Todd Souder, head of digital brokerage at Uber Freight, readily concedes that digital brokerages early on had a reputation for strong technology and poor customer service.
In an interview with FreightWaves, he said automation at Uber Freight will always be “a big push for us.” But it had its shortcomings.
“I think digital brokerage got a bad name out of the gate by trying to force everybody through one way of doing business,” said Souder, who joined Uber Freight (NYSE: UBER) at the start of 2022 after more than 13 years with UPS subsidiary Coyote Logistics (NYSE: UPS). “We really want to try to make sure we balance out the need for human expertise and what the automation and digital aspects of our business can do.”
Uber Freight has had a significant jolt to its model in the past two years: the $2.25 billion acquisition of transportation management company Transplace announced in July 2021 and closed in November of that year. It has been described as the merger of an upstream company — Transplace, with the services it provides to the shipper community — with a downstream provider of capacity, Uber Freight, a company that owns about 1,000 trailers, doesn’t employ a single driver but has a huge network of independent owner operators that use its service.
“Digital procurement,” a term Souder used to describe the basis for the legacy Uber Freight side of the company, will continue to be a “big push. We rely heavily on automation.”
The 90%-10% split on customer experience
“But you know, 90% of that could go well, but on that 10% that doesn’t, now you have experts on the other end that are waiting to support the customer,” Souder said. Prior to that, Souder conceded, “we were falling down there.” The company was operating more on a “one-size-fits-all-approach for the digital side,” he added.
The degree of overlap between the two sides, Uber Freight and Transplace, is an issue that Uber Freight management has consistently sought to tackle. In a joint interview with FreightWaves last fall, CEO Lior Ron and then Transplace President Frank McGuigan stressed that the carrier-focused digital brokerage and the shipper-driven legacy Transplace business would remain separate where areas of data disclosure and sharing of other confidential information might create concern among customers.
Ron said the company would “maintain an absolute separation of state and church and be sure that none of the operational insights pricing bleeds to the 3PL and broker side of the house.”
While Souder stressed in the interview about that division on proprietary information, he said he sees various ways in which Transplace culture has aided the customer service push at Uber Freight. Reiterating the concept of the wall between the two legacy divisions, Souder said beyond that limitation, it has “been interesting to see how we get those two groups to intersect while there is still clearly a wall,” but added that “getting some best practices in place has been key here.”
His status report: “So far, so good.”
The Uber Freight model coming into the merger, Souder said, has been “heavy digital-first when interacting with our carriers, getting them onboarded and trying to automate as much as we possibly can.”
Transplace’s ‘customer-centric’ culture
Transplace came into the merger as “very customer centric, operating in a way that was very unique to each customer,” Souder said. Uber Freight operated with “heavy standardization” in contrast to Transplace’s “very-customer-nuanced-way of operating.”
“There were definitely areas to be taken from each of those things and standardize where we can when working upstream, but then also bring more of a customer service element that is more typical of a traditional brokerage” is how Souder described the ways the two parts have been able to adopt “best practices” across the board.
“Specifically with our owner operator community, if you would call in and had an issue, you might get somebody on the phone that didn’t know what an issue was, or you’d get a call center,” Souder said, explaining the shifts the company has undergone in its customer service operations. If there were problems with a delivery, Souder said the approach to customer service was to “try to redirect everything through the app.”
He said there’s been a change in that approach. “Now when you do call, you get an expert on the phone,” he said. “You don’t get a call center that doesn’t know what your issue is going to be.”
While that shift does have some degree of specificity, when Souder talks about other areas where Transplace and Uber Freight have strengthened each other, the precise practices are not quite as clear. But he expressed enthusiasm for what was to come.
Although Transplace can’t share proprietary information about its shipping clients with the brokerage side of the house, Souder said it can divulge what are those shippers’ best practices, including what some of them are coming out of the brokers and carriers that are servicing those shippers.
“I think we’re a lot harder on ourselves internally as a result,” Souder said.
The combination has led to less formalized relationships between the two sides of the house, Souder said. “What you’re talking about here really are more kinds of philosophies, where we picked out the best practices that (legacy Transplace) was doing with customer relations,” Souder said. “So there are some kind of hard operating procedures that maybe you didn’t do before and you can do now while still keeping the two of them separate.”
The 4PL part of the business — the legacy Transplace operations — can “give us the best practices of the shipper,” Souder said. But he quickly drove home the same point as Ron did last fall: “But not sharing specific customer data by any means. It’s more so what’s going on out in the market and what are the best practices that other brokers and carriers are providing to these big shippers.”
Recent financial struggles
It’s difficult to measure what the impact has been on Uber Freight’s bottom line from the Transplace acquisition. Since it closed in November 2021, the freight market has gone from one of the best ever to one of the worst ever. Uber Freight’s financial performance within the parent firm’s earnings report are measured in EBITDA, and the recent record has been brutal: fourth quarter EBITDA in 2021 was negative $25 million, followed by three positive quarter of $2 million, $5 million and $1 million, with the fourth quarter of 2022 coming in at negative $8 million and finally a negative $23 million in this year’s first quarter.
Layoffs at Uber Freight in January were all in the brokerage business rather than the legacy Transplace side of the company.
Souder’s description of the relationship between the two suggested that it’s far from a system where shipper needs managed by Transplace get fed directly or automatically into the carrier network using Uber Freight’s brokerage capacities. But he said it was a “definite advantage for Transplace to be close to use and to push us where needed,” in comparison to the relationship Transplace might have with another brokerage or carrier.
Similarly, Souder said, Uber Freight is able to provide Tranpsace with information on “what we’re seeing in terms of buying power.” That’s not as valuable as it might be at other times, Souder said, given excess capacity in the market. But in those more normal times, “we can give more insights back to Transplace that they can then give to their shippers.”
Asked where he saw disappointment in the progress of putting the two groups together, Souder said the ability to better use “cross booking channels” had so far come up short but has potential. “I would have hoped it could have moved a bit faster,” he said, defining the issue as “finding the best possible service and capacity that we have between the two brokerages. I think bringing those two together would be something that I’m hoping to see in the near future.”
Asked to clarify the definition of “cross booking channels” after the interview, a spokesman said the cross-channel technology “allows Uber Freight to identify the right load and route it to the book channel to book it,” with automatic booking, a bid and a manual booking cited as the channels. Integrating Transplace’s brokerage activities has “made good progress.”
Competitors are lurking
Digital brokerages like Uber Freight are not competing against an industry that is sitting still. Offerings like Hunt 360 from J.B. Hunt (NASDAQ: JBHT) or those of C.H. Robinson (NASDAQ: CHRW) are just a small part of more mainstream carriers or brokers pushing back against the upstart digital brokerage community.
That leads to the question: what is the “value proposition” of a company like Uber Freight when the uniqueness of a digital brokerage offering such as theirs or that of Convoy doesn’t seem all that unique anymore?
Souder ticked off a few points in his argument. First, “I don’t know many others that have 80% to 90% of their freight digitally or automatically booked digitally on the procurement side,” he said. “That’s still tough for some of our competition,” he added, citing the fact that the longer time in business for Uber Freight means that it believes it is ahead in such things as carrier sales.
He also cited what he called the Uber Freight app’s “internal pricing tools and its pricing algorithm” as being superior to the competition. “I think we’re constantly coming up with new ways to interact with customers and more things that they can do themselves,” he said.
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