Uber has acquired the Otto recently, which is one of the leading truck startups, being the startup company it had developed the self-driving trucks. It is 91 employees company. With the help of only few employees it was possible for the Otto to develop the self-driving trucks.
With the acquisition of Otto, Uber is stepping its first step towards the long-haul trucking business, with the intention to establish itself as the freight hauler and also the technology partner for the industry.
At the same time, Otto plans to expand its business by increasing the number of fleets of trucks from 6 to about 15, for this it has made partnership with some of the independent truckers. The cofounder of Otto, Mr. Lior Ron said in an interview regarding this.
He also said that, all the branded trucks of Otto and many others that are equipped with the Otto technology will begin the hauling freight bound services for the warehouses and the stores.
Uber has started aiding the services to truck fleets, independent drivers and shippers. The services go beyond the Otto’s initial goal of self-driving trucks. And it is also trying to compete with the brokers who connect the shippers and the fleets for their business.
The complete autonomous truck technology is still many years away, the experts in the automotive industries expect that this technology will hit the roads after two decades. But Otto has attempted this technology, and its vehicles are managed by the driver or the engineer within the car.
The Uber-Otto efforts include the navigation, mapping and tracking. And these two will be the host of many companies who wish to do something with these three technologies. These can be introduced even the work for the autonomous vehicle project goes on the other side.
An executive at one company said that, Uber had approached him to haul his goods, but later it moved on hiring people for its trucking field, as it recently entered into that business.
The company aims to transform the competitive and the fragmented industry in $700 billion a year it is publicly known for the low margins. And the company is now challenging the experts and the hosts in the market, these hosts are the publicly traded companies in the market, they range from the third party logistics firms C.H Robinson and XPO logistics to countless mom and pop trucking business.
Otto has the motor carrier permits from the US department of transportation and the Motor vehicle department of California; this is an approval to move cargo from earlier this year. After the acquisition of the Uber, on the eleventh day Otto has requested for the approval to permit haul freight, so that Otto can expand its fleet to 15 trucks.
The co-founder of Otto said in an interview that, they are going to partner with the industry and with thousands of the owner operated truck drivers, who have reached to their company. He also said that, they are having a friendly and the professional conversation with everyone, and they don’t want to develop the technology just for the growth of the technology, but also for the benefits of the people.
Uber is the leading raid-hailing firm in the industry. It was the $68 billion startup and it now it is the most powerful venture capital firm; it bought Otto last month with the $680 million deal, Otto just had 100 employees, but still the firm had the best power to develop the autonomous vehicles.
Uber’s brand name and the financial background would support the Otto in its prospects. But some of the industry experts are having doubts and confusions that how the small Silicon Valley startup that has little experience can enter the long-haul trucking.
The vice president of C.H. Robinson, Mr. Kevin Abbott said that, the transportation industry is based on the financial support relationship, and there is a lot more to do other than finding a piece of the equipment.
Abbott has found that, Uber is the latest company among the line of companies that has tried to be in the place of the brokers who match the loads correctly with the vehicles.
Uber and Otto also face a lot of competitions from the growing startups emerging in the industry. The startups like the Transfix, Convey and cargo chief are trying to take off the traditional brokers by matching the shippers with the carriers that uses the complex algorithms. The trucker path has created a popular navigation app for the drivers.
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Otto has hired Mr. Bill Driegert, who has many years experience in the logistics field, he helped to find the leading freight broker, Coyote; he also worked as the chief innovation officer. Uber and Otto are working to develop the freight network, to connect the shippers and the carriers, just like the Uber which matches the passengers and the drivers.
Trucking push is really an advantage in leverage the mapping and also for the logistics expertise. Uber has gained many passengers in the transport as well as in the food industry.
Ron said that, this is same as connecting dots that is connecting the carriers and the shippers; they are connected to the long-haul piece. Uber as it did for the UberRush and the UberEats, now tries for the UberPiece, with reference to the company’s on-demand delivery service.
Self-driving truck technology will be an advantage in the industry, as there is a high demand for the drivers. Otto said that, even in the absence of the self-driving technology, the cost of the trucking goods can be reduced by quickly finding freight, thereby finding the simplest route so that it will reduce the fuel consumption.
In Uber if you press a button, it will show the cars which relates to you in three minutes, but in freight, it will show your truck in five hours, that is how the technology has improved so much. Uber is tackling that problem alone.
Among the world’s biggest logistics services, XPO logistics are the one that has invested more in the software that increases the utilization of the trucks and also reduces the fuel consumption.
C.H. Robinson, the transportation company that has developed a technology that helps the companies to track their shipments, and it has also developed an app for the carriers with smaller fleets.
The transportation analyst at the investment bank Stephens Inc, Mr. Jack Atkins said that, the model which was used by Uber to disturb the taxi industry cannot be used in the trucking industry. Most of the companies avoid risks while shipping goods than hailing the customers to the rides.
He says that, it is not just like the near-term threat; it is because of the complexity of the industry. It is not as simple as, moving from the point A to the point B in the midtown.
Entering the miles
Ron tells that the autonomous driving technology of Otto is in the testing phase, the autonomous trucks can drive by themselves on the high roads with the help of the two copilots or the engineers as the backup.
The trucks pull some items in the company’s garage in order to test how well the trucks respond to the hauling weight, the company will move the goods for shippers soon. Otto has two dozen drivers now, but it will have more drivers in the future as it has made the partnership with the independent drivers.