IN ITS QUEST to dominate transportation, Uber dreams of the day when everyone gets around in flying cars and self-driving taxis. But its plan doesn’t hinge entirely on a robo-revolution. Today, the delinquent decacorn of Silicon Valley announced Uber Freight, a bid to bring the ride hailing model to trucking.
The service, which quietly launched in Texas late last year, connects truckers with stuff that needs trucking, much like the app connects drivers with people who need driving. It’s like Uber, but for freight.
And it gives the company a way into an industry that touches 70 percent of American goods. “We’re going for that magical Uber experience,” says Curtis Chambers, one of the company’s highest-ranking engineers. And, of course, that magical Uber revenue.
With the Uber Freight app in hand, drivers can find loads sorted by destination, deadline, and required equipment (a refrigerated trailer, for example). When they find one that suits them, a few finger taps on their phone confirms the job. Uber promises to pay them within a week or so of delivery, so drivers don’t find themselves waiting for customers to cough up cash. To ensure the people hauling all those chickens, or TVs, or whatever, actually know what they’re doing, Uber requires drivers to hold a commercial license, possess a clean record, carry the required insurance, and adhere to federal regulations.
Like the core Uber service, the house that Travis built designed Uber Freight to displace the middleman—in this case, the brokerage firms that match drivers with cargo. “We fundamentally believe that computers are better at logistics than human beings,” says Kevin Novak, the company’s head of data (and the guy who brought you surge pricing). Uber will determine pricing based on market conditions (moving flowers the week before Mother’s Day costs extra), and expects to refine and automate the process as it gains experience and data.
There’s plenty of fat in today’s brokerage business. “Most truck brokers are pretty human-driven, with dialing for dollars on both sides,” says Ryan Petersen, CEO of Flexport, which helps businesses organize their shipping efforts. “Turn that labor into software, and you’ve really unlocked some volume.” But Uber’s not exactly driving a DeLorean into the 1950s, here. Big players like Total Quality Logistics already use apps and attract drivers with the promise of timely payment. “That’s table stakes for truck brokerage,” Petersen says.
Uber holds an advantage when it comes to software and managing data. But, as in its campaign to topple the taxi industry, it all hinges on pricing. Existing brokerages typically take a 12 percent cut on deals they arrange, Petersen says; Uber isn’t revealing its rate, but it has the cash and expertise to do the same job for far less.
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For now, Uber Freight remains a bit player in the trucking game. So far, it is focused on Dallas, Austin, San Antonio, and Houston, Texas. It only tackles full loads, even though there
’s money to be made helping drivers hauling small loads find other cargo to fill the empty space. “At some point that could definitely be something we do, but I think it’s like trying to build Uber Pool before we built Uber,” says Chambers. “We wouldn’t have the density of supply and demand.”
Uber Freight raises interesting questions about the company’s longterm ambitions. It acquired Otto, Anthony Levandowski’s self-driving truck outfit, almost a year ago for nearly $700 million. There’s some speculation that Uber shelved work on autonomous trucks (and, in fact, some of the people working on the project now toil on Uber Freight), but it’s easy to see how getting into the trucking business might come in handy if Uber develops semis that don’t need drivers.
Even without robots taking the wheel, Uber benefits from this. With Uber Eats, it’s building delivery networks in dozens of cities. “Trucking can be the connector between these nodes,” Petersen says. “If they do that, they can beat UPS and FedEx.” Given the year Uber’s been having—with the scandals and the lawsuits and the #deletingUber—a win would certainly be nice.