Uber Aims to Transform Trucking Industry

Uber has entered the freight business.  

The company started in 2009 as a phone app to summons a driver, and it is today the world’s most valuable venture-backed startup at $68 billion. This summer, it bought Otto for $680 million.

Otto launched in January. It offers technology that can retrofit existing trucks with self-driving capability. The “driverless” technology works on U.S. highways, but it does not fully automate the process. Drivers must negotiate entering and exiting highways. Still, the technology makes it possible for drivers to rest, hence complete routes more quickly, reports TechCrunch.

The self-driving technology remains under development—perhaps 20 years away—but with Uber’s considerable resources, Otto co-founder Lior Ron and his team plan to begin working with warehouses and stores to partially automate the driving process.

Otto will expand its fleet of trucks from six to 15 and forge partnerships with independent truckers. It plans to begin hauling freight in 2017.

Uber aims to ultimately transform the competitive and fragmented $700 billion-a-year trucking industry, which is notorious for low margins. The company is challenging a host of established players, ranging from publicly traded companies, such as third-party logistics firms C.H. Robinson and XPO Logistics, to countless mom-and-pop trucking businesses.

Uber has succeeded in other efforts to expand beyond its core business, but experts told Reuters they are skeptical of the company’s move into freight.

“The transportation industry is a relationship-backed business,” said Kevin Abbott, a vice president at C.H. Robinson. “There’s a lot more to it than just finding a piece of equipment.”

Sources: Reuters, TechCrunch