Uber Freight’s smaller shipper play hinges on capacity, price guarantees

Uber Freight’s smaller shipper play hinges on capacity, price guarantees

Uber Freight.

Uber Freight’s app has become a market participant at a time when US truck capacity is very tight and shippers are looking for ways to counter (or at least blunt) the remarkable amount of negotiating power transport companies have. Photo credit: Shutterstock.com.

Use of Uber Freight’s new app for shippers hinges on how well it helps smaller cargo owners find valuable capacity in a tight market, and how well its pricing guarantee works as a way for shippers to control freight costs.

Uber Freight launched its app for truckers in May 2017 and for much of last year there were whispers the company was doing most of the legwork required to connect shippers with carriers in its network in a manual fashion. The launch of the new app comes after its parent company abandoned its autonomous truck project, but noted that it would double its investment in the brokerage division, which it has called one of its fastest-growing businesses.

The company told JOC.com Monday, in a briefing to discuss the release of its desktop shipper app, that the focus on the supply side of its platform was by design. The app needed to have enough network density to put a robust enough offering in front of shippers.

App targets small and mid-sized shippers

The new shipper app is targeted at the small and mid-sized segments of the shipper market, “the long tail,” as Bill Driegert, director of Uber Freight, calls it. More specifically, the tool is designed to provide shippers that don’t have a transportation management system (TMS) with a way to search for capacity in a market where capacity is tight and lock in guaranteed rates to control cost variability.

“We thought it would be much more valuable to build network density on the carrier side,” he said. “We wanted to build the most carrier-centric platform, but realized that lots of shippers didn’t have access to this database of carrier capacity. They were calling us, but that’s not the best way to handle this efficiently.”

Since its inception Uber Freight has operated as a broker, and that means shippers with TMSs could pull in capacity and rates from Uber’s database of carriers just as they would from other freight brokers or carriers. Uber built its network through the trucker app, giving it visibility to the availability of capacity through the GPS locations of drivers’ cell phones.

Whereas Uber’s ride-sharing platform connected drivers and riders through corresponding apps, until now Uber hadn’t put such an app in the hands of shippers. So, in that regard, the release of the shipper app is a watershed moment for the company.

Uber — one broker in a very fragmented market

But unlike in the ride-sharing market, where Uber competes primarily with Lyft and taxi companies, Uber is one broker in a highly fragmented market, both on the demand and supply side. Competitors have insisted privately that Uber’s reputation has outstripped its uniqueness in the freight market.

Driegert addressed the issue of the weight of the brand: “The name is a benefit but it creates high expectations. The key is to get the respect of the industry. You have to operate at a certain base level, and we’ve been able to prove that over the last year.”

The company has been labeled a marketplace or load-matching platform, but product manager Stefan Sohlstrom, a driving force behind the shipper app, emphasized that matching capacity to demand is only the initial piece of a long sequence of processes that shippers and carriers must undertake. It’s in areas such as visibility and making the payment process more concise where Uber hopes to bring value.

“The vast majority of loads are booked on the Uber app,” he said. “This gives us visibility to where the shipment is. We see the driver location. Every time the driver crosses a geolocation boundary, it automatically does the timestamp on the load page. There’s no fudging of the numbers — it’s 100 percent transparent. It’s not humans inputting these timestamps, it’s the app. So there’s no situation where a broker is telling the customers what they want to hear.”

The app is also designed to target what Sohlstrom characterized as a lengthy payment process that hinges on proof of delivery. By linking the location of the load through the app to that process, proof of delivery can be instantly shared and the payment process initiated.

An Uber shipper price guarantee

Uber also said it guaranteed rates on the shipper app, so if a shipper locks in a quote and the market rises, Uber will cover the cost difference. Essentially, the company is banking that its pricing algorithms will be accurate enough to predict rate fluctuations.

“We float the rate risk as any intermediary would,” Driegert said. “We’re transparent on the shipper and carrier side. We’ve been committed to real-time pricing since the beginning. That’s where we’ve been able to leverage Uber since the beginning.”

“We started with procurement, actually securing capacity,” Solhstrom said, “A small shipper with five brokers will have to send all the load info to each broker and wait 20 minutes to 4 hours to hear back. So the first thing we built is a real-time instant quote tool.”

The company worked with a “select group of pilot shippers” the past six months to refine the shipper app, and said it expects both new and existing customers to use it.

“We’ve worked with a lot of enterprise shippers,” Driegert said. “We’ve integrated with their TMS, but we didn’t have a lot of tools. On the other side, we realized there was a need for shippers who didn’t have tools. This gives them direct access to a marketplace we’ve been building over the last year and half.”

Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.



Uber Freight expands reach to small US truck fleets

Uber Freight bolsters capacity with trucker incentives