Latest News

Uber’s Transplace Buy Signals Platform Approach To Logistics

The emergence of the platform economy brings all facets of commerce together — and that includes logistics, which focuses on the matter of getting goods where they need to go.

To that end, Uber said Thursday (July 22) that it has struck a $2.2 billion deal to buy Transplace from TPG Capital.

As reported in this space, in the announcement detailing the transaction, the combination of the two firms brings together platforms that serve, separately, transportation and logistics, shippers and carriers. Uber Freight, of course, through its app, brings trucking together with shippers, and has 65,000 carriers in its network. On the Uber Freight platform, carriers look to source vehicles in the process of moving goods.

By taking Transplace on board, so to speak, Uber broadens its platform — perhaps we might say platform that exists within its broader platform — toward more actively managing freight itself.

Moving Toward High-Tech Automation 

In a presentation detailing the transaction, Uber said the Freight Division’s revenues have been growing at a compound annual growth rate (CAGR) of 106 percent for the past several years to a Q1 tally of $1.2 billion. Transplace, according to the filing, has seen its own revenue growth rate over that same period at 15 percent.

With a bit more granular detailed into managed transportation, the companies said in the presentation that shippers need “complete management” over the supply chain — and Transplace works with brokers or carriers to fulfill those logistics needs for the shippers. Third-party logistics technology — such as would be tied to the platform model — matches shippers with carriers to manage loads or lanes of travel to move that freight. Carriers then move goods from point A to point B. The freight under management for Transplace, the presentation noted, has been growing at 19 percent CAGR, to $15 billion in 2021.

The firms also said the $4 trillion freight industry is “run by trucks” and that transportation spending is growing by 6 percent, as measured by a compound annual growth rate through 2024 — at a clip faster than GDP. The third-party logistics outsourcing compound annual growth rate has been growing by 11 percent through the past few decades.

And like many verticals, complex workflows, interactions and inefficiencies impact the payments part of the equation.

In our own coverage of Transplace in 2019, and in a nod to how technology can streamline the logistics process, Rich Wessels, treasurer for Transplace, said there are “pain points” upstream through the freight journey before the payments are ever made. Wessels noted that any exceptions and discrepancies must endure a heavily manual process that can delay payments from shippers to carriers or cause payment errors. In 2019, Transplace announced a partnership with logistics industry payment processing firm TriumphPay, and with Paymode-X, the B2B payments platform operated by Bank of America and powered by Bottomline Technologies.

“Visibility is a big part of the value prospect and plays into carriers being able to make invoice-level, quick-pay decisions,” he said.

Having access to key data surrounding a transaction is critical for both sides’ reconciliation processes, he added.

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News