Uber Freight bypasses Canada in international expansion
Posted: April 3, 2019 by John Tenpenny
(Uber Freight photo)
TORONTO, Ont. — Uber Freight is coming. To Europe.
Since launching in the U.S. two years ago, the digital freight matching service has secured more than 30,000 trucking companies and owner-operators as users. And trucking has quickly become a darling of the tech industry as a whole. Millions are being invested by those looking to digitize trucking-related transactions from payment processes to load tracking.
When those factors combined with a recent hiring binge in Uber Freight’s executive suite, many people began to predict the load-matching service had international aspirations.
The predictions were right. It just turns out that the aspirations involved borders outside North America.
Carriers and drivers in the Netherlands will now be able to book and move the first loads outside the U.S., and from there the plan is to expand access to other parts of Europe in the near future, said Lior Ron, head of Uber Freight.
“The European truckload market is a $400 billion marketplace and is the third-largest in the world after China and the United States, yet it still takes dispatchers and drivers multiple hours—sometimes even days—of administrative work to book a single load,” he said in a blog post announcing Uber Freight’s plans.
He also pointed out that many of Uber Freight’s existing shipper partners have vast operations in the European Union (EU), making it a natural next step for the company. Additionally, the EU shares many of the same pain points that U.S. drivers face.
“For example, the European trucking market is experiencing a severe shortage of drivers, and of the time drivers are on the road, 21% of total kilometers traveled are empty. Inefficiency of this scale results in shippers struggling to find available drivers to move their goods.”
Small- to medium-sized carriers in the EU make up more than 85% of the total carrier pool, and just like in other international freight markets, they can struggle to connect with larger shippers. “When you combine these shortcomings in the market, the price of goods goes up. A more efficient and transparent freight marketplace is something Uber Freight can bring to the table that will pay dividends to all, as well as reduce wasted miles and fuel,” wrote Ron.
While the explanations make sense, the obvious question is why not Canada? Is there something different or unique to the Canadian digital freight matching market that is giving Uber Freight pause?
For Karen Campbell Jones, director – marketing at TransCore Link Logistics, the reasons behind Uber Freight’s decision make sense.
“Although entrepreneurship ranks well in Canada, I think in general, the world perceives Canada as slower to adopt new technology than Europe or our neighbours to the south.” She adds that Europe’s population density is much higher, and competition is more robust than in Canada, “helping to drive adoption of new technology much more quickly.”
If and when Uber Freight comes calling on Canadian shippers and carriers, Campbell Jones believes they may have their work cut out for them, making adoption in the Great White North slower than in the U.S. or European markets.
“Shippers are used to dealing with freight brokers for spot freight, and dealing with trusted carriers is important,” she says of the Canadian marketplace. “Shippers may see it as risky to automatically assign high-valued goods to an unknown party.”
Another layer of complexity that Uber Freight will need to address is cross-border shipping, something they don’t have to deal with in the EU. “Who’s going to handle the Customs clearance?” asks Campbell Jones.
One factor driving the growth of digital freight matching services is rising last-mile delivery costs, something that is causing traditional transportation management systems (TMS) providers to play catch-up, according to Chris Cunnane, senior analyst in the supply chain and logistics team at ARC Advisory Group.
“The digital freight matching market, or the Uberization of freight as some like to call it, is not a new concept. There has been investment money pouring in for a few years, and a plethora of companies trying to make their name,” he says.
“Until recently, I was reluctant to think that the market would take off. But, with the current capacity restraints, most of the big TMS suppliers are creating partnerships for digital freight matching within their systems. This leads me to believe that the market is hitting critical mass and can thrive.”
The jury is still out on Uber Freight’s European foray. For now, however, a move into Canada doesn’t appear to be high on the agenda.