Where is, if at all, a place for freight forwarding in Uber Freight’s vision of transport? How does the company intend to develop the European market, that is so different from the American? Daniel Buczkowski, Head of Europe Expansion, Uber Freight, talks about the future of Uber in Europe in an interview with Trans.INFO.
Dorota Ziemkowska, Trans.INFO: Are you salvation or a threat to the transport industry?
Daniel Buczkowski, head of expansion, Europe Uber Freight: Well, I think that competition is generally reasonable. Thanks to the competition, everything develops.
Uber Freight provides the industry a technology that it may not have been able to use effectively enough before. And I think the industry will only benefit from it. The market is inefficient, as evidenced by the fact that every fifth truck on the road is empty. It is not possible to check rates in real-time. Insight into the implementation of transport operations is limited. I think customers want all this to change. Therefore, the quality of the business would improve.
I still haven’t heard the answer to my problem. You mentioned some benefits. The question is whether it is the industry that will benefit or only Uber.
Who are we? A 3PL operator, a logistics operator, and this is not a new concept of activity in this industry. However, there are different types of logistics operators. There are those who have their own trucks and those who do not. We belong to the latter. We connect shippers with carriers. This is very important. Because if it turns out that we do not provide a service that will benefit both parties, both carriers and shippers, then Uber Freight will have no future.
And the transport industry is not one in which you can appear, quickly earn some extra money and disappear. In Europe alone, it is worth $ 500 billion, in Poland it is $ 16 billion, so you can’t just take possession of the market, enter into it and do whatever you like.
The industry is mature, uses a lot of information, e.g. good rates for carriers, or for shippers the interpretation of what a good logistics operator should do. If we don’t meet these expectations, we won’t have a future.
There are companies in Europe that are afraid of your entry and consider you a threat. What would you tell them?
Do you mean logistics operators?
Primarily. Logistic operators, forwarders, other 3PL operators …
We get back to my opinion on the competition. Competition is good. And customers don’t choose any company just based on the price. Clients want to know who offers good quality and how his order is going to be carried out and I think it will be for the benefit of all.
First of all, for smaller companies, especially smaller carriers, which are hard to compete today. Why? Because they get money 45-50 days later, if at all. Because they do not have access to the same type of cargo as other, larger carriers. So, if we give them the opportunity to carry these loads, we’ll help them start the business.
What are the biggest problems in the transport industry and the challenges that Uber Freight wants to face?
I think that there are many such challenges, but you can put them all in one word – fragmentation. Let us take the example of the European Union alone – 27 countries (28 counting with Great Britain – note) that use different languages, currencies, have different legal frameworks.
And that’s not all. Take the price, for example. There is no one place where a company can check it. There may be different rates on different platforms, which are influenced by a number of factors. So, for carriers, determining which is good and which is not, is not a simple task. And I think Uber Freight can fix this situation.
What about the problem of empty runs? Lior Ron, head of Uber Freight stated in one of the interviews that this is the biggest problem in the industry that you want to face. Uber Freight is expecting to reduce the number of lorries running empty by 25 percent.
Yes. I think it is essential to emphasize the difference between having fewer cars on the road and making the presence of each car more purposeful. When I say that every fifth car runs empty, it means that it is already there, on the road. We don’t want to take it away. We should not! However, we should ensure that it has something to carry.
The main idea of a network of connections, a platform or an exchange is to connect two parties that can work together. And if it is done well, it creates what we call a flowing network, which is able to reduce the number of empty miles. And this is indeed our goal.
How do we operate in the United States? As a carrier, you reserve a load. However, we give you the option to book additional top-ups. By using the data we collect, we provide you with information about the distance between successive points on the route. Thanks to this, you can optimize the entire route and choose the best destination for you.
You talk a lot about benefits, but I wonder if Uber Freight causes disruption within the industry. As for me, however, it is a threat to a certain group operating in transport. I mean freight forwarders. What will happen to them?
I can only repeat what I have said before. To be honest, I don’t see any drawbacks in bringing modern technologies to the transport industry, and thus ensuring transparency of operations. And such transparency does not exist today.
I, in turn, would like to ask you how many small companies operate today? Small carriers employing one or two people? Not too many. Why is it like that? Because they do not have access to a broader market, they often have financial problems, because they have to pay both to customers and carriers. Some of these carriers can hardly survive.
On the other hand, we have carriers who sometimes take a lot more loads than they can handle, so they transfer them to subcontractors. And this is, in my opinion, another big challenge of the industry. Because adding more links to the supply chain, each of which gets its margin, is nothing good.
Wait a minute, talking about the number of small shipments and carriers do you mean the industry in the United States or Europe? These are two completely different markets and operate on entirely different principles.
Right. In the United States, we have a lot of driver carriers (owners of one-person transport companies – note). In Western Europe, the situation is different. The majority are small fleets, up to 50 trucks. In Poland, for example, 85 percent of the carriers are businesses with 10 vehicles and below. Although, of course, there is still a group that has only one to five trucks.
Therefore, depending on what company we are talking about, it may turn out that our application addressed to drivers (Carrier App Uber Freight – an app similar to that used by users of Uber, Uber Eats, etc. – note ) is not the best solution. However, we are also developing our (logistics) platform, which will also be available in the form of an application.
So if you are a carrier who has many trucks and you use a dispatcher or another person who manages your transport, you can use this tool. There you can allocate loads to lorries and manage the entire transport ecosystem in the company. Because with this tool, we also connect both sides.
However, still referring to your question – we’re just starting in Poland. And it is also a moment for us when we will have to start learning a lot. I do not know the answer to all questions, but I would like to meet, for example, with smaller forwarders to talk and learn their point of view.
One thing puzzles me – haven’t you been late with entering Europe and Poland? Platforms connecting shippers and carriers similar to what you are talking about already exist and are being developed or are planned by many companies.
Good question. How many years has the transport industry been operating? 80, maybe 90. This is one of the most critical sectors in the world. In Poland, almost 75 percent of all loads are transported by road. Transportation adds nearly 11 percent of the GDP, of which road transportation is a part. So I think the industry has a future.
And did we appear too late? No, I think the time is right. Technology has developed, customers are more and more familiar with it, and carriers have become open enough to start trying new solutions.
And what makes us different from other players on the market is that we have proved that we can operate on a larger scale. Our clients make millions of transactions every day. And the technology Uber built, from maps and routes to payments, will help us in the case of Uber Freight.
What about carriers who are already operating on some transport platforms or exchanges? Will you lure them?
Everyone can use Uber Freight. As a carrier, for example, you have the right to choose the order you want. If the price is reasonable and you provide quality and technology, entrepreneurs will be satisfied. And they will use this platform. That’s what we do – we try to create a product that customers will love. See what happened in the United States. We started two years ago, and today we have 400,000 drivers.
You are just entering Poland. Why there?
I think Poland has an incredibly exciting logistics market. It is large, growing very fast, just like the domestic transport market. And, which maybe some do not support, drivers perform nearly 60 percent of international transport in Europe. So, as you can see, Poland plays a vital role in this industry. Also, there are many small carriers there, which, I believe, our technology can help to start a business.