Uber Freight is launched in Germany and faces local competition

FRANKFURT (Reuters) – The American company Uber (UBER.N) launches a freight platform in Germany, engaging local technology startups in a race to grab a share of the $ 500 billion European trucking market.

Germany will be Uber Freight's second biggest market after the Netherlands, a Reuters leader said with further expansion once Europe's biggest economy moves smoothly .

In the United States, Uber Freight already links 48 states and generates quarterly revenues of more than $ 125 million.

Under the founder of non-conformist Travis Kalanick, Uber's request to establish mobile phone services in Germany has been fiercely opposed by taxi companies, politicians and courts.

This time, led by Kalanick's successor, Dara Khosrowshawi, Uber has consulted German officials and the industry for support for its freight business, said Daniel Buczkowski, Uber Freight's European Expansion Manager. .

"After the change of direction, we are really committed to doing what is right," said Buczkowski, a German national, to Reuters.

Uber will be competing with local players, including the Berlin-based sennder start-up, which raised $ 70 million from private equity firm Lakestar and other investors for a valuation of $ 300 million. dollars, and is already more present in Europe.

Flexport, a San Francisco-based full-service platform, also raised $ 1 billion earlier this year from investors led by the Japanese group Softbank (9984.T).

The British companies Zencargo and FreightHub, which, like sennder, have their headquarters in Berlin, have also taken some investment recently.

EMPTY TRAVEL

The purpose of the freight platforms is to digitize an industry still dominated by companies with 10 trucks or less and to improve their efficiency: trucks are empty on 21% of the distance traveled.

Other gains can come from tracking real-time shipments and automating payments in an area where trucking companies often lose weeks looking for bills.

"To make the most of this industry, it is essential to understand how to use those empty kilometers," said Nicolaus Schefenacker, co-founder of Sennder, created in 2016.

He told Reuters that, with the extension of its network, it was easier to model and predict traffic flows to ensure that shipments found the right truck at the right price. Although the freight technology industry is congested, the market is segmented and Sennder sees an obvious opportunity in the so-called full load market.

"The market is so huge that many players can coexist. That's also what we think of Uber Freight, "Schefenacker told Reuters.

THE MAN IN THE MIDDLE

Unlike Uber's mobile phone app or food delivery service, Uber Freight will operate as an intermediary in a market with an established price structure.

It will earn money from the margin between the price paid by the shipper and the amount it pays to the trucker, thus protecting it from the type of complaint filed by many taxi drivers who report having a hard time earning a decent income.

Uber, with a market capitalization of $ 74 billion, aims to adapt its model used in the United States, where many truck drivers are unique operators, in Europe, where family-owned businesses predominate.

Applications still face challenges ranging from the environmental issues facing a diesel industry to ensuring that drivers are not overloaded with long hours of driving.

The sector also needs new recruits. The World Bank estimates that two-thirds of German drivers will retire in the next decade, threatening insufficient capacity for a sector that handles more than 70% of freight.