My name is Tiffany Mendez and
I drive trucks for a living.
I got into trucking in the military.
It was just one of those
things way back in 1990...gosh,
I don't want to say the
year. But I was a Seabee.
It was one of those
adapt and overcome type things.
I got thrown in a seat
and I never got out.
In 2018, about 3.5
million people were employed as
truck drivers in the U.S.,
but with the explosion of e-commerce, the
demand for drivers has been outpacing
supply. For instance, in 2018, the U.S.
trucking industry was short,
over 60,000 drivers.
If the trend holds, experts predict this number
could be up to 160,000 by 2028.
One of the biggest misconceptions that people
have about truck driving is that
they believe that it's easy. They think that
we put the key in ignition and we
go. But a lot boils down to
the whole plan of the trip.
When I start my day, I only have 14
hours to complete up to 11 hours of
driving. So I have to put in
restroom, showers, washing, eating, all of that.
In prior life, as a driver, you know,
when I'm waiting on a dispatcher to
dispatch me, I'm waiting two, four hours for
them to tell me, hey, we don't
have a load for you until tomorrow.
You know, as to where I could have
washed clothes, I could have gone went out
and did something, you know, with my life,
per say, and now I have control over
that. Mendez says she now has more
control over her schedule thanks to Uber
Freight. It's an online platform that
matches truckers with shippers looking to
move cargo from one place to another.
This is a huge industry that is the
backbone of the economy, but it's also
highly, highly inefficient.
It is mostly still running
on fax, phone and paper.
We've a lot of disconnects of how
to actually match shippers that are looking
for truck drivers to hold their freight
with truck drivers that are looking for
opportunities to carry those
shipments on their trucks.
Uber getting into the trucking industry could
be a potential goldmine for a
company that's been struggling
to turn a profit.
If you look at the size of the opportunity,
this is up to 15 percent of the
global economy. So lots of potential and we
are still in the very early days
for us. The trucking industry drew in
revenues of $796 billion in 2018, with
trucks moving 71 percent
of the nation's freight.
Compare that to the global ride hailing
market, which in 2017 was valued at
just $36 billion.
Surging cargo volumes in 2018 gave trucking
companies a lot more power in terms
of price. That, in turn, drove up
costs for the shippers and manufacturers and
retailers leading to their margins being
squeezed, and that can eventually
weigh on growth for them. Uber saw
an opportunity to come into the marketplace,
digitize it, and make it more efficient
by applying the same sort of business
model that it has
applied to ride-sharing.
Uber launched Uber Freight in 2017 and
the program has since expanded to 48
states as well as
the Netherlands and Germany.
Uber says thousands of shippers and almost
half a million truck drivers use the
platform. Typically, shipping companies use freight
brokers as a middleman to
match them with available truckers, taking
a commission in the process.
Uber Freight removes the need for a
middleman by allowing truckers to choose
from a list of available jobs and the
routes that they need to take to complete
them. Drivers also get information on what
they are hauling, as well as how
much they'll be paid. Once they make
their delivery, the truckers can find
their next job right from the app.
Earlier this year, Uber Freight also launched
a desktop portal for larger fleet
operators. One of the benefits of having
a platform like this is giving people
the flexibility to drive when they want
and having a lot of certainty about
when they're driving, where they're driving,
what routes they feel most
comfortable doing, gives them flexibility in how
they get there and when they
work. And like Uber's conventional app,
Uber Freight allows drivers to rate
facilities out of five stars.
Truckers can actually rate the facilities of
the shippers that they go to, the
manufacturers that they go to.
So things like whether they have a bathroom,
whether they have a place to park
your truck at night and get some rest.
How long you have to wait.
These are things that are really
important to truckers and may determine
whether or not they want
to take your cargo shipment.
To improve efficiency, Uber Freight also
partnered with an affiliate company
called Powerloop that allows
carriers to share trailers.
So far, Powerloop is
only available in Texas.
The biggest issue for the small guys in
this industry is the fact that they
only have one trailer
connected to the truck.
Which means, they have to wait every time
they enter a facility to be loaded
and unloaded four, five, six,
seven hours at a time.
What we allowed them to do is actually
tap into a trailer pool, that we manage
for them, so when they enter a facility,
they can drop their trailer, hook a
trailer that is already loaded,
and get on the way.
Not having to wait in a facility
and constantly keep them utilizing their truck
and being paid more for their driving
time versus not being paid waiting in
those facilities. Powerloop is a truck driver's
dream because if I can just
pick up a loaded trailer and drop off
a loaded trailer and keep moving, then my
wheels are turning and I'm
continuing to earn, you know.
So that again changes
the industry totally.
And the industry does need to change
because the driver shortage is only
compounded by the fact that many of today's
truck drivers will be aging out of
the workforce. The Bureau of Labor Statistics
estimates that the average age of
a commercial truck driver in the U.S.
is 55 years old.
One way Uber says it's attracting drivers
is by giving them incentives that
reduce their cost of operation.
We actually have a loyalty offering, Uber
Freight Plus, which is giving them
discounts on fuel, on maintenance, on used
trucks, on the health insurance, on
their phone bills to really level the
playing field and allow those truck
drivers to operate with the scale of
a big fleet, accessing all of those
discounts. But does Uber
Freight make financial sense?
Uber's latest earnings report showed that
the company's "other bets" category,
made up of Uber Freight and
Uber's mobility services like bike-sharing, brought
in $340 million in revenue through
the first half of 2019.
That's more than three times the revenue
from the same time period last year.
But during this time, "other bets"
losses have also been increasing, jumping
from $48 million to $193 million.
Overall, Uber reported losses
over $6 billion.
Uber is applying the Uber strategy, growth
at all costs to the freight
industry. It is undercutting the competition in
terms of prices to gain more
market share. So what you get, is a
very fast-growing revenue stream, but a lot
of losses. Morgan Stanley, in fact, put
out a report that estimated that Uber
passes on 99 percent of its
revenue to the trucking companies.
To give you an indication of what the average
is in the industry, it's 80 to 85
percent. So Uber giving 99 percent of
revenue to the trucking companies is a
big deal. And it really tells you that
profitability is likely a very long way
off. Uber Freight is not alone in
its quest to digitize the trucking industry.
Trucking and freight technology companies
raised a record $3.6
billion in venture capital
funds last year.
One company that nabbed some
of this funding is KeepTruckin.
The San Francisco-based firm uses hardware
and software to help drivers and
fleet operators manage their
vehicles and cargo.
KeepTruckin says it works with over
250,000 trucks and 55,000 trucking
companies. But the company says it's not
exactly the same as Uber Freight.
Our hardware and software is used
by trucking companies to actually manage
their drivers, to improve
safety, to improve efficiency.
And through that connectivity we've built
with such a significant base of
capacity, we are now building an
open-freight marketplace, where any party that
has loads and that needs
access to capacity can participate.
And so while they're building a
private freight brokerage, we're building an
open-freight marketplace.
Other players in the market include
companies like Transfix and Convoy.
Even Amazon launched an online, beta, freight
service of its own in 2018.
The service is currently only available
for shipments in five states:
Connecticut, Maryland, New Jersey,
New York and Pennsylvania.
Like Uber Freight, Amazon created an app
it calls Relay, to give truck drivers
additional freight information, including route
tracking and expedited check-in
procedures at warehouses.
But the competition doesn't
seem to rattle Uber.
In fact, the company announced it's investing
$200 million per year in its new
Uber Freight headquarters in Chicago.
We're really the only one that has the
Uber scale, the Uber knowhow in terms of
transportation technologies, the capital, and the
stamina to actually invest in
this market for the long run.
So will Uber Freight be the
answer to Uber's quest for profitability?
Uber Freight is a much smaller piece
of the business right now, even though
it's growing very, very quickly
in terms of revenue.
It is much, much smaller than its
ride-sharing and its Uber eats business,
which investors tend to focus on.
That's not to say that the trajectory
of Uber Freight is very exciting and
could make up a larger portion
of the business going forward.
In fact, some people even say that
it could represent the Amazon Web Services
of Uber. What that means is that when
Amazon Web Services started, it was a
very small part of Amazon and
it grew into the profit engine.
So some implied that perhaps if Uber Freight
really takes off, it could be the
money maker and it could even
overshadow some of its other businesses.
On the surface, Uber Freight is a
better business than Uber the ride-hailing
business. It faces less of an uphill
battle to get to profitability than the
ride-hailing business does.
But on the other side of the coin,
I think the ride-hailing business has more
potential to be a
blockbuster type business.
If they can reach profitability just because
of the scale of the business.
