Uber Freight: move into trucking leaves rideshare company fighting with even more rivals
Uber once had plans to become a jobs website and haulage service as well as a taxi platform, food delivery and bike hire company. Uber Freight was launched in 2017 followed by Uber Works in 2019. Those were the glory days when the US business was expanding into multiple markets and industries at once. Since then it has gone into retreat. Uber Freight is one of the only new bets to survive.
Responsible for less than 10 per cent of revenue and still loss making, Uber Freight is not a significant diversification from food and rides. But it is a business that chimes with the company’s main revenue drivers. Created to match shippers with truck drivers, it uses the same tech that the rides business relies on to set prices and match drivers with customers.
In the past quarter, Freight reported $348m in revenue — up 65 per cent on the previous year. That makes it not just the smallest unit but the slowest growing. Undeterred, Uber purchased logistics company Transplace for $2.25bn this year, meaning that it is both expanding and hoping to break even.
Rivals include traditional freight brokers such as CH Robinson and digital freight start-ups like Convoy in Seattle. Amazon looms large too. It began testing an online service matching truckers and shippers three years ago and invested in freight start-up Transfix. The Seattle tech giant has more funds to experiment with. Amazon’s $34bn of cash at hand dwarfs Uber’s $5bn. Desperate to limit losses, Uber sold a stake in the business to external investors last year for $500m. The deal valued Freight at $3.3bn. This year it sold the European arm of Uber Freight.
The last valuation of Freight is equal to about 4 per cent of Uber’s market value. Uber estimates the businesses’ total addressable market as $900bn. Brian Nowak at Morgan Stanley points out that this is larger than the potential market for food delivery. This suggests possible revenues have not yet been factored into Uber’s market capitalisation. But freight is a busy and competitive market. Uber has no more chance of eliminating rivals in trucking than it does in any other sector.
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