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Uber Freight, Leveraging Network Density, Introduces Bundles And Expands Powerloop

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Uber Freight, Leveraging Network Density, Introduces Bundles And Expands Powerloop

Uber Freight announced today that it is expanding its signature drop trailer program Powerloop to California and that it is rolling out a new nationwide offering, Bundles, which allows carriers to book backhaul loads simultaneously with headhaul loads.

Both of these moves highlight Uber Freight's increasing network density as the digital freight brokerage continues to scale. Uber Freight, the logistics division of Uber Technologies, Inc. (NYSE: UBER), announced earlier this month that it would move its global headquarters to Chicago in the spring of 2020. 

‘Other Bets', the financial reporting unit that includes Uber Freight, reported revenues of $195 million in the second quarter of 2019. While Other Bets includes Uber's scooter and bike business, we believed that Uber Freight accounts for more than 90% of Other Bets, putting Uber Freight on a $702 million annual run rate. 

Powerloop, which was formerly only available in Texas, will be introduced in the Los Angeles market first and then gradually expanded to the rest of California, explained Glen Stewart, Powerloop's director of operations. While Uber Freight works with its shippers and carriers to identify opportunities for Powerloop, it starts with a local network that makes managing physical assets much easier.

The management of physical assets represents a step change in Uber Freight's technical sophistication because, unlike driver capacity—whether rideshare or freight—which disappears and reappears on demand, trailers have to be repositioned close to demand. The goal of any trailer pool manager has to be to balance a network in such a way that it minimizes the number of times carriers are paid to re-position empty trailers.

"When we think about trailer position," Stewart explained, "it all depends on the lanes and volumes we can get from a particular customer. That's when we do the back-end work and figure out where to strategically place these trailers."

We suspect that many of Powerloop's initial moves when it enters a market may be intra-customer, i.e., from a distribution center to a retail location and back, but Stewart said that Uber Freight approaches Powerloop and Bundle from a similar perspective.

"Powerloop tries to find the round trip, somewhat similar to Bundles," Stewart said.

Both offerings are designed to drive carrier stickiness by improving asset utilization and automating a painful part of the driver's daily workload, but they both depend on Uber Freight having achieved a certain scale and volume of freight. 

"We've seen that in Texas when we've launched a program with a lot of demand, we're meeting a need for the carrier base," Stewart said. "At Uber Freight, our owner-operators are our bread and butter, and we want to ensure we're being transparent and giving them the opportunity to explore different options. We've seen a high demand and we've seen carriers come back."

Powerloop, it should be noted, also effectively offers Uber Freight's shipper customers additional capacity and flexibility in their facility operations. The availability of drop trailers improved LG Electronics' facility ratings and lowered its transportation costs, company officials said.

"We were asking ourselves: how do we make our logistics smoother? Better? Uber Freight and Powerloop were the perfect introductions," said Denis Marion, LG's U.S. director of logistics operations. "LG has peak periods throughout the year; we were impressed by their performance throughout Black Friday."

While Powerloop initially gets traction and users in a dense network of local routes, customers in Texas also use it for long-haul moves, Stewart said. Uber Freight will continue to build the Powerloop brand, acquire more assets, and establish predictable demand for power-only moves, Stewart said. Eventually, Powerloop will be a nationwide offering and its local markets will be linked and integrated with each other.

Image Sourced from Pixabay

Posted-In: Freight Freightwaves Logistics Supply ChainNews Markets Tech General

 

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