In the last week, press reports have revealed that Uber is considering a sale of Uber Freight. Bloomberg has reported that Uber is studying whether to spin off Uber Freight as a trade sale or as a stand-alone publicly traded company. A source quoted by Bloomberg stated that an IPO would be a more likely outcome.
Whilst Uber Freight’s valuation is uncertain, the company received two large investments in recent years. The first was Greenbriar Equity’s investment of US$500m in October 2020, with Uber valued at US$3.3bn for the transaction. The second was a US$550m investment from Abu Dhabi Growth Fund, D1 Capital and GCM Grosvenor with no value available.
Uber launched its freight division in 2017. Uber Freight counts nearly 60,000 carriers in its network and thousands of shippers as customers, from small businesses to Fortune 500 companies, including AB Inbev, Nestle, IFCO, Kroger, CostCo, Aldi, LG, Land O’Lakes and more. More than 1.7m truck drivers use Uber Freight.
The company sold off its European Freight Business to sennder GmbH in 2020, for US$77m. As part of the deal, sennder and Uber entered into a strategic agreement to provide enterprise shippers with freight logistics services across the US, Canada and Europe. The agreement includes a shipper referral program in which sennder will refer shippers seeking freight brokerage or similar services in North America to Uber Freight, and vice versa.
In 2022, Uber Freight generated revenues of US$6,947m up from US$2,132m in revenues in 2021, with revenue growth principally due to the acquisition of Transplace. Uber Freight broke even in 2022, a slightly improved result compared to an operating loss of US$130 in 2021.
The company may be facing a downturn in its business due to the current economic pressures facing the industry. In its fourth-quarter earnings call, Uber’s Chief Financial Officer Nelson Chai warned that Uber Freight would struggle going forward from a cyclical downturn in the business. In Q4 2021, Freight revenue decline 12% year on year.
Uber Freight has not delivered profitability. It operates in a competitive landscape with a range of larger traditional freight companies, like C.H. Robinson and DHL Global Forwarding and certain forwarding technology platforms. Uber Freight also announced in Jan 2023 it was laying off 3% of its workforce, or 150 employees citing headwinds in the logistics market. Like many other companies, Uber also noted that the freight business had accelerated hiring in 2022, expecting a different economic reality. An IPO may be a better way forward, rather than attempting a trade sale in an industry which is facing economic headwinds.
Author: Paul Chapman
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