Uber, Amazon, and COVID-19: Shaping the Future of Freight Brokerage

COVID-19 is disrupting many aspects of supply chain management. The “glass is half full” perspective, however, is that the pandemic is also serving as a catalyst for innovation and digital transformation. Will COVID-19, for example, lead to an acceleration in digital freight adoption?

Last week, Uber Freight announced “a new milestone in [its] vision to simplify logistics: moving tens of thousands of touchless loads for key customers.” Here are some details from its blog post:

To achieve end-to-end automation, Uber Freight focused on the most labor-intensive touchpoints throughout the freight life cycle and built technology to solve each. From tender to proof of delivery, our loads can now move without any manual intervention.

Our direct API integrations mean that when a shipper tenders a load, the Uber Freight platform automatically requests and verifies appointments, generates a price based on real-time capacity and market data (which optimizes loads for quick coverage), and makes the load available on the carrier marketplace. A carrier books the load and dispatches their driver, all through the app or web portal, and tracking events are automatically sent to the shippers’ TMS, from driver arrival to departure. Drivers upload their proof of delivery directly through the carrier app for invoicing. Tasks that once required hours of back-and-forth phone calls and emails now happen automatically, with precision, in seconds. 

Uber Freight has also formed partnerships with leading transportation management system (TMS) providers — including BluJay Solutions (April 2020), MercuryGate (August 2019), and SAP (April 2019) — enabling shippers to access this source of capacity via their TMS. Other digital freight brokers and TMS providers have formed similar partnerships over the past 18 months too.

In short, technology is starting to eliminate some of the waste and inefficiencies that have existed in the transportation industry for a long time. The current trend is to integrate TMS applications with digital freight platforms. Will this be a winning formula?

The answer depends, in part, on the future of digital freight brokers. Last week, for example, Uber reported its Q1 2020 results and its Uber Freight division reported $198 million in gross bookings, a 55% increase from Q1 2019. However, Uber Freight’s EBITDA was negative $64 million in the quarter, a 121% increase from Q1 2019. Losses growing at more than twice the rate of bookings. How sustainable is this model?

As I wrote last November, what is the timeline for digital freight brokers to turn a profit? Is it measured in months? Years? Decades? Lightyears? 

You also can’t ignore Amazon’s growing presence in the industry. As reported by FreightWaves last week:

[Amazon] is now offering brokerage services in 48 states. Amazon’s shipper-focused website, freight.amazon.com, now says service areas include “all U.S. states except Alaska and Hawaii.”

The service matches shippers with freight capacity. Previously, access to the site was limited to only to pre-approved shippers. The site is now open to more shippers.

As with other industries, I believe COVID-19 will accelerate many trends in the transportation industry, including the adoption of digital freight technologies. I don’t know what the winning formula will be, but I predict we’ll see many more partnerships, acquisitions, and some failures along the way. Years from now, when we look at the way transportation is managed, we will look back to 2020 and this pandemic as the catalyst for change and innovation.