United States based ride hailing firm Uber is introducing its freight platform in Germany. The company is projected to compete with German tech startups, all of whom are pushing to control a share of the $500 billion European trucking sector.
With this development, Germany is set to become Uber’s second foray in the Europe market, following the release of the freighting service in the Netherlands. According to a statement by a company executive, the company is also considering further European expansion, after the German operations start running without any hitches.
Currently, Uber freight has a well-established base in the United States, where it generates more than $125 million in revenue per quarter through its operations in 48 states of the country. Under the guidance of company founder Travis Kalanick, Ubers freight venture in Germany has had to go through stiff challenges in terms of court cases, local taxi companies, and opposition from politicians.
According to Uber’s head of the Freight division for European expansion, Daniel Buczkowski, Kalanick’s successor Dara Khosrowshawi has pushed Uber to enter into consultations with the relevant German officials and the local industry to drum up support for its freight venture in the country.
Uber Freight Competes in a Fragmented Market
Uber is anticipated to compete with local startups. These companies are aiming to digitalize the market which primarily comprise small scale firms with approximately 10 trucks in the fleet, which will allow for increased efficiency. Payment automation and real time tracking will allow for greater optimization of trucking processes.
Unlike the company’s ride hailing or food delivery apps, Uber Freight will operate as a middleman in the trucking market with preset structure for pricing. The company aims to generate revenue from the difference between the price paid by shippers and the amount being paid to the trucker, which would provide safeguards against complaints of inadequate payments for drivers.
Since the trucking market in Germany is largely fragmented, uber is aiming to use its United States business model, as the country’s freight sector is dominated by family run businesses.