Surge Pricing, Understanding the Market, and Building a Sustainable Business

Future of Supply Chain, Episode 39

Surge Pricing, Understanding the Market, and Building a Sustainable Business

In this episode of the Future of Supply Chain podcast, we sat down with Bill Driegert, Head of Operations and Co-Founder of Uber Freight.

Bill graduated from the Cox School of Business at Southern Methodist University with a BBA in 2002. He then proceeded to MIT where he finished an MEng in Logistics in 2003, writing his dissertation on applying dynamic pricing strategies to continuously replenished perishable goods in consideration of the complete supply chain impact. Bill later pursued further academic studies, completing an MBA in Finance and Entrepreneurship at The University of Chicago Booth School of Business in 2009.

While pursuing his education, Bill was also honing his skills in the professional world. He served as a Solution Architect for PepsiCo from 2001 until 2006, when he became the Chief Innovation Officer at Coyote Logistics. He worked with Coyote until 2014 when he joined Amazon as the Director of Planning and Innovation.

Uber Freight brings the innovation of Uber to the freight industry to ensure that businesses are able to operate quickly and efficiently. The Uber Freight app provides both carriers and shippers with the ability to see prices in real-time and instantly fulfills their needs, revolutionizing the freight industry. Uber Freight prides itself on its unrivaled visibility and up-front pricing, producing the information necessary to make the correct business decisions regarding supply chains.  

Surge Pricing

The idea of surge pricing is not particularly new to the freight industry, although it has been designated in different ways.

“The concept of surge pricing is already understood in our market under a different name,” Bill says. “When we go to the market for spot pricing we're going to get a surge price, or last-minute price.”

Surge pricing is a simple function of supply and demand. When the demand for carriers exceeds carrier availability, prices will naturally rise. Waiting for a “last-minute” price is going to lead to more expensive freight. As Uber Freight provides instant market pricing, their prices will accurately reflect current market costs.

In relation to carrier availability and the value of the instant market pricing information that Uber Freight provides, pricing is flexible.

“There are some fundamental dynamics, like supply and demand, that have always been,” Bill says. “I think the advantage of a real-time instant market is that you're able to track those prices much more quickly.”

Understanding the Market

Bill addresses potential confusion about how Uber Freight’s pricing relates to the changes the company is bringing to the freight industry. According to Bill, Uber Freight’s ultimate goal is to make the market more efficient.

Any successful business needs to have an understanding of the current market and its place in the market. It’s critical to understand what role a business fulfills and what value its services provide to customers. In any industry, knowing your organization’s place in the market and its value leads to long-term sustainability.

“To solve this market, we have to build a sustainable business,” Bill says. “And ultimately, margin is a measure of the value that you're adding to that transaction.”

The implication, of course, is that a lack of a margin implies that the business is not adding anything of value to the market.

As an example of Uber Freight’s contributions to the industry, Bill points to the efficiency that Uber Freight is creating in the market. It’s directly connecting carriers and shippers without the need for anyone in the middle.

This is all a function of what Bill considers to be one of Uber Freight’s missions.

“One of our missions is to make life easier for drivers and to make the ecosystem more sustainable for them,” he says. “The number one way we do that is by keeping the trucks moving.”

Hiring the Right People

Hiring is one of the most crucial aspects of any business. Having genuinely good employees allows for a team to be built — one comprised of people who complement one another’s strengths and weaknesses. Bill reminds us that one of the common struggles in the hiring process comes from those involved in the hiring process not realizing their own shortcomings.

“The number one skill is hiring good people,” he says. “To be able to hire good people, you have to possess a high level of self-awareness and introspection. You've got to be able to recognize your faults, take feedback, and realize where you need to shore up your own capabilities and build a bench that is balanced for the organization.”

To listen to the full Future of Supply Chain episode featuring Bill, click here.

Image Source: Uber Freight

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