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Gig Economy Trucking

Full Truck Alliance Group is a China based logistics platform that has been called the ‘Uber of trucking’. But can it break out of its home market and find success in the US?

The company, which was formed by a merger in 2017, has risen quickly to become the world’s largest platform for freight even though it currently only operates in China. Currently registered on the platform are 10 million truck drivers and 5 million truck owners, which is impressive for a 4 year old company. The increasingly competitive Chinese market means that they are not alone, and some of the large players in the digital platform economy, such as Alibaba and Tencent are playing catch up. However, with an IPO filing aiming to raise $1.5 billion, Full Truck Alliance is setting its sights beyond just the domestic Chinese market to expand into the US.

The moniker ‘Uber of trucking’ points to the business model of the Full Truck Alliance. A digital platform can be defined as “a place for exchanges of information, goods, or servicers to occur between producers and consumers as well as the community that interacts with said platform.” In the case of the Full Truck Alliance they primarily make money through memberships of companies looking to ship items and a cut of the transactions when a shipper connects with a trucker. In a parallel way Uber connects the person looking for a ride with the driver, and then takes a cut from that ensuing transaction. Digital platforms can generate significant efficiencies and innovation. The trucking industry is a good place to find efficiencies, and Full Truck Alliance appears to be doing this – as Bloomberg’s report early on noted in 2018:

“It’s using technology to streamline processes and boost efficiency in an industry where trucks can stand empty for hours and drivers rely on typically chaotic service centers to find their next load. As of August, the company had more than 1.5 million paying customers and 5.2 million truck members who use its platform for free, the company said in a statement. It’s linked more than 3,000 gas stations across the country, bringing business to under-utilized outlets in return for diver discounts.”

In addition, Full Truck Alliance may also be taking a leaf out of the playbook of other major Chinese platforms (like Alipay) by going after payment services as an additional revenue stream. The company has been offering payment solutions for highway toll networks as well as loyalty and discount schemes for gasoline purchases.

Personal comment:

The rapid rise of Full Truck Alliance and its valuation of nearly $30 billion attest to the effectiveness of this business model and expectations that exist in the market. Uberizing new markets and industries is not without drawbacks. Reducing the idling time for vehicles, and especially large trucks reduces emissions and potentially congestion, but it can also put increased pressure on drivers that, like Uber drivers, may see their pay reduced to strictly on-the-clock while evading any direct responsibility by either the shipping company or the platform.

The trucking industry is different from the taxi industry however, and it may be well suited to make this transition. Currently 11% of the truckers in the US are self-employed and can earn more than their employed counterparts. Will an online platform like Full Truck Alliance boost these self-employed truckers’ access to businesses and increase their earning power or not? Only time will tell.

Written by Joshua Bronson,
RISE Mobility & Systems (Människa-autonomi)