As Uber Freight expands, what it means for mom-and-pop shipping and logistics firms

Lior Ron, Uber Freight CEO, joins Yahoo Finance's On the Move panel to talk about expansion and the future of the freight business.

Video Transcript

JULIE HYMAN: Now, we've just been talking about manufacturing in this country. And before we get to sort of Uber Freight specific offerings, I'm curious what you guys have been seeing in terms of shipping goods around the country, in terms of traffic right now. Because we know supply chains were getting sort of bottlenecked, and we were seeing shortages during the peak of the pandemic. What does the picture look like right now?

LIOR RON: Thanks, and good to be here. We're definitely seeing unprecedented volatility in supply chains across the US. In March and April, demand went down as the pandemic hit. We had a big rush of shelf stocking in May and June, and this continues up until now.

We're actually at an all-time high of freight demand and demand for trucking in history. And that's mostly driven because we're all sitting at home ordering staff and rather than consuming services, consuming goods, and we're consuming more and more of those goods for our homes. So CPG, essential goods, and even manufacturing is picking up big-time, and this is the highest demand for trucking that the US have ever seen.

On the other hand, we're actually seeing a historical shortage on supply, because truck drivers want to stay safe. They want to be close to their families. So they're actually driving more-- or less-- sorry-- they're driving less.

There's a bunch of supply and truck drivers that actually exited the market in April and May. And usually, supply follows demand. In this case, supply has not fully followed demand. So we are facing a very abnormal market, where we're at high-- historical high for demand, but historical low for supply, which is definitely driving trucking rates very high.

AKIKO FUJITA: Lior, it's good to see you again. You know, that-- that leads to the point of how Uber Freight has adjusted to the market. Going into this pandemic, you were largely on logistics. And now you've announced this new enterprise software, Uber Freight Link. I'm curious why you're making a SaaS play now. What's the opportunity you see there?

LIOR RON: Definitely good to see you again, Akiko. And really, this is predicated and supported by two developments. One is the market. Those enterprise shippers are facing unprecedented demand for their goods, but also facing unprecedented volatility.

Facilities are being opened and closed on a daily basis. Supply is being changed on a weekly basis. Rates are changing faster than any time in history. So we wanted to extend our offering to those enterprise shippers that just need more visibility, more transparency, more control in a time like that.

The other reason is this is just a stage in our development. We now have a fully fledged product platform. We have developed a lot of technology over the past two, three years, and this is a time that we feel we can extend a lot of those services in going to the biggest enterprises out there.

To give you a few examples, we now have the biggest facility database in the industry. We have over a million reviews and ratings on facilities. So there's a lot of insights we think we can offer those enterprise shippers and extend, really, SaaS tools for enterprises.

AKIKO FUJITA: And Lior, we've talked about the competition before. There's certainly a number of players who have joined the fray, Convoy probably the biggest competitor to you. And last time we spoke, you said that you expected some consolidation in the market as a result of so many players in this space.

It sounds like you're saying that there's more demand now that's coming through as a result of COVID. So I mean, when you look at the market, is there enough space for all of these players to take market share? Or do you still see consolidation down the line?

LIOR RON: This is a huge market, right? $800 billion of spend in the US every year. So there's definitely room for multiple-- multiple players. Where we see the consolidation is actually on the smaller players and more of the mom and pop brokers that have been doing business.

But now with technology, the bar is much higher. One example is the real-time API that we offer for those shippers that it can integrate into the system's real-time pricing and real-time booking of trucks in the market. That's a capability that once you integrate into your supply chain, only a handful of players can actually offer that.

So what happens is some of the smaller players are either being opted out of the market because they can't keep up with technology, or they are looking for tools to keep up. And actually, some of the tools that we offer now also catering for that audience and for other partners that can use our technology. So we definitely see consolidation on the lower end. It's such a big market. I think it's going to take more time for consolidation on the higher end.

JULIE HYMAN: Lior, thanks so much. Lior Ron is Uber Freight CEO. Appreciate it.

LIOR RON: Thank you.