Uber Freight, the digital freight marketplace arm of US-based ride-hailing giant Uber, announced earlier this week that it's entering the European market, beginning with the Netherlands, according to Freight Waves.
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Uber Freight will face challenges in Europe (DPSGY, XPO, CHRW)
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This will be Uber Freight's first overseas expansion.
Uber Freight has grown rapidly in the US but will face a pair of roadblocks on theEuropean continent.Founded in 2017, Uber Freight hit a $500 million revenue run rate last August. The unit has quickly amassed about 30,000 active users; its app has been downloaded more than 328,000 times and by 12% of truckers in the US. But translating this domestic success to Europe won't come easy:
- Uber Freight will come up against competition from some familiar faces.German logistics behemoth DHL the world's largest logistics company launched its own digital freight marketplace back in early 2017. And XPO Logistics, the Connecticut-based delivery firm, launched its XPO Connect digital marketplace in Europe earlier this month. Truckers in Europe have been working with these legacy carriers since before the days of digital marketplaces, and the relationships won't be easily disrupted. This is something that's evident in the US digital freight market: Uber Freight is outpaced by legacy players Coyote, C.H. Robinson, and DAT.
- Strained public relations and regulatory backlash have likely damaged the Uber brand.Uber's core business has faced a long line of challenges in Europe, starting with Transport for London's decision to temporarily suspend its license to operate in the city back in 2017. More recently, Uber was kicked out of Barcelona after local taxi drivers escalated long-running protests against the firm's labor practices. Lastly, Uber was dealt a pair of blows by the EU's top court, including a ruling that it must be regulated as a taxi company (Uber claims it's a technology platform). All of this regulatory and PR baggage could damage the Uber name enough to deter truckers and shippers from using the firm's freight marketplace.
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Uber Freight isn't likely to dethrone legacy carriers in the European digital freight space but this won't matter to the firm.The EU truckload space is a $400 billion market, per figures cited by TechCrunch, making it the world's third-largest trucking market after the US and China. Given the challenges Uber Freight will face on the continent and the fact that Freight isn't Uber's core business it likely doesnt view vaulting ahead of legacy carriers as imperative for success in the region.
Instead, Uber is likely hoping Freight will attract digitally savvy truckers or trucking companies that don't have longstanding relationships with legacy players, enabling the firm to capture a piece of the massive market and a valuable supplemental revenue stream to its operations in the US.
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