Uber Freight recently announced that it will expand its operations into Europe. The announcement marks Uber Freight’s first international expansion. The Netherlands will be the first European market Uber Freight will enter, and carriers will be able to book their first loads in April. From there, it plans to expand in other parts of Europe in the near future.

Uber Freight’s platform was launched in the USA two years ago. The platform matches carriers with shippers and gives shippers a direct connection with Uber Freight’s carrier network. Shippers using Uber Freight can tender loads with just a few clicks, get instant price quotes for shipments and track their shipments from pickup to drop-off. 

Europe is the third largest trucking market in the world after China and the United States, according to Uber Freight. In the European Road Freight 2018 Report, Ti estimates that the European road freight market was worth €326bn in 2017. Given the restrictions on the extent to which foreign companies can operate in China, it should come as no surprise that Uber Freight has decided to forego the Chinese market. Additionally, the Chinese digital freight marketplace space is already dominated by the Manbang Group, founded in 2017 through the merger of the two digital brokerage rivals, Yunmanman and Huochebang.

With the launch in Europe, Uber Freight will be faced with a long-lasting structural issue – driver shortages. To tackle this problem and lure truck drivers in the USA, it recently launched an incentive program which offers discounts on fuel, tyres, maintenance, and the purchase of vehicles. At the start of this year, it also introduced another service which allows truck drivers using its app to rate retailers and warehouses they work with. This should help solve the issue of unpaid detention time, which according to an audit by the Department of Transportation’s Office of Inspector General costs truckers $1.3bn annually. Detention is one of the biggest complaints within the trucking sector and as such any measure aimed at addressing it is likely to improve drivers’ working conditions and job satisfaction. Most shippers should load or unload in a two-hour window in accordance with industry standards. Carriers often have a ‘detention rate’ which according to the freight factoring company TAFS can range from $25-$100 an hour to counterbalance some of the income lost during detention. However, carriers are rarely paid the detention fee, and even when it is paid, it does not cover the full business cost that comes from the delay, according to DAT. Considering that the European road freight market is faced with the same structural challenges as the USA, one would expect that Uber Freight could roll out these schemes in Europe too.

In conclusion, in order to attract business and compete in the increasingly competitive freight brokerage market in Europe, Uber Freight needs to be able to achieve scale and for this it requires more truck drivers on its app. While its U.S. platform currently has 30,000 carriers, it will be starting from scratch in each new European country, provided that it doesn’t consider mergers or acquisitions. The company is unlikely to represent a significant threat to legacy carriers in the European freight marketplace space. Instead, it will probably go after digitally savvy truck drivers or trucking companies that don’t have longstanding relationships with legacy carriers. In particular, Uber Freight will try to lure small- to medium-sized carriers, which typically have difficulties connecting with larger shippers. 

Source: Transport Intelligence, March 28, 2019

Author: Violeta Keckarovska