Uber will invest $200 million annually and hire thousands of employees to bolster its two-year-old long-haul trucking venture, Uber Freight, the company, announced today. The expanded business will be headquartered in a newly opened office in downtown Chicago where it will house 2,000 employees that Uber plans to hire over the next three years.
Launched in 2017, Uber Freight connects truck drivers with shippers, much in the same way the company’s ride-hailing app pairs drivers with those looking for a ride. It’s part of Uber’s “other bets,” which includes its food delivery service, Uber Eats, and its New Mobility ventures like its Jump-branded electric bikes and scooters.
It’s a huge vote of confidence in Uber’s growing freight division, even as Uber’s overall business continues to hemorrhage billions of dollars every quarter. In August, Uber reported a record quarterly loss of $5.3 billion, much of which is attributable to one-time expenses like stock-based compensation. Still, its revenue growth has slowed, and its path to profitability seems longer than ever.
The trucking industry is not an obvious place for Uber to direct its resources. There has been a shortage of truck drivers over the last few years, with experts noting that there are not enough truckers to keep up with demand. This has led to a softening of the market, with prices dropping overall.
But Uber’s top executives say its Freight division shows promise. “Uber Freight continued to see impressive growth and great progress in Q2 despite soft market conditions,” Uber CEO Dara Khosrowshahi said in an August earnings call with investors. Still, the company did not break out revenue figures for its Freight business.
Lior Ron, head of Uber Freight, said the soft market conditions were just a byproduct of the truck industry’s “cyclical” nature. “Every time the economy picks up, the freight industry gets many more assets,” Ron said in an interview with The Verge. “Truck orders are at a historical high.”
Uber is continuing to lure drivers to its platform through well-established techniques, like bonuses and perks. Last year, Uber Freight introduced a perks program that offers truckers discounts on essential items like gas and new tires. The company won’t say how much it’s spending to subsidize its trucking business, but Ron insisted that Freight is the “fastest growing business in Uber.”
“We see acceleration in every region in the US.” he added. “Once you’re serving them, the compounded revenue from the shippers is only going up and up and up as we’re going deeper into the supply chain.”
Ron first joined Uber when the ride-hailing company acquired Otto, the self-driving trucking startup he co-founded with fellow ex-Google engineer Anthony Levandowski. Later, Google’s self-driving spinoff Waymo sued Uber, claiming that Levandowski stole trade secrets as a way to entice a sale from the ride-hailing company. The suit was settled in 2018, but Levandowski was recently charged with theft by the Justice Department. Ron, who was not named in either the lawsuit or the indictment against Levandowski, rejoined Uber last year to head up the Freight division.
Ron, who spoke with The Verge a week before Levandowski was arrested, called his involvement with notorious engineer “an interesting experience” that unfortunately went the direction that it did. “Obviously there was a lot of misinformation and misunderstanding in that old story,” he continued. “In the end of the day, the reason that I was super psyched about joining Uber [was because] this is the best place in the universe to be in transportation marketplaces, which we always viewed as the end game in terms of the business model.”