On Sept. 15, a truck left from Houston carrying a food-and-beverage industry haul to Roanoke, Texas, outside of Dallas. The next day, that same truck picked up another load for a different client in nearby Grand Prairie and delivered it to Missouri City on the outskirts of Houston.
While seemingly unremarkable among the countless long-haul trucking trips that take place every day among the 10.7 billion tons that move through the U.S. annually, this Texas out-and-back last month represented a potential breakthrough in the industry. The driver contracted for the two loads via Uber Freight, which used an algorithm to match the truck with loads in both directions that would minimize the amount of time driving an empty rig.
This so-called “bundle” meant the truck had a full load for 563 miles and an empty one for just 30 miles. That distance amounts to a utilization rate of 96 percent, while the industry average is just 79 percent. In other words, about one-fifth of the time that freight trucks are on the road, they have no cargo inside. Such driving accounts for about 1.5 percent of U.S. greenhouse gas emissions.
Uber Freight’s new load bundling tool is just one of many innovations the San Francisco-based transportation company hopes to bring to the freight and logistics industry. Just as a phone call to a dispatcher followed by an indeterminate wait was once the only way to hail a taxi, truck drivers still must navigate a sea of phone calls and faxes to negotiate and confirm a haul while weighing the cost of deadheading, or driving empty, to pick up the load.
On average, it takes 20 calls and four labor hours to book a single load. That messy process, which lacks price transparency, can put truck drivers at a disadvantage, especially given that 96 percent of carriers in the U.S. consist of 15 trucks or less.
On Uber Freight, drivers can see a list of nearby hauls with upfront rates that are paid promptly, view an automated calculation of the fuel cost to reach the load, and check ratings to compare shippers on criteria like promptness of loading.
Launched in May 2017, Uber Freight now boasts 46,000 carriers hauling loads for more than 1,000 shippers including some 60 companies on the Fortune 500 list such as Anheuser-Busch inBev, Nestle, and Procter & Gamble.
Uber announced last month that it will invest $200 million annually and hire thousands at a new Uber Freight headquarters in Chicago, where it is consolidating its freight operations.
Uber Freight competes directly with Seattle-based Convoy; it listed the company in its IPO prospectus earlier this year. Convoy, valued at more than $1 billion as one of Seattle’s only unicorns, said this month that its new Automated Reloads program is yielding a 45 percent decrease in CO2 emissions from trucks running empty less often. It also recently rolled out Convoy Connect, a new transportation management system.
Other competitors to Uber Freight and Convoy include traditional brokers such as publicly-traded giant C.H. Robinson, while freight operators themselves are also investing heavily in technology to keep up with demand. There are also newer direct competitors including Transfix; Trucker Path; DAT; and others.
GeekWire sat down with Bar Ifrach, Uber Freight’s head of marketplace, in downtown Seattle on the sidelines of the INFORMS conference on operations research and analytics.
This interview has been edited for length and clarity.
GeekWire: Why are you making such a big investment on the freight side, especially as there are job cuts happening in other parts of Uber?
Ifrach: I can’t refer to the specifics of other job cuts at Uber. What I can say is that we’re seeing great growth on Uber Freight and we’re very excited about the opportunity to continue to drive that forward. We already have a really sizable presence in Chicago, which is one of the freight capitals of the U.S., and we’re continuing to invest there and grow the team.
GW: How does Uber Freight compare to Uber’s other businesses and do you think it will ultimately become your largest revenue generator?
Ifrach: I can’t comment about such a far out forecast, but we are seeing great momentum. In Q2 earnings, Uber revenue from “Other Bets” — meaning not ride-hailing — increased 175 percent year-over-year to $195 million, with gross bookings coming in at $182 million, or 153 percent higher year-over-year. The majority of this was from Uber Freight.
GW: What are the key drivers of your growth at this point?
Ifrach: We’re seeing growth on the supply side where our carriers love the product that we offer. They love the transparency, they love to be able to see lots of loads available to them. It’s searchable at their fingertips. Now bundles are giving them the opportunity to actually book multiple loads in one go that make up a round trip, so they stay highly utilized and don’t waste time driving empty, which is the industry’s major pain point. On the carrier side, you see that fueling a ton of growth.
On the shipper side we are able to bring awesome technology to our shippers on the shipper platform, where shippers can input the origin, destination, and pick-up time. They see not only an upfront price for that day, but also an upfront price for the next 14 days. If they have some flexibility, they can pick the most cost advantageous time to move the freight. Then they can track the load on the platform through the app.
GW: Is Uber Freight currently profitable and will it help Uber become profitable?
Ifrach: What I can say is that we’re seeing great momentum and we’re investing heavily in growing that business and capturing the opportunity that we see ahead of us. We are one of the youngest groups within Uber. We’ve been in operation for about two and a half years. We’re seeing massive scale and growth.
GW: Who are your primary competitors and how do you think about your competition?
Ifrach: We see Convoy and Amazon as competitors. But the industry is enormous. The technological revolution of this space is just getting started so we see a big opportunity ahead of us and we know that Uber brings a unique advantage in terms of tech, understanding marketplaces, payments, infrastructure, you name it. So we are able to scale very rapidly.
GW: What makes Uber Freight different from Convoy?
Ifrach: We are the biggest digital freight broker. If you are a carrier, you want to be on the platform that offers you the most demand. We are there and we have the know-how of how to build marketplaces, how to offer all of those pieces of software that need to come together around our tracking, payments, etc., to make things easy and convenient.
Amazon is a different story. Amazon is a huge shipper of course and they are looking into their excess capacity and what they might do with that. We are building a product that is carrier-first and shipper-first to serve their needs and put technology at their fingertips. We think that it’s a very different offering than Amazon.
GW: Could an Amazon job end up on Uber Freight?
Ifrach: They’re a huge shipper, we would love to have them as a customer. There is no reason why we won’t work together.
GW: You were formerly head of data science at Airbnb’s Homes business. What did you learn at Airbnb that you’re bringing over to Uber Freight?
Ifrach: At Airbnb, I worked on a slew of problems in the matching and pricing spaces surrounding the core marketplace. We also experienced massive growth. I’m bringing that kind of experience in terms of know-how, how to approach a problem, how to model things out, helping scale our tech side, but also bringing insight in terms of what could work and how we might want to fine tune our strategy in terms of addressing challenges in the marketplace.
GW: How does running the Uber Freight marketplace differ from other marketplaces that Uber has created?
Ifrach: We are really in a B2B space and that’s somewhat different than the type of marketplaces that Uber has worked on before with ride hailing and food delivery. At Uber Freight, our customers are shippers and our carriers are businesses.
