RBC Questions The 'Uberization' Movement Impact To Transport Names

RBC Capital Markets analysts have questioned the ‘Uberization' Movement impact to transport names. The analysts pointed out that the traditional freight transportation industry is under attack from fresh entrants deploying unconventional approaches that enable linking shippers together with freight transportation providers.

The brokerage said, "As such, we've experienced a significant increase in investor interest concerning the topic of "Uberization" of the freight transportation sector and the implications for the traditional industry participants. Thus far, the investor interest is directed at the ability of the aforementioned non-traditional approaches to dis-intermediate the intermediaries, i.e. the domestic truck brokerage companies."

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The analysts pointed out they were getting calls on this topic focused on the implications for the likes of CHRW, LSTR and ECHO, the biggest of the publicly traded domestic truck brokerage operations. The analysts started to see the conversation expand to add the impact on the traditional asset intensive TL carrier.

RBC thinks the "Uberization" risk is likely to take some time to develop, making it a longer-term risk for the freight transportation sector. The brokerage added that in sum, the "Uberization" discussion was interesting as it identified potentially disruptive technologies and processes, which could be brought to bear on the traditional freight transportation sector.

The brokerage said in its analysis, "We don't see any of these non-traditional methods providing a service that isn't already provided….. In sum, there are risks but in our opinion, these risks are minimal and are likely to take several years to develop into something resulting in market share gains at the expense of the aforementioned competitors."