The freight transport sector has experienced a tumultuous year marked by bankruptcies, driven by reduced freight rates and a decrease in cargo demand. Lior Ron, CEO of Uber's logistics subsidiary, Uber Freight, suggests that the industry may be at a new "tipping point," and the key catalyst is fuel prices.
According to Ron, Uber Freight has observed a concerning trend: more carriers are relinquishing lanes after bids, possibly indicating financial challenges in operating certain shipping routes. While low fuel prices earlier in the year helped carriers cope with low rates, the recent rise in fuel costs could be a tipping point for those operating with slim margins.
Despite ongoing depressed carrier rates and reduced shipper volumes, Ron notes that in Q4, carriers are becoming more selective with the volume they accept in bids to maintain profitability. Simultaneously, shippers are carefully choosing carriers they perceive as stable and providing excellent service.
Fueling the uncertainty is the fluctuating oil market, geopolitical risks, and projections of slowing global economic growth. The World Bank's warnings about potential record-high oil prices add to the industry's challenges.
In response to these difficulties, Uber Freight is intensifying its focus on sustainability measures. Leveraging data analytics, AI, and matching/routing solutions, the company recently launched a sea-to-sky emissions dashboard to enhance visibility and reduce "empty miles," ultimately cutting costs, delivery times, and environmental impact.
Ron emphasizes the importance of digitizing the entire supply chain to achieve sustainability at scale. Uber Freight aims to reduce empty miles, which currently account for around 30% of U.S. trucking miles, to as low as 15% with routing and bundling technology, translating into a potential 10-15% increase in income.
Autonomous trucking is also part of Uber Freight's strategy, with partnerships in place for daily runs with select customers in Texas using autonomous trucks. Ron envisions these efforts contributing to their ambitious goal of achieving 80% clean transportation across global brokerage shipments by 2040.
Despite industry-wide pressures, Ron remains optimistic about a potential holiday season upswing and preparations for the year ahead. While challenges persist, Uber Freight is committed to sustainability and leveraging technology to shape a more efficient and eco-friendly future for freight transport.