I interviewed Dick Metzler who discussed The Uberization of Freight.
Can you first provide a brief background of yourself?
Sure. My entire career was in transportation and logistics. My mother and dad met at my grandfather's warehousing and trucking company on the south side of Pittsburgh, Pennsylvania. So, logistics ran in my DNA, I guess you could say. But I spent a lot of years at FedEx, TNT, and DHL in the express ground parcel business. I also, prior to coming to uShip, was doing acquisitions at XPO Logistics. Prior to that, I was involved in the trucking and warehousing industry at Greatwide Logistics.
What is the sharing economy?
This is one of those things that a lot of people have a lot of different opinions on. I'll just give you mine. It's on-demand companies really aggregating demand in an online manner, but that fulfill that demand is some kind of offline type of scenario. And where a lot of this has gotten started, where the biggest awareness and the best examples that everybody knows is Amazon and Uber, if you will. A lot of people who are seeing the success there, they're wanting to be the Uber of almost everything.
What does this mean for the trucking and logistics industry?
The trucking and logistics industry has yet to be dramatically affected by a large degree, because a lot of what is being discussed is on demand. And on-demand is a subset of the sharing economy, which means that there is an order request, and there's immediate fulfillment, oftentimes in one to two hours. But that part of the sharing economy, we think, is a difficult part to sustain and grow and scale over the long term within trucking and logistics.
Where we do think it makes sense is to support the obvious consumer demand for free shipping with more cost effective, slower, and more innovative types of solutions that are more cost effective. Consumer have said in research, time and time again, they'd rather have free shipping than rather have speed. And a relatively small number of consumers have really taken up on one to two hours services. Virtually none of them are willing to pay a lot more for it. Just a very narrow niche in that regard.
Could that change, and could Amazon change expectations? And could Uber start delivering packages in the back of cars? Sure. But there isn't any strong signs at this point that that change will occur any time soon.
Where will this all shake out?
I think there will be a lot of dead VC money that has gone into one and two here startups, trying to out Amazon Amazon, or out Uber Uber. I think there's only two ways that people are going to be successful in the sharing economy and on-demand. And that's if they either have phenomenal route density in residential neighborhoods — think FedEx, UPS, United States Postal Service, some of the regional couriers, things of that nature. And like I said, maybe Uber if they scale up Uber Rush and Uber of everything. But besides that, it's very difficult for a startups to get scale, where essentially the United States Postal Service is delivering to every address in America every day in sequence versus one to two hour delivers zinging back and forth across town for five dollars. I've been doing this a long time, and I'm telling you that won't work. So, that's one way.
The second way is to have higher revenue for per stop in trucking and logistics for the sharing economy, business to consumer type things. Think of a gun safe you ordered online or a refrigerator that needs to get to your house. Well, the most common way of doing that today is less than truckload, but they really don't want to do that. We're in that business from a marketplace point of view and in terms of household goods, and things of that nature, virtually anything you can imagine ordering online, up to and including a car.
So, that's the other way to do it.And there's some folks in this space, including us, that are targeting that sector as the other way to go.
Thanks, Dick. Do you have any final comments on this topic?
Yeah. I think, obviously, this is the highest growth area of retail and, obviously transportation and logistics, retail is a key consumer and a key customer for our industry. And I think that finding ways to more efficiently mesh consumer need with consumer demand on cost efficiency and overall profitability of the providers doing this, is where it's all going to shake out, and that's where the winners and losers are going to defined. I'd say most of the VC-funded startups and on-demand delivery are not going to make it.
And thanks for sharing today.
Thank you, Dustin.
About Dick Metzler
Chief Marketing Officer at uShip.com