Techies versus Everyone Else in Trucking — or maybe not. (Also, hi.)
Hi everyone.
This is Rachel Premack. I'm a transportation reporter covering logistics at Business Insider in New York City. (This spring, I've been taking a break from reporting to be a Journalist-in-Residence at the University of Chicago's Booth School.)
I started covering trucking a year ago. Since then, I've detailed why Amazon's underpaid pilot crews could bring down its shipping ambitions, deconstructed the 1980 trucking law that's ultimately upended retail, found out just what UPS CEO David Abney thinks about Amazon, and reported everywhere from UPS's flower-filled air freight facility in Bogota, Colombia to a Coca-Cola facility in the South Bronx.
Now, I'm launching this newsletter to keep industry insiders and interested outsiders informed on the biggest logistics topic(s) dominating the conversation this week.
I'm calling it Modes, which is a marginally better name than the suggestion I received of "Rachel's Logistics Logic."
Why is this newsletter necessary? There are a ton of logistics newsletters out there already. Yes, nameless naysayer, you're right. But, to my knowledge, there isn't a single logistics reporter out there with a newsletter writing about this industry.
I'm hoping that Modes achieves a more conversational, narrative-driven tone than many of the industry newsletters I follow. They're incredibly informative, but I don't find them particularly accessible to your Average Gal/Fella.
And I'm aiming to go beyond the day-to-day to connect the fascinating trends in this industry that tend to emerge over time — like Amazon's new identity as a transportation company, the rise of freight brokerage apps, and how America's 1.8 million truck drivers are trying to re-achieve lost labor gains.
Okay, let's get to the biggest topics dominating the conversation this week.
Uber is setting its IPO this week. MarketWatch reported that it's set to be the largest US IPO since Facebook in 2012. (That seems so recent, doesn't it? I guess it was seven years ago. Never mind.)
Lyft's IPO wasn't of particular interest to we logistics wretches, but Uber's is notable as it gives us insight into Uber Freight, the company's freight brokerage app. In the past several years, we've seen startups like Convoy and Transfix enter the trucking industry promising to expedite freight brokerage.
The most recent entrant to the freight brokerage space — Amazon. They've been operating a freight website and app since last year, the retail/transportation/cloud computing/fashion/everything else juggernaut announced last month.
Amazon, Uber, and the slew of startups are trying to make faster the process in which trucking companies (aka, carriers) and retailers/manufacturers (aka, shippers) match up and do the job.
"We believe that Uber Freight is revolutionizing the logistics industry," Uber wrote in its S-1 last month,
The freight industry today is highly fragmented and deeply inefficient. It can take several hours, sometimes days, for shippers to find a truck and driver for shipments, with most of the process conducted over the phone or by fax.
But, until Uber announced its IPO intentions earlier this year, we didn't really know just how much money these techies were making in trucking.
Uber Freight generated $359 million in 2018, matching small to medium-sized trucking companies with retailers like Land O' Lakes and Anheuser-Busch. As the S-1 later notes, that's 0.1% of the trucking industry. Oh dear!
So, what's the deal? Does this mean trucking companies are more keen on phoning and faxing and old-boys-networks than sleek apps?
My initial hunch while covering Uber Freight, Transfix, and so on was that traditional brokers must be freaking out. The automated technologies are cheaper for retailers than the traditionals' staffs of humans doing the same job. Right?
But I've interviewed a few analysts and brokers on the topic, and they weren't exactly sounding the alarm bells.
Rather, they have told me that (actually!) the "traditional brokers" actually have technology that's similar to startups. XPO, C.H. Robinson, and Echo Global Logistics all have automated matching, apps, and other flashy technologies.
Thus, not the case of Techies Disrupting An Industry versus Stodgy Olds that I was initially imaging. But this is a slightly more nuanced, interesting narrative.
Meanwhile, at FreightWaves' Transparency19 this week, which I am missing to much FOMO...
Andrew Clark, the recently-departed CFO of C.H. Robinson, pointed to the need of a little human intervention. He argued that supply chains are only becoming more complex, which will require more people making phone calls and faxing information — not automation. (What do you think of that? Send me a note with your rebuttals/affirmations.)
There you go, folks. Hope you enjoyed this first edition of Modes. Please send any commentary and suggestions to rpremack@businessinsider.com. (You'll get an out-of-office response, but I'll read your email regardless.)
— Rachel