Head in the sand

There are developments in road transport we need to start thinking about now, or it may be too late. Most people are now aware of the phenomenon of Uber and the effect it is having on the taxi industry. The Uber concept started gaining traction very fast, as soon as it arrived in Australia and was disrupting taxi companies within a few months of its first launch here.

 

 

Brendan Richards from road transport consultants, Ferrier Hodgson, has been talking about the road transport and logistics industry needing to be aware of the ‘uberfication’ of the transport industry. This is not idle speculation, there is already movement from Uber and some other similar enterprises, looking into introducing the concept into goods transport.

 

 

The road transport industry’s big players are merrily building bigger and better facilities around Australia to handle the massive boom in local delivery, anticipated as a direct result of the phenomenal growth in online shopping and commerce.

 

 

The population is choosing to do more and more of its buying online and, incumbent with this, is the growing expectation of next day, or even same day, delivery of bought items. This is what the big players are gearing up for, developing ever more sophisticated systems with better and more efficient express delivery coverage.

 

 

This involves massive capital expenditure, all of which has to be paid for. It is not just the real estate, the vehicles and the personnel, it is also the massive databases and control systems needed to make the whole edifice work and get the goods to the consumer ASAP. None of this comes cheap.

 

 

Richards points out how different the current situation is from just a few years ago. He quotes a study by Acquity Group, which found 64 per cent of those surveyed would pay a premium for faster delivery, but also 75 per cent would be open to receiving those goods from a third party. He points out this third party could be Uber.

 

 

The ubiquity of the smart phone in our society means people can get fast delivery, tracking, easy payment options, low prices and the ability to rate the service in real time, all from a few taps of the finger onto their phone.

 

 

A number of these app based businesses are already in the game. Uber already works with bike couriers in New York and has a cargo division now functioning in Hong Kong. Operations mimicing Uber are using a very similar smartphone based system for owners of small vans in a few countries.

 

 

A business called Postmates is growing fast in the US, as it connects couriers with loads. Brendan Richards tells us the business took 116 weeks to reach its first 500,000 deliveries, 20 to achieve its next 500,000 and just ten weeks to get another half a million. That is astronomical growth in any business, not just freight transport.

 

 

New ideas like these are coming and when they arrive the change will be rapid. The taxi industry ignored Uber at first and is now playing catch up. The most likely solution is going to see taxi businesses becoming more like Uber and not the other way round.

 

 

For the road transport industry the smart phone app revolution is a little farther over the horizon, but it is coming fast. There will be no ‘head in the sand’ option for those involved in small local deliveries. Current rates and practices may not be quite as secure as they appear right now. Pre-warned is pre-armed.

 

Brendan Richards on Uberfication.

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Author: Tim Giles

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