All those 'Uber for trucking' start-ups just got another competitor to contend with: Uber.
After months of operating in stealth mode, the San Francisco company best known for its ride-hailing service took the wraps off Uber Freight, a cloud-based, on-demand, full truck-load freight brokerage on Thursday.
Uber Technologies has been testing Uber Freight for van and refrigerator deliveries since September, starting in the Texas Triangle area between Dallas, Houston, San Antonio and Austin, and now is rolling out nationwide, complete with a YouTube ad announcing the service.
The company wants to win over independent owner-operators, midsize and large carriers by offering drivers one-click signups for loads through a mobile app, along with guarantees they'll be paid within seven days.
In a Trucks.com interview, Uber Freight executives declined to disclose how many trucking companies or drivers are using the service or how many shippers have signed. Shipping partners on the platform range from mom-and-pop operations to Fortune 500 companies and operate in oil and other industries. Shippers pay contract or spot rates, though officials wouldn't disclose what those rates are.
Uber is betting the company's expertise running its ride-hailing business will transfer to the freight industry.
"Uber brings the tech capability and depth of resources and talent that nobody in the space can match," Uber Freight Director Bill Driegert told Trucks.com.
The company also brings an established brand name and potent technology to the freight business.
"Uber's disruptive impact has been almost entirely in its easy connection of underutilized assets with demand. That's the start and finish of why it has swept across the transportation landscape," said Michael Ramsey, an analyst at Gartner Inc. "An Uber for hauling stuff is sensible and really builds on what trucking companies have tried to do in their own ecosystem to ensure that trucks are full as often as possible."
Some see the company's entrance into the freight business setting off a price war.
"Their stated claim that they would be happy with margins at one-third that of competitors is the point of concern," said John Larkin, a logistics analyst at Stifel Financial Corp. "Those skinny margins would eventually expand due to their potential access to the inexpensive capacity."
Larkin also questioned how well the Uber model will work for the trucking industry.
"We do not think that applying the Uber matching technology, used to displace the taxi industry, works well in the freight world," he said. "Underutilized capacity isn't just 'sitting around' as it is in the automobile world, and each load of freight is a little different than every other load as there are somewhere between 40 and 70 different factors that need to be considered in most truckload brokerage transactions."
However, the launch of the freight business is a bright spot for Uber, which has spent the bulk of 2017 battling a series of setbacks.
It is fighting a lawsuit brought by Google on behalf of its Waymo self-driving car division over claims of stolen company secrets. Earlier this week, a federal judge in California ruled that a star engineer who left Waymo to start Otto, a self-driving truck start-up Uber acquired in 2016, cannot work on critical components of Uber's self-driving car technology while the suit is being tried. The same judge also ordered a review by the U.S. attorney's office for possible criminal charges.
But with the exception of some former Otto employees who now work at Uber Freight, the division is entirely separate from Uber's Advanced Technologies Group, the unit overseeing development of self-driving cars and trucks, Driegert said.
Joining an Already Crowded Field of On-Demand Start-ups
With Uber Freight, Uber is joining a swarm of venture-backed start-ups that want to disrupt the $700-billion U.S. freight industry in much the same way the company has disintermediated traditional taxi companies in the U.S. and abroad.
Uber's recent problems may have taken some shine off its brand, but the company is a known commodity unlike a lot of on-demand freight startups, and that will register with freight carriers and shippers, said Wallace Lau, a commercial vehicle industry analyst at Frost & Sullivan.
"Their name alone makes them a disruptive force compared to a start-up trying to make a name," Lau said.
The disjointed way the freight industry does business and the predominance of outdated, analog systems make it an easy target for competitors with more modern services based on cloud-based digital platforms and mobile apps.
Venture capital funds, private investors and others have poured at least $200 million - and potentially substantially more - into dozens of on-demand freight start-ups, including Flexport, Transfix, Loadsmart, Convoy, Doft, Cargo Chief, TugForce, HaulHound, Parade, Ship Lync and others.
Still, less than 5 percent of U.S. trucking lines today use on-demand freight services. Taking market share from established players will be the biggest challenge, whether you're Uber or a start-up, Lau said. Those established players include freight brokers like C.H. Robinson that have been around for ages and are likely developing their own digital services.
"I highly doubt they're sitting idly by," he said.
When truckers open an account on Uber Freight, they're added to a database of freight haulers. When shippers need a load moved that matches a driver"s equipment and location, details about the load show up in the driver's Uber Freight account. The driver can then click a button on the mobile app to accept.
Uber Freight executives are betting one-click load booking and fast payments will encourage trucking carriers and independent drivers to create accounts. Other start-ups also offer incentives to entice drivers to sign onto their services, including perks such as free real-time load tracking, fleet management apps and mobile apps that truckers can use on the road to find truck stops, rest stops and other amenities.
Uber Freight doesn't offer any of those perks yet but does send drivers extra information such as guard-station instructions and walks them through document uploads, said Eric Berdinis, an Uber senior product manager.
To raise its profile in the driver community, Uber is running a YouTube ad for the service. It exhibited at the recent Mid-America Trucking Show and threw a driver appreciation barbecue. "The excitement has been incredible, and we're scaling up quickly," Berdinis said.
During the past eight months, Uber Freight has built out its operations, opening a second office in Chicago and hiring industry veterans such as Driegert, who worked in logistics at Amazon as director of planning and innovation for two years before joining Uber in September.
Driegert declined to disclose the size of Uber Freight's workforce. However, close to 40 LinkedIn member profiles show up in a search for people who list Uber Freight as their current employer. As of this week, LinkedIn also listed 19 Uber Freight job openings in San Francisco and Chicago.
A Well-Timed Rollout
Uber isn't the only big business hoping to shake up the U.S. freight industry. As part of Amazon's effort to gain more control over its distribution system, the company is reportedly working on its own on-demand freight service and could launch it as soon as this summer.
Uber Freight's rollout comes at a time when Uber is desperate for good news. In addition to the Waymo lawsuit, Uber has spent the better part of 2017 combatting problems of its own making, starting with a blog post written by a female engineer and former employee who chronicled widespread sexism and mismanagement at the company and set off an internal investigation.
In the months since, a smartphone recording showing Chief Executive Travis Kalanick berating an Uber driver went viral, and the New York Times revealed the company's use of digital prompts to manipulate where and how long drivers work. Earlier this month, the Department of Justice began a criminal investigation into Uber's use of a secret software program called Greyball that helped its drivers evade detection from local regulators in areas where the ride-hailing service hadn't been approved.
The results of Uber's internal investigation into sexism and mismanagement claims aren't due until the end of this month. However, five top-level managers have already quit or been forced out, and the company's hunt for a chief operating officer to work with Kalanick has so far proved fruitless.
Editor's note: This story has been updated with comments from analysts. Trucks.com editor Jerry Hirsch contributed to this report.
By Michelle Rafter