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Why Uber and friends should keep you up at night

By Kevin Gue | 06/10/2014 | 8:16 AM

The drumbeat of a new "sharing economy" continues with excitement I haven't seen since 1999. For those with day jobs who seem unable to keep up with this stuff, the sharing economy (or crowdsourced economy) is based on the insight that much of today's commercial activity—especially in logistics and transportation—essentially duplicates functions that ordinary people do in their ordinary lives. Example: everytime I drive 1.5 hours to the Atlanta airport with three empty seats in my car, dozens of people are paying $40 for a shuttle to exactly the same place at about the same time. Why? Because until now there has been no coordinating mechanism to avoid the duplication.

Recent news that Uber, a crowdsourced transportation service with big ambitions, was valued at $18 billion should make executives in the logsitics industry quiver more than just a little. What happens to the logistics industry when millions of automobiles on our nation's highways become miniature freight transportation providers? "Anyone driving from Atlanta to Louisville this morning? Got room for 4 medium sized cartons?" Can you say, "Nationwide Transportation Company with Near-Zero Capital Investment?" I thought you could.

We're all truckers in the sharing economy [image: npr.org]

Again, the only obstacle to this business model has been coordination, but Uber and other companies are now exploiting the mobile computing revolution to provide both the necessary coordination and a low-cost means of paying all these new drivers. Whether or not a sufficient number of folks sign on to make this a threat to the current people transportation industry is an open question, and there is another leap to make it work for time-definite freight delivery. Nevertheless, I believe new crowdsourcing models will play a significant role in both industries in the near future.

How about this scenario: For my flight tomorrow, TripIt knows I'll be leaving my house around noon. CrowdLog (made up name!), which has a contract with TripIt, sends a notification during the night asking if I can stop by a local auto parts store to make a delivery to a customer in LaGrange (on the way to ATL). I tap "Agree" and pick up the part on my way out of town and deliver it to a Cracker Barrel at Exit 18, from which another "crowdsource participant" picks it up and makes the delivery right to the door of Mr. Intended Customer. Presto—no distribution center, no conveyors, no forklifts, and no 18-wheelers!

That gets me excited enough to lose sleep tonight. How about you?



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About Kevin Gue

Keving Gue

Kevin Gue is a professor of industrial engineering at the University of Louisville, where he holds the Duthie Chair of Engineering Logistics and serves as Director of the Logistics and Distribution Institute (LoDI). His research addresses the design and control of logistics systems, with a focus on distribution, warehousing, and material handling. He is co-inventor of the warehouse aisle designs known as the Flying-V, Fishbone, and Chevron, work for which he received multiple best paper awards and was awarded the Technical Innovation in Industrial Engineering Award from IIE in 2009. Kevin is a former president of the College-Industry Council on Material Handling Education and is Editor-in-Chief of the recently published U.S. Roadmap on Material Handling and Logistics.


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