Heads up, Convoy: Uber is doubling down on its trucking venture.
Uber announced Monday that it will invest $200 million annually and hire thousands at a new Uber Freight headquarters in Chicago, signaling the company’s optimism for its on-demand trucking marketplace that launched in May 2017.
Uber Freight helps match carriers with shipper’s loads, using technology to expedite and automate a traditionally manual process that involves email and phone calls. Since launch, Uber has contracted with more than 50,000 carriers and served more than 1,000 shippers, including corporations such as Anheuser-Busch InBev, Niagara, Land O’Lakes, and Colgate-Palmolive. In March it expanded to Europe and is already growing to various countries.
In its latest quarterly report, Uber said revenue in its Other Bets category, largely driven by Uber Freight, tripled to $340 million in the first half of the year.
“It is going to take a couple of years, but this is a multibillion dollar industry and we think we have got kind of the best solution with the best tech and a great brand. And we think we can succeed there very much so,” Uber CEO Dara Khosrowshahi told CNBC last month, speaking about Uber Freight.
Uber Freight competes directly with Seattle-based Convoy; it listed the company in its IPO prospectus earlier this year.
Convoy launched in 2015 and has raised $265 million, including a giant $185 million round this past September led by Google’s VC arm that turned the startup into one of the Seattle region’s only unicorns.
Much like Uber Freight, Convoy also builds technology to facilitate transactions between trucking companies and shippers, providing an alternative to brokers.
Convoy’s investors include Jeff Bezos, Bill Gates, Expedia Chairman Barry Diller, Salesforce CEO Marc Benioff, Code.org founders Hadi and Ali Partovi, LinkedIn co-founder Reid Hoffman, and former Starbucks president Howard Behar.
Last month Convoy added two new senior executives to lead marketing and revenue, the latest additions to a company that has grown to 750 employees, doubling its headcount over the past year, primarily at its Seattle headquarters.
Though Uber’s IPO put a spotlight on Uber Freight, Convoy CEO Dan Lewis told GeekWire last month that the company’s primary competition still comes from traditional large-asset carriers and brokers. In that way, he said, the attention being paid to Uber Freight has benefited Convoy. “We’re creating a new category,” he said in August. “Anytime there are new companies coming into the space that have a digital angle, the industry naturally says, ‘OK, well, this shift is for real. This is happening.’”
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.
The U.S. trucking industry is estimated to be $800 billion.