Expanding into new markets brings opportunities and risks.
“We’ve built an app for independent owner-operators and small fleets, where they can log on and see the freight available to them,” explains Sagar Shah, Uber Freight’s Director of Carrier Operations. “They don’t have to call in and negotiate over rates. It’s full transparency.”
In September, Uber Freight announced that it would establish its headquarters in Chicago and invest more than $200 million annually in the region.
Sagar says that Uber Freight’s growing success comes down to a combination of Uber’s well-tested experience in logistics and input from freight experts.
“Let’s take the institutional knowledge that individuals from the freight industry have, but then let’s also make sure we are not falling into old bad habits by bringing in individuals from a different perspective, as well as sharing some of the best practices from what has happened at Uber,” says Sagar, who spent three years as the Midwestern general manager of Uber’s rideshare business line before he joined Uber Freight.
Sagar came on the podcast to discuss how Uber views the overlooked opportunities in freight, and how he feels about internal competition. An edited version of the conversation appears below.
Small businesses present a big opportunity
Scott: How long has Uber Freight been rolling?
Sagar: We launched Uber Freight in early 2017, and we’ve been growing the business ever since. We started in certain regions with traditional dry van freight, and we’ve expanded throughout the greater continental US as well as Canada and Europe, and are now hauling dry van and refrigerated freight, and we just got into flatbed. We’re continuing to expand geographically, as well as in terms of service lines.
Scott: Who are the target customers who use Uber Freight?
Sagar: This is Uber for trucking — literally. Freight is one of those industries that oftentimes goes overlooked in terms of the size as well as the importance. It’s a $700 billion industry, incredibly fragmented, with tons of inefficiencies: a lot of the business is still conducted over the phone or over fax.
The opportunity that we saw, there are a few things. One is, how can we improve the efficiency of this business? If you think about air freight and ocean freight, those have actually improved over time as it comes to efficiencies: over-the-road trucking has stayed quite flat. And that’s really the macro trend here that speaks to the opportunity.
In terms of our customer base and how we got started, it was thinking about the carriers, and the drivers, and the community. There are increasingly a number of pain points for those carriers and drivers, as it relates to their ability to utilize their time effectively, and in terms of their treatment, and how they’ve been able to work with others and have transparency into the overall way that they do business.
And then lastly, you could see a trend in which the driving population is aging and there’s an increasing driver shortage that a lot of people are talking about. So how can we think about this macro trend and really provide the opportunity?
When we started Uber Freight, we thought about those drivers and those smaller carriers that are either independent owner-operators or small fleets — because about 90 percent of the trucking companies out there have 10 or fewer drivers. So it’s a long tail of capacity that’s oftentimes unaddressed by the larger brokerages.
If you are a logistics company or logistics professional, are you going to make a relationship with one large trucking company with 300 trucks, or are you going to make 300 individual relationships with 300 individual drivers? You often see companies doing the former because of the efficiencies that come with it.
What we’ve built is an app for those independent owner-operators and small fleets where they can log on and they can see the freight available to them. They don’t have to call in and haggle or negotiate over rates. It’s full transparency. It’s market-based pricing, similar to the way Uber rideshare is market-based pricing. They push a few buttons on the app and book a load, and it provides them access to freight and customers that they otherwise wouldn’t have access to.
Scott: Can you quote on some of the business, like volume of market, that you guys are operating in now?
Sagar: We’re among the fastest growing business units within Uber. I think what’s exciting is that we have over 40,000 carriers and over 1,000 shippers in our network now, many of which are within that Fortune 500 business segment.
From taxis to trucks
Scott: Was operating in all of these markets — food delivery, freight, shift work — mapped as the original Uber plan?
Sagar: It’s certainly evolved over time. If you remember, Uber started as a black car service: this was something to solve the need for transportation in cities that were typically either underserved by public transit, or it was incredibly difficult to find a taxi. The realization was that a lot of black car drivers have significant downtime when they’re not doing airport trips or business trips or whatnot, so let’s think about a way to improve the utilization within that community. And then one thing essentially led to another, and the concept of ridesharing was created.
But then this idea of food delivery started, based on a lot of promotions that we were doing, in terms of on-demand food or on-demand events, and I think we eventually realized that you’re gonna apply this model for the delivery of things as well. And the rest is history.
Scott: How did you and Uber take what you’d learned before and use it for a new line of business?
Sagar: The way we’ve built Uber Freight is really a combination of previous Uber talent who helped build other business units, such as the rideshare or Eats businesses within Uber: but we also built the freight operations hub in Chicago for a reason, which is this is a very important part of the country for freight talent. You have a lot of freight innovation happening, a lot of the larger brokerages are here. Let’s take the institutional knowledge that individuals from the freight industry have, but then let’s also make sure we are changing this industry, not falling into old bad habits, by bringing in individuals from a different perspective, as well as sharing some of the best practices from what has happened at Uber.
I think you see a lot of similarities in terms of things like pricing, and marketplace, and developing things in real-time. There are a lot of learnings that you can translate over from the Uber rideshare business line. And then it’s also that combination of the operations and the technology, and helping bring those two together to move the industry forward.
The Uber advantage
Scott: What do you think is the benefit of all the resources Uber Freight has versus your competitors?
Sagar: A lot of the engineering and data problems that we need to solve within Uber Freight can be based on learnings from other business lines at Uber. Logistics is an incredibly complicated industry, and thinking about the efficiencies of routes for trucks can be similar to problems with efficiencies of routes for cars in cities. How do we think about those data scientists or engineers and bring them over to this new business line, or at least think about a similar approach in solving those problems?
Another one is the global scale. Uber is a global company: Uber Freight recently launched Europe earlier this year, we launched Canada about a month ago. How do we tap into those other local hubs internationally to help get the business started, either in terms of talent or understanding the local landscape and doing that research to accelerate our growth in new areas?
Scott: What is the competitive nature of Uber Freight versus Uber ridesharing versus Uber Eats?
Sagar: Every new business unit within Uber has that exponential growth, and that’s one of the most exciting parts about working at this company. We’re continually innovating in terms of new business lines. It started with rideshare, then Eats, Freight, and we’re getting into self-driving and Uber Elevate, which is air taxis. And that is really what I think is interesting, and continuing to see how these businesses work together, but also how we can take previous learnings and apply them to the future.