Uber will invest $ 200 million and hire thousands of engineers to strengthen its two-year-old long-distance freight transportation company, Uber Freight. The expanded company will have its headquarters in a newly opened office in downtown Chicago, where it will house up to 2,000 engineers that Uber wants to hire in the next three years.
Uber Freight was launched in 2017 and connects truck drivers with shippers, in the same way as the app of the company that rides vehicles, connects drivers with those looking for a ride. It is part of Uber & # 39; s "other bets", including the food delivery service, Uber Eats, and its new Mobility businesses such as its Jump-branded electric bikes and scooters.
It is a huge voice of confidence in Uber's growing freight division, even though Uber's overall operations continue to bleed billions of dollars every quarter. In August, Uber reported a record loss of $ 5.3 billion on a quarterly basis, much of which is due to one-off costs, such as share-based compensation. Nevertheless, sales growth has slowed and seems to be making its way to profitability longer than ever.
The truck industry is not an obvious place for Uber to target its resources. There has been a shortage of truck drivers in recent years, with experts noting that there are not enough truck drivers to keep up with demand. This has led to a softening of the market, with prices generally falling.
But Uber's top managers say the freight division is promising. "Uber Freight continued to see impressive growth and great progress in the second quarter despite mild market conditions," said Uber CEO Dara Khosrowshahi in a profit call in August with investors. Nevertheless, the company did not break out revenue figures for its freight activities.
Lior Ron, head of Uber Freight, said the soft market conditions were only a by-product of the "cyclical" nature of the truck industry. "Every time the economy picks up, the freight industry gets a lot more assets," Ron said in an interview with The edge. "Truck orders have reached a historic peak."
Uber continues to lure drivers to its platform using established techniques such as bonuses and benefits. Last year Uber Freight introduced a perk that offers truck drivers discounts on essential items such as gasoline and new tires. The company doesn't want to say how much it spends to subsidize its truck business, but Ron insisted that cargo be the "fastest growing company in Uber".
"We see acceleration in every region in the US," he added. "Once you serve them, the combined revenue from shippers will only go up and up, as we go deeper into the supply chain."
Ron came to Uber for the first time when the ride-hailing company took over Otto, the self-driving truckup startup that he founded together with fellow ex-Google engineer Anthony Levandowski. Later, Google & # 39; s self-propelled spin-off Waymo sued Uber and claimed that Levandowski had stolen trade secrets as a way to lure a sale from the driver company. The case was settled in 2018, but Levandowski was recently charged with theft by the Justice Department. Ron, who was mentioned neither in the trial nor in the charge against Levandowski, again at Uber last year to lead the Freight division.
Ron, who spoke with The edge a week before Levandowski was arrested, he called his involvement in a notorious engineer "an interesting experience" that unfortunately went in the direction it did. "There was clearly a lot of misinformation and misunderstanding in that old story," he continued. "In the end, the reason I was really mad about joining Uber (was because) was the best place in the universe to be on transportation markets, which we always considered the endgame in terms of the business model."