Uber Freight Launches In Germany
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U.S. 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 $500 billion trucking market.
Germany will be Uber Freight’s second European market to go live after the Netherlands, an executive told Reuters, adding that the firm would consider expanding elsewhere in Europe once the new German operations were running smoothly.
In the United States, Uber Freight connects 48 states and generates more than $125 million in quarterly revenues.
Uber’s bid, under its founder Travis Kalanick, to establish its ride-hailing services in Germany met intractable opposition from taxi companies, politicians and the courts.
Under 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, told Reuters.
Uber will compete with local players, including Berlin-based startup sennder, which has raised $70 million from private equity house Lakestar and other investors, and which already has a wider presence in Europe.
Uber and sennder aim to digitalize an industry dominated by firms running 10 or fewer trucks and to improve efficiency – trucks are empty for 21% of the distance they travel. Real-time tracking of consignments and payment automation will make life easier for shippers and hauliers, tech platforms say.
“After the change in leadership, we really engaged in doing the right thing,”
“The key to getting a lot of value out of this industry is understanding how to use those empty kilometers,” said Nicolaus Schefenacker, a co-founder of sennder, which was set up in 2016.
He told Reuters 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.
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.
Given the fragmented nature of the freight forwarding market, a single player was unlikely to dominate but regional players might emerge, said one investor who backed sennder.
Uber, with a stock market capitalization of $74 billion, aims to adapt its model used in the United States, where many truck drivers are sole operators, to Europe, where small, family-run firms dominate.
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.
“The problem that we see today is that we are not using the assets that we have efficiently,” Buczkowski said, adding this was what apps like Uber Freight would seek to address in Germany, and in other European nations in future.
Questions & Answers
Q.What is Uber Freight's expansion plan within Europe after launching in Germany?
What is Uber Freight's expansion plan within Europe after launching in Germany?
Germany is Uber Freight's second European market after the Netherlands. The firm plans to consider expanding elsewhere in Europe once the new German operations are running smoothly, according to an executive.
Q.How will Uber Freight generate revenue in Germany, given its established pricing structure?
How will Uber Freight generate revenue in Germany, given its established pricing structure?
Uber Freight will operate as a middle-man in the market. 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 driver complaints.
Q.Which local competitors will Uber Freight face in the German market?
Which local competitors will Uber Freight face in the German market?
Uber will compete with local players, including Berlin-based startup sennder. Sennder has raised $70 million from investors and already has a wider presence across Europe than Uber Freight currently does.
Q.How does Uber Freight plan to adapt its US model to the European market?
How does Uber Freight plan to adapt its US model to the European market?
The Uber Freight model used in the United States, where many truck drivers are sole operators, will be adapted for Europe. In Europe, small, family-run firms dominate the freight forwarding market.