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Freight.Tech 25: automation and customization drive Uber Freight to #6

At MarketWaves18, FreightWaves announced the Freight.Tech 25, the industry’s list of the most innovative and disruptive companies in transportation and logistics: Uber Freight took the sixth position.

In business media, especially when it comes to technology startups, writers like to throw around the adjective ‘disruptive’, and in most circumstances the descriptor is inappropriate. Most companies—even most tech companies—construct their value propositions around their industry as it is, and simply want to outperform their competitors by operating incrementally better. Few companies actually render whole industries’ business models obsolete, but Uber is one of them.

Uber’s crowdsourced ride-hailing service exposed traditional taxi cab companies for what they are: expensive, low-capacity, hard-to-book transportation providers that get by with poor service levels and narrow geographic ranges only because of artificial regulatory moats. By dramatically lowering the cost of hiring private cars, Uber pulled the rug out from under public transit authorities and took significant portions of those agencies’ revenues. Finally, by changing the consumer’s relationship to the automobile—transforming it from a product one owns to a service one uses—Uber will change how cars are designed, marketed, and to whom they’re sold.

Uber Freight is part of that story. Since launching in 2016, Uber Freight is now the most-downloaded digital load-matching app for truck drivers, commanding 30.7% market share on nearly 300,000 downloads, according to a September Goldman Sachs report. Since its introduction, the number of loads booked on Uber Freight’s app have doubled every quarter.

“Uber Freight’s stated goal is not only to help individual owner-operators book loads, but allow fleet owners to run their fleet (by assigning loads to drivers), pay for expenses, and be paid for their services quickly. We believe the focus on fleet owners may allow for more scale than an individual ‘owner operator’ focused platform,” wrote Goldman Sachs equities analysts Matt Reustle, Nick Fahmie, and Chandler Mangum.

In August, we reported that Uber Freight—which we classify as a digital brokerage similar in concept to Convoy—was on a $500M run rate for top line revenue, burning cash as it continues to scale. Around the same time, Uber said it was spinning off Uber Freight as a separate business unit and would double its investment in the brokerage.

“We do not think of Uber Freight or Convoy as going after each other. Our view is that the digital brokers will eat the more than 16,000 freight brokers in the market before worrying about each other,” Matt Wimberly wrote for FreightWaves.

Hauling freight, of course, is more complex than moving human passengers: different commodities have different equipment and insurance requirements, there are pick-up and drop-off times to consider, and more involved customer relationships to manage. The way that the Uber Freight app works as a market place is also very different: here passengers (loads) offer prices, rather than the other way around. Uber Freight quickly realized that many more features had to be added so that drivers and carriers could sort through available loads according to their own preferences. Last month, the app’s new version included better map functionality and ways for drivers to customize how loads were presented.

“It was really about understanding what the drivers wanted, and we fully acknowledge the fact that each driver and each carrier is different,” said Xinfeng Le, product manager at Uber Freight. “They have different types of requirements when it comes to picking a load, and so we were looking to drivers in trying to figure out what those criteria were for each individual and took that input to create a very personalized experience where they could customize the app to their needs.”

Uber Freight also introduced Powerloop, a trailer rental business to provide owner-operators and small fleets access to drop-and-hook freight.

At FreightWaves’ conference MarketWaves18 in Grapevine, Texas, Eric Berdinis, senior product manager at Uber Freight, said that Uber was interested in sharing more assets with its rivals and competitors. The problems facing the trucking industry cannot be “solved without cooperation,” Berdinis said.

FreightWaves continues to watch Uber Freight for several reasons. First, we want to see how low-cost, low-margin digital brokerages fare against voice brokers after the trucking market rolls over and capacity loosens. As a corollary to that, we want to see how shippers’ calculus of the balance between service and cost plays out at different points in the economic and trucking cycle. We’re also waiting for Uber’s expected IPO next  year and any additional insight that publicly-traded company will give into its Uber Freight investment.

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