June 01–Amir Shaw, who’s driven his own big-rig truck since 2000, met with Uber at the Great American Trucking Show in Dallas last year. A representative from Uber Freight, the ride-hailing company’s “Uber for trucking” spinoff, showed him how a trucker like him could find and book loads through its app.
The next day, Shaw logged on and saw a nearby load paying a phenomenal $1,700 for a 150-mile haul. The high price was because of the havoc wreaked by Hurricane Harvey.
“I was like, ‘I’m going, baby, let’s go!'” he recalled. “That week I made $7,200 for six loads.”
While the extra-high hurricane rates have subsided, he’s found Uber Freight a good way to run his business. Shaw took a full-time job in March but still operates his truck with contract drivers.
“It saves you the trouble of calling the freight broker, doing negotiations, figuring out the pickup and schedule time,” Shaw said. “Everything is already incorporated in the app. It shows you the distance, commodity, weight and whether it’s pallets or a floor load, and the deadhead miles.” Deadheading refers to driving an empty truck. “The last thing you want to do is deadhead 200 miles to pick up your next load,” he said.
Now, as Uber Freight turns 1 year old, it’s expanding its geographic reach, its customer targets and its focus.
It will cover the entire continental United States rather than the scattered metro regions it previously served. Branching out from its initial focus on owner-operators, the one-person, one-truck enterprises that make up about 10 percent of the market, Uber Freight will introduce a new “fleet mode” for companies with two to 10 trucks.
“Coast-to-coast expansion gives us the ability to think about the whole U.S. as the first major network for Uber Freight,” said Eric Berdinis, senior product lead.
Uber is also moving beyond “tap-to-book freight” with a more holistic approach to serving drivers, many of whom see themselves as entrepreneurs.
“Our thinking evolved to how to help businesses succeed: not just find a load, but run a fleet, pay for expenses, be successful as a small business owner,” Berdinis said.
Uber says Freight has been going gangbusters, doubling its number of loads every quarter. But it won’t disclose the initial numbers, so it’s hard to gauge how successful it actually is.
Some analysts said they think that Uber Freight, as well as its rivals in on-demand freight brokerage, are struggling to attract enough drivers and shippers, a problem exacerbated as the whole country deals with a shortage of drivers.
“It’s hard for new startups to build trust,” said Wallace Lau, team lead for automotive and transportation at consulting firm Frost & Sullivan. “They are all trying to find their footing and going through a lot of growing pains. Existing relationships and reputation are important. A lot more goes into it than just pressing a button to ship.”
Uber emphatically refutes press speculation that Freight might be headed for the chopping block as the company seeks to streamline operations ahead of a planned public offering next year.
“Uber is a transportation platform, and Freight is its entree into the broader logistics market,” said Bill Driegert, director of Uber Freight. “We are a key part of Uber’s strategy, an obvious fit. There are a lot of parallels with ride-hailing — a multisided marketplace fragmented on both sides.”
Uber Freight grew out of Otto, the San Francisco self-driving truck startup that Uber acquired two years ago. “Both autonomous trucks and the new-wave interactions with Freight are two major bets Uber is making in the trucking space,” Berdinis said. “Both are ways we think the future of trucking will evolve.”
Lots of other companies are angling to disrupt the multibillion-dollar trucking industry.
Convoy, a Seattle company making software to match truckers to cargo, has financial backing from the likes of Jeff Bezos and Bill Gates. Bezos’ Amazon — which obviously is a major user of ground transportation — launched its own app for truck drivers last year called Relay, designed to streamline hauling freight from Amazon warehouses. New York’s Transfix offers fleet management and an online marketplace for matching loads to drivers.
“These platforms use technology to speed things up,” Lau said. “They’re trying to remove the inefficiencies in the broker/carrier/shipper relationship, which has lots of phone calls, faxing, and going back and forth to negotiate prices.”
They also seek to undercut the legacy system on price by increasing efficiencies — or by subsidizing rates, something that deep-pocketed contenders can readily afford, although it’s not sustainable. All brokers make money on the difference between the rates they negotiate with shippers, often via long-term contracts, and what they pay truckers on the spot market to carry those loads.
Uber would not say whether it underwrites costs to lure business. “Most broker-middlemen make 10 to 15 percent on their freight,” Berdinis said. “In the long term, we think a smaller margin is the right competitive move to grow faster.”
For Niagara Bottling, one of the nation’s largest beverage suppliers, trucking is its second biggest expense, after plastics. This year the Ontario (San Bernardino County) company will ship almost 800,000 truckloads of water, tea and sports drinks to stores and distribution centers across the United States from its 30 bottling facilities.
Uber Freight hauled 10,000 loads for Niagara last year and will do close to 50,000 loads for it this year, said Ashley Dorna, Niagara vice president of supply chain. Most loads are bid out a year in advance.
“The opportunity for technology to connect all the different trading partners in the industry is absolutely massive,” Dorna said. “Uber, Convoy and Amazon are all trying to crack the code on how to drive that integration and shorten the supply chain.”
Uber Freight operates like a typical freight-brokerage company, but its response time, on-time delivery rate and follow-through are better, he said.
“We dig under every stone to find a way to get some sort of strategic advantage in this industry,” he said. “It’s cutthroat when capacity is tight.”
Uber said it has added driver-requested features such as Take Me Home and Post My Truck for drivers to enter preferred destinations and distances. A feature called Reloads minimizes empty miles. This year it started Uber Freight Plus, a series of discounts and incentives, such as cheaper gas and a rewards credit card. It even offers deals for $4,000 off used trucks and $16,000 off new ones.
“We want to lower the barrier to having fleets expand and run their business,” Berdinis said.
Wooing truckers requires a different approach to marketing. At truck shows, Uber sponsors concerts with country stars such as Tony Justice (“the Justin Timberlake of trucking music,” Berdinis said), Jane Denham and Joey Holiday.
Greg Murphy, a former truck driver who is now Freight’s head of driver community, is embarking on a cross-county outreach tour this month.
“We plan to meet drivers on the road and talk to them about their ups and downs,” he said.
He wants drivers to know that Uber Freight is backed by a lot of service, including 24/7 customer support for drivers. “There are a bunch of people putting these loads together; it’s not like a machine is doing it,” he said.
Still the whiz-bang aspect is appealing.
“At the end of the day, bing! you hit the button, bam! the load is theirs,” he said. “Normally that would require five or six calls.”
Carolyn Said is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @csaid
(c)2018 the San Francisco Chronicle
Visit the San Francisco Chronicle at www.sfgate.com
Distributed by Tribune Content Agency, LLC.