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'We are facing a very abnormal market': Uber Freight on historic demand for trucking

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Business re-openings and a “historic demand” for shipments are helping fuel Uber Freight’s bounce-back, after the lows hit during the height of the COVID-19 pandemic.

Speaking to Yahoo Finance’s On The Move, Lior Ron, head of Uber Freight, said the company is seeing a 31% increase in spot rates across the U.S. as record demand for trucking coincides with a severe shortage of truck drivers.

“Usually supply follows demand. In this case supply has not fully followed demand,” Ron said. “So, we are facing a very abnormal market with a ... historical high for demand, but historical low for supply, which is definitely driving trucking rates very high.”

Global shipments ground to a halt in March, as the coronavirus forced countries to slow their economies, disrupting supply chains. The trucking industry was especially hit hard, with a recent report from the International Road Transport Union forecasting a near 20% decline in road freight transport this year alone.

While Uber Freight has not released specific numbers on the scale of the volatility, Ron says he has seen a steady climb in shipments related to non-essential goods since May, driven largely by the easing of COVID-related restrictions.

Spot volume grew 44% from May to June, while van and reefer spot rates (refrigerated goods) jumped 21% and 12% respectively, month over month.

“That’s mostly driven [by the fact that] we're all sitting at home ordering stuff. And rather than consuming services, we’re consuming goods,” Ron said. “So, it’s [consumer packaged goods], essential goods — even manufacturing is picking up big time.”

Caravan or convoy of trucks in line on a country highway
Caravan or convoy of trucks in line on a country highway

Still, the 27% revenue growth in the second quarter remains well below the 75% growth Uber Freight notched at the end of last year. The platform has more than 65,000 carriers in its network.

The industry faced a trucker shortage even before the pandemic hit. Faced with a tight labor market and aging demographics, the American Trucking Association estimated the industry would need to hire 1.1 million new drivers over the next decade to close the gap. Ron said the pandemic has only accelerated that divide, with health concerns and a lack of demand prompting drivers to retire in April and May. The average haul declined by 50-miles in March alone, according to data provided by Uber Freight.

The company has seized on opportunities stemming from the volatility experienced over the last six months. This week, it launched two new services, including Uber Freight Link, a software platform that helps shippers manage their drivers and carriers, even for loads outside of the Uber network. Uber Freight Enterprise builds on the existing platform that connects shippers and drivers, but improving visibility into the overall operation.

“Those enterprise shippers are facing unprecedented demand for their goods, but also facing unprecedented volatility,” Ron said. “Facilities are being opened and closed on a daily basis, supply is being changed on a weekly basis, rates are changing faster than at any time in history. So we wanted to extend our offering to those enterprise shippers that just need more visibility, more transparency, more control.”

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita