Uber has agreed to buy logistics planner Transplace for about $2.25 billion in a move to create one of the biggest platforms for arranging and tracking the shipment of goods.
Freight accounted for just $302 million in gross bookings of Uber’s overall revenue of $19.5 billion in the quarter ended March 31. Uber launched Uber Freight in 2017 as part of its effort to expand beyond its core ride-hailing business.
But the addition of Transplace would make Uber Freight the eighth-largest third-party logistics company in the United States, with some $4.4 billion in revenue, according to logistics-industry research group Armstrong & Associates.
Transplace is currently owned by the private-equity arm of investment firm TPG. Uber said it will acquire Transplace with up to $750 million of its stock and the rest in cash.
“This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform,” Lior Ron, head of Uber Freight, said in a news release.
As The Wall Street Journal reports, Uber has been seeking to bulk up its shipping operations as its ride-hailing business has taken a hit from the COVID-19 pandemic.
“The company is seeking to bring greater efficiency through digital bookings to the domestic shipping sector but faces strong competition from traditional middlemen that match freight loads to available trucks and from a lineup of tech-focused startups including Convoy and Transfix,” the Journal noted.
Transplace, which was formed in 2000 through the merger of the third-party logistics operations of six of the largest U.S. truckload carriers, claims to have about $11 billion worth of freight under its management, with customers including Colgate-Palmolive and Del Monte.
“This transaction is very complementary,” said Evan Armstrong, president of Armstrong & Associates, noting that Transplace has been strong in transportation management but weaker in Uber Freight’s core business of freight brokerage.
As a result of the deal, Transplace CEO Frank McGuigan said, “Our expectation is that shippers will see greater efficiency and transparency and carriers will benefit from the scale to drive improved operating ratios.”