Uber Technologies Inc.’s truck-brokerage business has helped reshape freight brokerage, but it might not be doing enough to shore up the finances at its parent company.
The ride-hailing giant, reeling from the impact of the coronavirus pandemic, is re-evaluating its Uber Freight operation as it slashes jobs and cuts costs, in an effort that includes a new look at its costly bets on noncore business lines. Uber didn’t say what actions it is considering as it evaluates the business.
The freight operation, like the main passenger business of its parent, has had a significant impact on its market but has been hard-pressed to turn its gains into profits. Uber Freight lost $64 million in the first quarter despite a 57% jump in revenue, to $199 million, from the same period in 2019.
Uber Technologies Inc.’s truck-brokerage business has helped reshape freight brokerage, but it might not be doing enough to shore up the finances at its parent company.
The ride-hailing giant, reeling from the impact of the coronavirus pandemic, is re-evaluating its Uber Freight operation as it slashes jobs and cuts costs, in an effort that includes a new look at its costly bets on noncore business lines. Uber didn’t say what actions it is considering as it evaluates the business.
The freight operation, like the main passenger business of its parent, has had a significant impact on its market but has been hard-pressed to turn its gains into profits. Uber Freight lost $64 million in the first quarter despite a 57% jump in revenue, to $199 million, from the same period in 2019.
Uber Freight and its digital rivals are still small players compared with the sector’s biggest operators. In 2019, digital freight brokers accounted for about 2% of the $83 billion domestic transportation market, which includes brokerage and other logistics services, according to research firm Armstrong & Associates.
But their push to use technology to make booking freight transportation more efficient has pushed competitors to step up their digital investments.
Big transportation companies are spending billions on automation that can both improve service and help brokers add revenue without hiring more people.
But coronavirus lockdowns have crippled demand in the sector, sending freight volumes spiraling downward.
“It doesn’t matter if you’re a digital freight broker like Transfix or Conovy or Uber, or somebody like C.H. Robinson or XPO Logistics, ” said Evan Armstrong, president of Armstrong & Associates. “Everybody feels the pain.”
Uber’s Re-Evaluation of Freight Follows Steep Losses
Uber’s Re-Evaluation of Freight Follows Steep Losses
Discussion in 'Freight Broker Forum' started by autopaint, May 19, 2020.
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