Advertisement

Is Uber the Next UPS?

As Uber continues to build out its logistics business, Uber Freight will acquire Transplace for $2.25 billion, including up to $750 million in Uber Technologies common stock with the remainder in cash from TPG Capital. . The combined companies will seek to combine Uber Freight’s network of digitally-enabled carriers with the Transplace shipper technology and operational solutions to create a scaled logistics platform that can serve both shippers and carriers of any size.

The overall U.S. logistics market generated just under $1 trillion in economic value during 2020, according to data from Statista — making it an extremely tempting market for a company with existing expertise in transportation and logistics technology. This particular deal comes at a time of volatility in retail logistics, particularly as another ecommerce-heavy holiday season approaches. Salesforce expects rising demand, continued COVID restrictions and growing container costs to generate $163 billion in added costs for companies along the retail supply chain during the holidays.

Retailers also will be contending with shoppers who have higher expectations for fast last-mile delivery than ever. Four to five days is the maximum acceptable wait time during the holidays, and for the rest of the year that shrinks to two to three days, according to Sean Whitehouse, Managing Director of Strategy & Consulting, Supply Chain & Operations, Retail Lead at Accenture in an interview with Retail TouchPoints. Maintaining such delivery speeds calls for coordinated efficiency, from the supplier through the retailer right to the customer, and Uber is aiming to deliver across this entire journey.

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight in a statement. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.”

Advertisement

Transplace focuses on logistics technology and solutions and has further developed its supply chain capabilities since it was acquired by TPG Capital in 2017. The continued digitization of the global supply chain has proven lucrative for the solution provider, and the current capacity constraints have only made efficiency more important in supply chain management across every industry.

“Our expectation is that shippers will see greater efficiency and transparency and carriers will benefit from the scale to drive improved operating ratios,” said Frank McGuigan, CEO of Transplace in a statement. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment.”

The companies’ shipper partners are expected to benefit from a more robust technology platform across all transportation modes and services due to the technology and data science expertise Uber will provide. Additionally, carriers will be able to collaborate directly with shippers within a seamless marketplace and gain access to multiple expanded service lines, including intermodal, cross-border and Less-Than-Truckload.

The transaction also is expected to help Uber Freight serve more customers across the freight industry and expand its presence into Mexico with new capabilities in intermodal and customs brokerage. As a result, Uber Freight expects to accelerate its path to profitability and break even on an adjusted EBITDA basis by the end of 2022.

The transaction is subject to regulatory approval and other customary closing conditions.

Featured Event

Get free access to tactical tips, invaluable insights, and deep-dive conversations that will help you hone your strategies for Q4 and beyond. That way, you can be sure to be on shoppers’ nice lists this holiday season…and all year long.

Advertisement

Advertisement

Access The Media Kit

Interests:

Access Our Editorial Calendar




If you are downloading this on behalf of a client, please provide the company name and website information below: