It has been quite a year for Uber Freight, even as some analysts who follow the parent company of Uber Technologies continue to ask whether a digital load-matching platform fits with the bigger transportation disrupter.
The highlight of the year for Uber Freight, which is ranked 22nd on the FreightWaves FreightTech 25 list of disruptive and innovative companies, was taking on a half-billion-dollar investment.
That investment of $500 million from an investor group led by Greenbriar Equity Group valued the company at $3.3 billion. (To give that a sense of scale, industry leader C.H. Robinson had a market capitalization in mid-December of about $12.5 billion.)
Even as Uber Freight was having a strong year, questions arose about its fit in the Uber parent. The Greenbriar investment couldn’t help but raise speculation: If the company was willing to sell a half-billion stake in a unit worth $3.3 billion, why not sell all of it?
On the company’s third-quarter earnings call, Uber CEO Dara Khosrowshahi, responding to an analyst’s question, said that Uber Freight was operating in “a vacuum.” He said Uber Freight was not a “consumer-facing business,” unlike ride sharing or Uber Eats.
But while Khosrowshahi said there might be a point where Uber decided that Uber Freight didn’t fit, now was not the time. “Right now we kind of like what we’re seeing from the freight business,” he said, adding that the money from the Greenbriar investment would allow Uber to fund Uber Freight until it becomes profitable.
When the investment was made, it was described as the largest minority stake in a 3PL ever. In the prepared statement that accompanied the announcement of the Greenbriar investment, Lior Ron, the head of Uber Freight, said the investment would send the signals to customers that “we’re here for the long haul.”
Even before the Greenbriar investment, Uber Freight had several developments in 2020 that moved its technological capabilities forward.
In July, it partnered with Blue Yonder, an artificial intelligence/machine learning supply chain provider, to push Uber Freight data into Blue Yonder’s transportation management system. In describing the relationship, Blue Yonder said the partnership would allow a user of the services to employ an API and work with what it called a “dynamic pricing discovery solution … to tap into automated execution, dynamic routing guides and Uber Freight’s capacity network of over 50,000 freight carriers in the U.S. and Europe.”
“Shippers can move loads with the confidence that their prices reflect the current state of the market and lock in available capacity instantly to ensure service stays consistent and reliable for every customer,” the company said in July when the partnership was announced.
Uber Freight also released a feature called dedicated lanes. The new feature, according to the company, will enable its users to “lock in regular loads across 1,000-plus dedicated lanes.” It can also do so up to three months in advance.
Uber Freight also announced a partnership with ELD provider KeepTruckin to integrate Uber Freight data into the KeepTruckin system.
Financially, in the most recently completed quarter, Uber Freight posted $288 million in revenue in the third quarter, marking growth of 32%. But its EBITDA is still in the red, posting negative EBITDA of $73 million, which was more than $11 million worse than what Merrill Lynch said was projected EBITDA.
In a report to investors in September, the research team at Wells Fargo said after a virtual meeting with Uber investor relations that the company views the freight business at Uber as “like a series B startup.”
A definition of series B funding on Investopedia described it as for a company that has “already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale. Series B funding is used to grow the company so that it can meet these levels of demand.”
Another thing the Wells Fargo analysts took away from the meeting: Digital brokerage Convoy and more mainstream broker C.H. Robinson have been able to “fast follow” Uber Freight, “but small brokers haven’t been able to keep up,” the report said.
The report said that Uber management is “excited” for the company’s prospects in 2021 and 2022, with its average price “now coming close to established brokers.”