The COVID-19 crisis has put tremendous pressure on the shipping industry. As a lifeline for medical supplies, groceries, and other essential goods, trucking plays a central role in maintaining the well-being of our society. And while truck drivers have continued to log miles during these demanding times, it’s hardly business as usual for them.
The Policy Research team at Uber recently examined changes in the US freight industry caused by COVID-19. The findings indicate that the pandemic has moved the freight market out of balance by disrupting the normal flow of goods throughout the country.
Despite the volatile market, their research also indicates that load bundles on Uber Freight could positively address this imbalance for carriers. By booking loads and reloads together, carrier utilization, measured in deadhead, could remain stable during market turbulence.
An out-of-balance freight market
Due to the current crisis, some regions of the country saw a demand for incoming loads while other regions showed an increase in outgoing loads. This created a situation where carriers had to either wait a significant amount of time to find a load or incur significant deadhead to reach the next load.
“Ideally, there are carrier loads into an area and carrier loads out, but if a certain industry has a lot more demand for shipments, the counterpart may not be there,” Kilian Heilmann, an Uber research economist, says. This demand spike creates more than just tight capacity; it fuels a dynamic that perpetuates the imbalance. “Carriers are less likely to want to go to a certain place if they can’t get a load out,” adds Heilmann.
This imbalance doesn’t just affect carriers, either. Depending on the industry, shippers saw demand either rise or drop sharply at the outset of the COVID-19 crisis. Retailers and consumer product companies saw a spike in demand as consumers stocked up on food and hygiene products. Manufacturers and non-essential retailers experienced pronounced declines as many workplaces were shut down.
“Shippers probably have to pay more to induce carriers,” Heilmann says. “And that might even affect shippers that are not having an increase in shipments.”
Uber Freight load bundles
As Heilmann’s previous research illustrates, carriers can increase truck utilization by booking bundles. Using a proprietary algorithm, reloads are suggested to carriers and drivers using Uber Freight; the app allows them to book loads and reloads at the same time.
“Load bundling reduces uncertainty by being able to book across a one- or 2-week window,” Heilmann says.
The latest research from the team shows that load bundles maintain high utilization even during times of market imbalances, precisely when they’re needed most. While many loads during COVID-19 need to be booked in a much shorter time frame, Heilmann believes bundling can still create positive results: “Even if you have a 3- or 4-day window, you can find much more efficient bundled loads.” This may also ease the stress on carriers, an important consideration during these times, he says.
In normal freight market conditions, bundles have helped reduce deadhead miles by an average of 22.6%. Similarly, during the COVID-19 pandemic, being able to book a reload in advance should help carriers reduce empty miles between loads.
“Load bundling is powerful, even in stressful times,” Heilmann says. “It’s a resilient feature that can help make a difference.”
Load bundling is just one of the ways Uber Freight is building innovation for today and for years down the road. If you’re ready to haul more efficiently, sign up with Uber Freight.