Uber Freight goes big, in $2.25B acquisition of Transplace

Earlier today, San Francisco-based Uber Freight, a subsidiary of the ubiquitous, ride-sharing service Uber, whose proprietary app matches trucking companies with loads to haul, announced it is acquiring Frisco, Texas-based Transplace, a non-asset-based third-party logistics services provider, for roughly $2.25 billion and consisting of up to $750 million in common stock of Uber. Transplace is owned by TPG Capital, the private equity platform of alternative asset firm TPG capital. TPG acquired Transplace in 2017.

The deal is subject to regulatory approval and other customary closing conditions, according to Uber Freight and Transplace.

The companies also explained that the acquisition will create one of the leading logistics technology platforms, with one of the largest and most comprehensive managed transportation and logistics networks in the world.

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, in a statement. “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 that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.”

And Frank McGuigan, CEO of Transplace said in the same statement that the acquisition will combine the world’s premier shipper network platform with one of the industry’s most innovative supply platforms, to the benefit of all stakeholders.

“Our expectation is that shippers will see greater efficiency and transparency and carriers will benefit from the scale to drive improved operating ratios,” he said. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment. Finally, we want to thank TPG for their partnership as we have worked together to position Transplace as a leader in supply chain innovation.”

The companies also said that this meshing will optimize the movement of freight throughout the entire marketplace while also providing shippers with best-in-class services for shippers and creating new carrier opportunities, too. They explained that the pairing of Uber Freight’s digitally-enabled carrier network and Transplace’s shipper technology and operational offerings will provide what they called a fully scaled logistics platform built to meet both shippers and carriers where they are, no matter the size of their business or their transportation needs.

Other key aspects of this deal highlighted by Uber Freight and Transplace include:

• shippers having access to an even more robust set of technology solutions across all transportation modes and services, bolstered by support services based on Uber’s advanced technology and data science expertise;
• carriers having the ability to collaborate directly with shippers within a seamless marketplace as well as access high quality freight across multiple expanded service lines, including intermodal, cross border and Less-Than-Truckload; and
• Uber Freight’s brokerage will continue to operate independently from Transplace’s managed transportation services to ensure the highest-quality service for shippers

“This is a transformative deal, said Ben Gordon, Managing Partner of Cambridge Capital, an investor in niche supply chain leaders and also Managing Partner of BGSA Holdings, a leading mergers and acquisitions advisory firm focused on the transportation, logistics, and supply chain technology sector. “It gives the ridesharing company a major logistics platform. It combines market-leading technology with a top player in asset-light logistics. And it could help Uber's freight business become profitable. I remember when Transplace was founded in 2000. Six trucking companies [J.B. Hunt, M.S. Carriers Inc.; Swift Transportation Co.; Werner Enterprises Inc., Covenant Transport Inc. and U.S. Xpress Enterprises Inc.] merged their logistics arms and added a .com suffix. Since then, the company has grown to reach $11B of freight spend. It remains at the intersection of Internet and logistics, as the Uber deal shows!”

Evan Armstrong, president of Milwaukee-based supply chain consultancy Armstrong & Associates Inc. called this acquisition a big deal, with both companies fitting together nicely, as they are both players in the domestic transportation management (DTM) 3PL segment, have proprietary technology, with Transplace in managed transportation and Uber Freight in the digital freight brokerage space of DTM.

“Transplace is number two in terms of gross revenues behind Transportation Insight [based on Armstrong data] for managed transportation companies, and Uber Freight is growing,” he said. “Combined, they will be the eighth largest U.S. 3PL, at $4.4 billion, with Transplace at $3.4 billion and Uber Freight at $1.01 billion, behind DHL Supply Chain North America, the seventh largest, based on 2020 gross logistics revenues. Globally, it makes them combined, at $4.4 billion, number 23 on the global 3PL list [also based on Armstrong data].”

As for what shippers can expect, Armstrong said this deal will be beneficial in various ways.

“If you are a customer of Transplace, you will be able to benefit from Uber Freight’s larger size and scale and better technology around freight brokerage,” he said. “And for Uber Freight customers interested in a more strategic relationship and more of a managed transportation relationship, they can be provided with Transplace’s expertise in that area.”

When looking at the U.S. DTM 3PL segment, Armstrong said that the total market value is $91.2 billion in gross revenue, with freight brokerage accounting for $75.3 billion and managed transportation accounting for $15.9 billion, or 17.4%.

“Transplace has struggled in the freight brokerage area, their current freight brokerage is still kind of subscale,” said Armstrong. “So, they will get a lot more scale by going to Uber Freight. Uber Freight, of course, has very good technology around freight brokerage. It has things like upfront pricing and good digital freight matching to match shipments to loads, visibility and the whole tender and acceptance process. Transplace is very good at optimizing less-than-truckload shipments and building truckloads. I think it is going to be pretty beneficial for customers who are looking to have freight brokerage capabilities as part of their routing guide and also an outlet beyond the core carrier group. Also, for Uber Freight customers who really want more of a managed approach, plus freight brokerage abilities. They each have a lot of focus on continuous improvement, as well as a lot of focus on technology, so they should fit together from a cultural standpoint very well.”