Recently, we reported on the new sector of Uber: Uber Freight, an app which works to allow truck drivers and operators to claim shipments straight from their phones, as well as to get fixed rates and instant confirmation, tracking tools, and guaranteed seven-day payments.
However, the gratification of apps such as these seems to be fizzling out.
Uber Freight promised to motivate more new truckers to enter the industry in the midst of a driver shortage, and to easily allow drivers to match with jobs without the need of a middleman.
It also claimed it would allow drivers to pick their own hours and diminish the need to worry about rate negotiations.
For many independent drivers, though, Uber Freight and other similar apps, which seemed too good to be true, turned out to be just that.
Amit Sekhri, a driver who took up the vocation during the Great Recession, started noticing that not only was he enduring lengthy hours and weeks on end away from home, but he also was constantly dealing with late payments and incessant phone calls. Like a majority of truckers, Sekhri was booking his jobs through freight bookers, who do most of their business via phone call and habitually pay their drivers late.
Eventually, Sekhri came across Convoy, an app not unlike Uber Freight that allowed him to select nearby loads via his phone’s GPS and get paid within two days after completing a job. Now, Sekhri also dispatches four other drivers through Convoy delivery orders as well as through Uber Freight.
“It’s pretty easy. You like the price, you accept it, you assign it to a driver, and you can track them,” Sekhri said. “I don’t have to call the driver and say, ‘Where you at?’”
But problems began arising quickly. The number of jobs has started to dwindle, and drivers have begun complaining about low prices on Convoy. Three truck drivers, including Sekhri, recently discussed their disappointment with Bloomberg.
“I’ve got four kids to support,” said Sekhri. “I’m still hanging in and hoping it will get better.”
One of the other drivers had to close his business in March.
Convoy has even been negatively compared to its Uber counterpart, as truckers notice its business model has not been turning a profit. Convoy is planning to expand a bidding system, which would make it a kind of freight-eBay. Drivers would be able to place offers for a number of shipment gigs, which Convoy explains would help drivers find more work.
This theory isn’t proven, though, and could easily allow job payments to decrease, thus only making the low payment problem worse.
Drivers are continuing to try and find effective ways to save on costs. Although Convoy originally strived to become the new face of the trucking industry, it has instead become a reminder for drivers to pinch pennies.
For trucker Ira Lawrence, however, penny pinching wasn’t enough. After signing up with Convoy and buying a truck in 2017, he quickly found that it would be nearly impossible to make a living this way. With insurance costing over $1,600 a month, weekly fuel costing up to $3,000, and monthly maintenance exceeding $1,500, he was unable to stay in business with the vast majority of his jobs coming in through Convoy.
“We thought it would be this glorified life of: Get a load; stay there for a few days; and then get a load to somewhere else,” Lawrence said. “The overall cost of owning a truck is through the roof.”
The problem at hand is that while Lawrence and other drivers need to be paid more, shippers continually want to pay less. The quick payouts through Convoy helped him to stay in the gain for a while, but Lawrence was eventually forced to shut down his business after the low payments made it impossible for him to cover his insurance costs.
Insurance is an ongoing issue for these gig apps, as drivers are required to have high coverage for their cargo in addition to what they need for their trucks. For example, Uber Freight drivers have to cover all damages when they are at fault in the event of an accident, and must have a plan with at least $100,000 in liability coverage for cargo, as well as $1 million for their trucks.
The driver would then take on all responsibility for damages, which isn’t typically the case with traditional truck drivers, whose manufacturers or trucking companies are usually held responsible.
This is another ongoing issue, especially for innocent drivers involved in a trucking-related accident. Because these truckers are only required to have insurance covering the truck and its cargo, it is never guaranteed that hospital bills or car damage to the innocent party would be fully covered.
Still, Convoy plans to work toward exceeding the success of other trucking companies, including Uber Freight. However, Uber says it plans to spend $2 billion to expand its operations throughout Chicago.
