Uber’s Stock Offering Docs Provide Peek into Freight Business

April 15, 2019 by Michelle Rafter, @MichelleRafter

Uber’s side bet on the freight business has turned into big business.

Since Uber launched Uber Freight in May 2017, the digital freight broker has grown to more than $350 million in annual gross bookings, according to paperwork the company filed last week in advance of a proposed stock offering.

In the past two years, Uber Freight has contracted with 36,000 carriers, 400,000 truck drivers and 1,000 shippers. The latter group includes 100 enterprise-level shippers, including such national brands as Anheuser-Busch InBev, Niagara Bottling, Land O’Lakes Inc. and Colgate-Palmolive Co.

That business added up to $125 million in revenue for the quarter ended Dec. 31, according to the form S-1 registration statement that Uber submitted to the Securities and Exchange Commission in advance of a much-anticipated initial public stock offering that could happen as soon as May.

Uber Freight app

Uber Freight launched in 2017 and could have one of the largest IPOs in years. (Photo: Uber)

If Uber Freight continues to operate at that rate, the company could hit revenue of $500 million this year. That puts it among the country’s top three digital freight brokers, behind Convoy and JB Hunt 360, according to Craig Fuller, chief executive of FreightWaves, a freight-markets data analytics company.

“All of them are kicking ass right now and taking share from the incumbents. It’s them and everyone else,” Fuller said.

Uber Freight’s expenses have increased as the business has expanded. Cost of revenue, not including depreciation and amortization, jumped to $288 million in 2018 from $71 million in 2017 due to higher carrier costs, according to the S1. The filing does not break out profits for its non-core businesses. However, those ventures lost an aggregate $152 million in 2018, according to the S1.

A LOOK INTO UBER

The filing provides other indicators of Uber Freight’s current business and future plans:

  • Uber pegs Uber Freight’s current share of the $700 billion U.S. truck freight market at 0.1 percent based on the division’s total gross bookings of $359 million in 2018.
  • In March, Uber Freight announced it would expand into Europe, beginning in The Netherlands, where it will operate as a freight forwarder. As of early April, the company was recruiting local Dutch carriers and drivers. Uber said it plans to launch in additional geographies.
  • While its business is growing, Uber Freight faces formidable competition, including from larger, better-established brokers as well as other startups that have attracted substantial investor funding. According to the S1, Uber Freight identifies its biggest competitors as C.H. Robinson, Total Quality Logistics, XPO Logistics, Convoy, Echo Global Logistics, Coyote, Transfix, DHL and NEXT Trucking.
  • Uber Freight’s 2018 gross bookings of $359 million accounted for slightly more than 3 percent of Uber’s $11.3 billion revenue for the year. During that 12-month period, the company lost $1.8 billion.
  • Uber owns 89 percent of the capital stock in the subsidiary that operates Uber Freight. According to FreightWaves, the balance is likely owned by the team that started Otto, the self-driving truck business that Uber acquired in 2016.

Not all of Uber’s trucking initiatives have been successful. In March 2018, the company had to stop testing self-driving trucks after one of its autonomous cars struck and killed a pedestrian in Arizona. Uber began testing autonomous trucks in Arizona in late 2017 as part of an experiment to blend self-driving and conventional driver-operated trucks through its Advanced Technologies Group. The company used human drivers to deliver freight to transfer hubs on Arizona’s eastern and western borders, and the loaded trailers were then hooked to self-driving tractors and hauled across the state.

Uber’s IPO could value the company at around $100 billion, making it one of the largest public stock offerings in years.

Jerry Hirsch April 10, 2019
Truck manufacturers are working to develop self-driving trucks. But they also see a role for human drivers. How can the two co-exist?

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