News / Uber Freight expands reach and customer focus in rocky brokerage market

© Timon Schneider

At its annual ‘Deliver’ customer event yesterday Uber Freight unveiled a raft of technology advancements. Most prominent of these is the alignment with Uber Direct to expand final mile capabilities and bolster the company’s end-to-end logistics muscle.

The freight platform has integrated its parcel transport management system (TMS) with the delivery network of Uber Direct, the parent company’s on-delivery platform, to enable same-day, next-day and scheduled deliveries through Uber Direct drivers as well as its own network.

Currently more than 250m parcels a year are moved through Uber Freight’s Parcel TMS, and management expects strong growth in this segment.

“More shippers add last mile to the mix,” remarked Uber Freight founder and CEO Lior Ron. He added that Uber Direct has shown rapid growth and can boast a large customer base that includes some of the largest retailers in the market.

The integration of the platforms and their respective carrier bases has enabled a seamless experience for customers, he added.

A major focus of the technology push has been on Uber Freight’s TMS with the aim of creating a more modular set-up with increased flexibility. Improvements on this front include a simplified dock scheduler and upgraded financial management tools.

Much of this has been done with SMB customers in mind, who make up a large chunk of the more than 6,000 users of the Uber Freight Shipping platform. Mr Ron sees massive growth potential in this segment, noting that there are hundreds of thousands of SMB firms in the US alone.

The company has extended access to its Uber Freight Exchange: Contract offering to all shippers and launched Uber Freight Exchange: Spot, which is available to customers of its managed transport customer base. This is intended as a single, transparent hub for all load procurement activities.

Uber Freight Exchange was launched last autumn as the company’s first foray into software-as-a-service offerings.

“We’re both an end-to-end diversified logistics company and a technology company, and we continue to create a balance between the two,” Mr Ron said.

He acknowledged that some of the AI-powered developments in the mix of new offerings are beyond the aspirations of some of the customer base, but emphasised that all technology advancements have been developed and tested in collaboration with customers.

“Each of these has been battle-tested for the past year,” he said. “We have customers that are seeing benefits in these and are using them. This is not a future thing.”

A lot of customers are happy to leave the analytics to Uber Freight’s staff that were reeled in through the acquisition of Transplace in 2021. At the time Transplace managed about $12bn to $13bn of freight management activity; today it is closer to $20bn, Mr Ron said.

“There’s a lot of momentum in outsourcing,” he remarked.

This has not propelled Uber Freight into the profit zone so far. The only time it reported a profit was in the third quarter of 2022, when ebitda reached $1m. In the second quarter of this year ebitda was $12m in the red on revenues of $1.273bn, a shade lower than the $1.279bn a year earlier.

“It’s been a tough market for brokers,” Mr Ron acknowledged. A number of freighter brokers have collapsed over the past 12 months, Convoy being the most prominent casualty. One of the more recent ones was Universal Logistics, which ceased operations in late August. UPS sold off its Coyote brokerage arm for $1.025bn in June, nine years after it had bought it for $1.8bn.

Like others, Mr Ron expects to see further casualties going forward, but added that there is a growing consensus that the market should turn around by the first quarter of next year.

For now, he is bullish on cross-border flows to and from Mexico, saying that this “has grown tremendously for us”. Down the road he sees ample growth opportunities for Uber Freight. He intends to add other modes to the platform and to advance to the next level in procurement with pushes into network and facility optimisation. Moreover, he sees promising opportunities in expansion into international markets.