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  • My name is Tiffany Mendez and I drive trucks for a living.

  • I got into trucking in the military.

  • It was just one of those things way back in 1990...gosh,

  • I don't want to say the year. But I was a Seabee.

  • It was one of those adapt and overcome type things.

  • I got thrown in a seat and I never got out.

  • In 2018, about 3.5

  • million people were employed as truck drivers in the U.S.,

  • but with the explosion of e-commerce, the demand for drivers has been outpacing

  • supply. For instance, in 2018, the U.S.

  • trucking industry was short, over 60,000 drivers.

  • If the trend holds, experts predict this number could be up to 160,000 by 2028.

  • One of the biggest misconceptions that people have about truck driving is that

  • they believe that it's easy. They think that we put the key in ignition and we

  • go. But a lot boils down to the whole plan of the trip.

  • When I start my day, I only have 14 hours to complete up to 11 hours of

  • driving. So I have to put in restroom, showers, washing, eating, all of that.

  • In prior life, as a driver, you know, when I'm waiting on a dispatcher to

  • dispatch me, I'm waiting two, four hours for them to tell me, hey, we don't

  • have a load for you until tomorrow.

  • You know, as to where I could have washed clothes, I could have gone went out

  • and did something, you know, with my life, per say, and now I have control over

  • that. Mendez says she now has more control over her schedule thanks to Uber

  • Freight. It's an online platform that matches truckers with shippers looking to

  • move cargo from one place to another.

  • This is a huge industry that is the backbone of the economy, but it's also

  • highly, highly inefficient.

  • It is mostly still running on fax, phone and paper.

  • We've a lot of disconnects of how to actually match shippers that are looking

  • for truck drivers to hold their freight with truck drivers that are looking for

  • opportunities to carry those shipments on their trucks.

  • Uber getting into the trucking industry could be a potential goldmine for a

  • company that's been struggling to turn a profit.

  • If you look at the size of the opportunity, this is up to 15 percent of the

  • global economy. So lots of potential and we are still in the very early days

  • for us. The trucking industry drew in revenues of $796 billion in 2018, with

  • trucks moving 71 percent of the nation's freight.

  • Compare that to the global ride hailing market, which in 2017 was valued at

  • just $36 billion.

  • Surging cargo volumes in 2018 gave trucking companies a lot more power in terms

  • of price. That, in turn, drove up costs for the shippers and manufacturers and

  • retailers leading to their margins being squeezed, and that can eventually

  • weigh on growth for them. Uber saw an opportunity to come into the marketplace,

  • digitize it, and make it more efficient by applying the same sort of business

  • model that it has applied to ride-sharing.

  • Uber launched Uber Freight in 2017 and the program has since expanded to 48

  • states as well as the Netherlands and Germany.

  • Uber says thousands of shippers and almost half a million truck drivers use the

  • platform. Typically, shipping companies use freight brokers as a middleman to

  • match them with available truckers, taking a commission in the process.

  • Uber Freight removes the need for a middleman by allowing truckers to choose

  • from a list of available jobs and the routes that they need to take to complete

  • them. Drivers also get information on what they are hauling, as well as how

  • much they'll be paid. Once they make their delivery, the truckers can find

  • their next job right from the app.

  • Earlier this year, Uber Freight also launched a desktop portal for larger fleet

  • operators. One of the benefits of having a platform like this is giving people

  • the flexibility to drive when they want and having a lot of certainty about

  • when they're driving, where they're driving, what routes they feel most

  • comfortable doing, gives them flexibility in how they get there and when they

  • work. And like Uber's conventional app, Uber Freight allows drivers to rate

  • facilities out of five stars.

  • Truckers can actually rate the facilities of the shippers that they go to, the

  • manufacturers that they go to.

  • So things like whether they have a bathroom, whether they have a place to park

  • your truck at night and get some rest.

  • How long you have to wait.

  • These are things that are really important to truckers and may determine

  • whether or not they want to take your cargo shipment.

  • To improve efficiency, Uber Freight also partnered with an affiliate company

  • called Powerloop that allows carriers to share trailers.

  • So far, Powerloop is only available in Texas.

  • The biggest issue for the small guys in this industry is the fact that they

  • only have one trailer connected to the truck.

  • Which means, they have to wait every time they enter a facility to be loaded

  • and unloaded four, five, six, seven hours at a time.

  • What we allowed them to do is actually tap into a trailer pool, that we manage

  • for them, so when they enter a facility, they can drop their trailer, hook a

  • trailer that is already loaded, and get on the way.

  • Not having to wait in a facility and constantly keep them utilizing their truck

  • and being paid more for their driving time versus not being paid waiting in

  • those facilities. Powerloop is a truck driver's dream because if I can just

  • pick up a loaded trailer and drop off a loaded trailer and keep moving, then my

  • wheels are turning and I'm continuing to earn, you know.

  • So that again changes the industry totally.

  • And the industry does need to change because the driver shortage is only

  • compounded by the fact that many of today's truck drivers will be aging out of

  • the workforce. The Bureau of Labor Statistics estimates that the average age of

  • a commercial truck driver in the U.S.

  • is 55 years old.

  • One way Uber says it's attracting drivers is by giving them incentives that

  • reduce their cost of operation.

  • We actually have a loyalty offering, Uber Freight Plus, which is giving them

  • discounts on fuel, on maintenance, on used trucks, on the health insurance, on

  • their phone bills to really level the playing field and allow those truck

  • drivers to operate with the scale of a big fleet, accessing all of those

  • discounts. But does Uber Freight make financial sense?

  • Uber's latest earnings report showed that the company's "other bets" category,

  • made up of Uber Freight and Uber's mobility services like bike-sharing, brought

  • in $340 million in revenue through the first half of 2019.

  • That's more than three times the revenue from the same time period last year.

  • But during this time, "other bets" losses have also been increasing, jumping

  • from $48 million to $193 million.

  • Overall, Uber reported losses over $6 billion.

  • Uber is applying the Uber strategy, growth at all costs to the freight

  • industry. It is undercutting the competition in terms of prices to gain more

  • market share. So what you get, is a very fast-growing revenue stream, but a lot

  • of losses. Morgan Stanley, in fact, put out a report that estimated that Uber

  • passes on 99 percent of its revenue to the trucking companies.

  • To give you an indication of what the average is in the industry, it's 80 to 85

  • percent. So Uber giving 99 percent of revenue to the trucking companies is a

  • big deal. And it really tells you that profitability is likely a very long way

  • off. Uber Freight is not alone in its quest to digitize the trucking industry.

  • Trucking and freight technology companies raised a record $3.6

  • billion in venture capital funds last year.

  • One company that nabbed some of this funding is KeepTruckin.

  • The San Francisco-based firm uses hardware and software to help drivers and

  • fleet operators manage their vehicles and cargo.

  • KeepTruckin says it works with over 250,000 trucks and 55,000 trucking

  • companies. But the company says it's not exactly the same as Uber Freight.

  • Our hardware and software is used by trucking companies to actually manage

  • their drivers, to improve safety, to improve efficiency.

  • And through that connectivity we've built with such a significant base of

  • capacity, we are now building an open-freight marketplace, where any party that

  • has loads and that needs access to capacity can participate.

  • And so while they're building a private freight brokerage, we're building an

  • open-freight marketplace.

  • Other players in the market include companies like Transfix and Convoy.

  • Even Amazon launched an online, beta, freight service of its own in 2018.

  • The service is currently only available for shipments in five states:

  • Connecticut, Maryland, New Jersey, New York and Pennsylvania.

  • Like Uber Freight, Amazon created an app it calls Relay, to give truck drivers

  • additional freight information, including route tracking and expedited check-in

  • procedures at warehouses.

  • But the competition doesn't seem to rattle Uber.

  • In fact, the company announced it's investing $200 million per year in its new

  • Uber Freight headquarters in Chicago.

  • We're really the only one that has the Uber scale, the Uber knowhow in terms of

  • transportation technologies, the capital, and the stamina to actually invest in

  • this market for the long run.

  • So will Uber Freight be the answer to Uber's quest for profitability?

  • Uber Freight is a much smaller piece of the business right now, even though

  • it's growing very, very quickly in terms of revenue.

  • It is much, much smaller than its ride-sharing and its Uber eats business,

  • which investors tend to focus on.

  • That's not to say that the trajectory of Uber Freight is very exciting and

  • could make up a larger portion of the business going forward.

  • In fact, some people even say that it could represent the Amazon Web Services

  • of Uber. What that means is that when Amazon Web Services started, it was a

  • very small part of Amazon and it grew into the profit engine.

  • So some implied that perhaps if Uber Freight really takes off, it could be the

  • money maker and it could even overshadow some of its other businesses.

  • On the surface, Uber Freight is a better business than Uber the ride-hailing

  • business. It faces less of an uphill battle to get to profitability than the

  • ride-hailing business does.

  • But on the other side of the coin, I think the ride-hailing business has more

  • potential to be a blockbuster type business.

  • If they can reach profitability just because of the scale of the business.

My name is Tiffany Mendez and I drive trucks for a living.

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