‘Uber-ization’ could change the express sector for good

Over the last few months Uber has developed from its roots as an app based taxi network that uses technology to direct and connect vast taxi capacity with would-be travellers more efficiently. The app, which allows customers to see the location of nearby taxis and offers a choice of driver based on proximity, price and a review system has proven a real hit. Its success in the transport field has caught the attention of the express sector which is beginning to see significant applications for an app like Uber. The prospective adoption of such innovative technology has wide reaching implications for the express sector and could render once viable business models obsolete.

Uber has already begun to apply its technology to the express sector, running a trial of Uber Cargo in Hong Kong. The service works in much the same fashion as the Uber taxi app, customers select a vehicle from the app and direct it to pick up some cargo. The customer then loads the goods and tracks their journey in real time through to their arrival and delivery. Prices for the trial are based on the distance and time of the trip, with no extra charge applied for weight and volume.

Similar services to this have already been created in Asia Pacific by companies such as Lalamove and GoGoVan, both of which are operating in multiple cities in China and South East Asia. With the introduction of Uber’s brand, and the critical mass it has the potential to bring, the express sector in Asia Pacific could be about to witness a revolutionary change and lead markets in Europe and the Americas to follow suit.

After all the express sector is ripe for this sort of innovation. Across mature markets it is becoming increasingly plain that the sector cannot continue in its current form with huge inefficiencies brought about by failed deliveries and the costs of B2C deliveries not accounted for. Uber style technology has the potential to dramatically increase efficiency with higher load factors, shorter trips between pick-ups and fewer missed deliveries by virtue of its high visibility. Its application will therefore move to the forefront of delivery companies’ agendas as they aim to cut down costs.

However some delivery companies may look upon the application of Uber’s technology with caution; especially those whose business models are currently predicated upon the use of subcontractors and attempts to squeeze as much value out of them as possible. Uber technology has the potential to empower smaller subcontractors with the technology they need to secure business independently of the large delivery firms.

What do you think about Uber’s business model? Comment on this article and the surrounding subject here.

For more information on the global express market you can register your interest in Ti’s Global e-commerce Logistics 2015 report here. Or take a look at Ti’s Global Express and Small Parcels 2014 report here.