Under pressure to inject fresh impetus into growth and its road towards profitability since its IPO earlier this year, Uber is renewing its efforts to grab a growing slice of the $700 billion U.S. freight market. Uber Freight, the company unit that connects truck drivers and shipping companies with others who need to transport freight along the same routes, will have around $200 million per year invested in it over the next three years as it moves to beef up it market share.
Like Uber’s core ride sharing app that connects passengers who want to go from A to B with drivers willing to take them there, Uber Freight’s app connects those who want to move freight, with truck drivers or the shipping and logistics companies they work for. The service can simply mean filling free space in a truck going in the same direction as a user needs freight transported. Or can involve hiring a whole truck and driver. Like the Uber many of us are familiar with as an alternative to traditional taxis, Uber Freight promises lower prices than the norm for the traditional market because a truck is going the same way anyway or would otherwise be sitting idle.
With the freight market in the USA alone worth an estimated $700 billion a year, and margins potentially much better than in ride hailing for short personal journeys, Uber has clearly spotted an opportunity for a quick win as it seeks to reassure investors over its business model’s long term viability. Last month, Uber announced its largest ever quarterly loss – a net loss of $5.24 billion over the second quarter on revenues of $3.17 billion. The company’s struggle to turn a profit is put down to its aggressive growth strategy but margins are also low and competition fierce in many of the geographies in which it operates.
The $600 million the company plans to invest in Uber Freight over the next 3 years will go towards a new unit HQ in Chicago, a strategically important city in the USA’s transportation and logistics industry. Around 2000 new staff will also be hired.
Uber Freight has been in operation since 2017 and has made solid progress. Around 400,000 lorry drivers have signed up to its network and over 1000 customers have used the service, including big corporate names such as AB Inbev and Nestlé. Plenty of further potential is seen in the hugely valuable freight market and Uber’s ultimate ambition is to run fleets of self-driving trucks.
Commenting on the announcement, Uber CEO Dara Khosrowshahi said:
“Trucking represents an enormous opportunity for Uber and this milestone is a testament to our long-term commitment to our Freight business”.