US ride-hailing company Uber is launching a freight platform in Germany, taking on local technology startups in a race to grab a share of Europe's $500bn trucking market.
Germany will be Uber Freight's second market to go live on the continent after the Netherlands, an executive told Reuters, with further expansion in prospect once operations are running smoothly in Europe's largest economy.
In the US, Uber Freight already
connects 48 states and generates more than $125m in quarterly revenues.
Under maverick founder Travis Kalanick, Uber's earlier bid to establish its ride-hailing services in Germany met intractable opposition from taxi companies, politicians and the courts.
This time, led by Kalanick's successor Dara Khosrowshawi, Uber has consulted German officials and industry to win support for its freight business, said Daniel Buczkowski, Uber Freight's head of European expansion.
"After the change in leadership, we really engaged in doing the right thing," Buczkowski, who is German, said.
Uber will compete with local players, including Berlin-based startup sennder, which has raised $70m from private equity house Lakestar and other investors at a $300m valuation, and which already has a wider presence in Europe.
Other technology players in the freight forwarding sector include Flexport, a full-service platform based in San Francisco that raised $1 billion earlier this year from investors led by Japan's Softbank Group.
UK-based Zencargo and FreightHub, which like sennder is headquartered in Berlin, have also taken in investments of late.
Buczkowski sees Uber Freight's edge in its worldwide reach and proven technology. "As a global company we have the bandwidth to constantly innovate and create new products and features that support the entire marketplace," he said.
Empty journeys
The freight platforms aim to digitalise an industry still dominated by firms running 10 or fewer trucks and to improve efficiency — trucks are empty for 21% of the distance they travel.
Other gains can come from real-time tracking of consignments, and the automation of payments in an industry where trucking firms often waste weeks chasing up invoices.
"The key to getting a lot of value out of this industry is understanding how to use those empty kilometres," said Nicolaus Schefenacker, a co-founder of sennder, which was set up in 2016.
He said that as its network expanded, it was easier to model and forecast traffic flows to ensure consignments found the right truck at the right price. Although the freight tech sector is crowded, the market is segmented and sennder sees a clear opportunity in the so-called full-truck load market.
"The market is so huge that I think a lot of players are able to coexist. That's also the way we think about Uber Freight," Schefenacker said.
Man in the middle
Unlike Uber's ride-hailing app or its food-delivery service, Uber Freight will operate as a middle-man in a market with an established pricing structure.
It will make money from the margin between the price paid by the shipper and the amount it pays on to the trucker, insulating it from the type of complaints made by many ride-hailing drivers who say they struggle to earn a decent income.
Uber, with a stock market capitalisation of $74bn, aims to adapt its model used in the US, where many truck drivers are sole operators, to Europe, where family-run firms predominate.
The apps still face challenges, ranging from environmental issues confronting an industry that runs on diesel to ensuring drivers are not overworked with long hours on the road.
The industry also needs new recruits, with the World Bank estimating two-thirds of German drivers will retire over the next decade, threatening a shortage in capacity for an industry that handles more than 70% of freight.
- Reuters
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