in the world they lived.
Uber — and the smartphone — took things to the next level. Their technology made it easy for people with a car to connect in real time with people that needed a ride.
Uber’s timing could not have been more perfect. The company launched in 2009, a year after the recession hit and unemployment doubled to 10%. There were a lot of people with a lot of time and not a lot of ways to make money. With Uber, people could start making money with their car.
Since cars sit idle for 92% of the time, and the average American household owns 1.8 cars, that’s a lot of underutilized capacity that Uber suddenly made available to anyone with a smartphone, a credit card, and opposable thumbs. Suddenly, Uber’s $62.5 billion valuation starts to make more sense.
The Sharing Economy and Local Trucking: A Case Study
Cargomatic’s cofounders — one is a logistics veteran, the other two come from tech — saw how the sharing economy was revolutionizing other industries and recognized a unique opportunity in the LTL market.
LTL shipping, and local trucking in general, was an ideal candidate for benefiting from the effects of the sharing economy.
Why local trucking + sharing economy makes sense:
- Highly fragmented supply
- 90% of carriers have 6 trucks or less
- Lots of friction per job
- High-touch, low-revenue
- No technology layer
- Supply and demand not easily matched
- Fixed supply, seasonal fluctuations in demand
Both shippers and carriers stand to benefit from more seamless communication and real-time tracking of freight and drivers.
The Challenges of Local Trucking
Cargomatic’s web app lets shippers easily tender an order online. Our mobile apps allow LTL carriers in our network to use their smartphones to see which jobs are available for pickup in their area.
If the carriers have extra space on their truck, they can accept jobs that are ready for pickup. The smartphone app essentially enables them to market their excess capacity to shippers in real time and, as a result, increase their revenues by keeping their trucks full.
This two-sided marketplace, which connects trucking supply with trucking demand, has worked so well in the LTL and full truckload sectors that Cargomatic recently expanded its suite of shipping apps to include drayage.
Cargomatic has also partnered with the West Basin Container Terminal at the Port of Los Angeles to develop a more efficient way to move containers out of the ports that relies on sharing economy principles and Cargomatic’s dispatch technology.