Uber Technologies’ (UBER) is bringing to Canada its trucking app that connects shipping companies with drivers, a move with potential to disrupt a key segment of the transportation industry.
The ride-sharing company announced Wednesday that it will expand its Uber Freight service to Canada as it continues an aggressive expansion plan already launched in the U.S. and Europe. The service will first be available in Ontario and Quebec.
The Uber Freight app works much like its popular ride-sharing technology, connecting shippers looking to send goods with qualified carriers looking for work. First launched in 2017, Uber Freight says the app allows shippers – particularly small to medium-sized companies – to book drivers quickly, and 24/7. Connecting shippers and drivers has traditionally been a role fulfilled by freight brokerages, but Uber Freight claims that process is inefficient.
Uber Freight’s head of operations Bill Driegert says the company’s trucking app provides a solution that is better for shippers and drivers, allowing them to connect instantaneously while improving transparency on pricing and tracking shipments.
“Shippers all of a sudden have this access to capacity and they can book freight that before they didn’t have visibility for. Before they were making decisions in the dark. We’re bringing the light,” Driegert said in an interview with Yahoo Finance Canada.
“When they flip a switch, they get logistics on demand. They’ll know they can get capacity when they need it and they’ll know the prices will be fair and transparent.”
Uber Freight has been a bright spot amid profitability concerns at the ride-sharing company. In the most recent quarter ending June 30, the company reported a net loss of US$5.5 billion dollars. But Uber’s “Other Bets” category – which includes the trucking division – saw revenue grow 175 per cent year-over-year from US$71 million to US$195 million in the second quarter.
Lior Ron, the head of Uber Freight, told Yahoo Finance in August that it expects to sustain triple digit revenue growth as it continues on its aggressive expansion plan.
Uber is not the only player looking to disrupt the shipping industry, that saw revenue in the United States top US$700 billion in 2017. Convoy, a Seattle-based company, operates a similar app that has garnered interest from the likes of Jeff Bezos, Bill Gates and Marc Benioff, according to Bloomberg News.
Silpa Paul, an analyst with Frost and Sullivan, expects that digital freight brokerage will take off over the next five years.
"Lack of instant load and rate visibility, frequently delayed payments and operating cash crunches are creating a huge market for digital brokerage solutions, as in the very least they enable faster brokerage, instant electronic upload of proof of delivery as well as electronic payment terms,” Silpa said in a statement.
“By 2025, online channels are likely to become the key differentiating sales tool for OEMs and dealers. Almost 70 percent of sales leads will come through digital channels rather than traditional channels.”
Uber said Martin Brower, a carrier that partners with restaurant chains, will be among the first partners signed on to the service in Canada.
“Martin Brower is always looking for new technologies that help us raise the bar of service for our restaurant partners,” Kristofer Lorelli, the company’s director of freight, said in a statement.
“We’re excited to work with Uber Freight to tap reliable capacity and ensure seamless, fast service across North America.”