Uber Freight’s acquisition of Transplace is a done deal

The July announcement that San Francisco-based Uber Freight, a subsidiary of the ubiquitous, ride-sharing service Uber, whose proprietary app matches trucking companies with loads to haul, was 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, was made official today.

Transplace was owned by TPG Capital, the private equity platform of alternative asset firm TPG capital. TPG acquired Transplace in 2017. Uber Freight said that Abu Dhabi Growth Fund, D1 Capital, and CGM Grosvenor invested $550 million into Uber Freight, in partial financing for the transaction.

An Uber Freight official said that this combination of talent and technology ultimately creates one of the world’s leading logistics teams and suite of solutions during a time when supply chain innovation is more important than ever. 

And the companies said that this partnership will unlock myriad efficiencies and insights across the $16 billion of Freight Under Management (FUM) and also help to reduce transportation costs, improve service, automate processes and streamline the execution of freight for shippers of all sizes. What’s more, they also noted that through their combined networks, they will establish the largest global network of digitally-enabled carriers, reaching 135,000 high quality carriers throughout North America and Europe, for various services, including intermodal, cross-border, and expedited, among others.

Uber Freight and Transplace leadership both praised the closing of this deal in a joint statement.

“Logistics is going through a historic transformation. Unprecedented volatility, increasing supply chain complexities, and escalating shipping costs are driving shippers to modernize their supply chains with new technologies,” said Lior Ron, Head of Uber Freight. “By acquiring Transplace, we’re able to accelerate our vision for a seamless freight ecosystem and create the world’s first true freight operating system. Combining the leading shipper network and the largest digital network of carriers will enable us to immediately unlock new opportunities and efficiencies for everyone in the value chain — shippers, carriers, and ultimately society at large.”

Frank McGuigan, CEO of Transplace, noted that today it is more essential than ever to bring shipper and carrier networks closer together through a fully connected and transparent logistics ecosystem that addresses the evolving supply chain needs of all stakeholders

“The acquisition marks a turning point in the industry and a new era of delivering trusted outcomes by coupling best-in-class logistics platforms and managed services with the world’s premier shipper and carrier networks to dramatically increase value for customers,” he said.

When this deal was first announced in July, the companies 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.”

This deal is one of several high-profile deals that the freight transportation and logistics sectors have seen over the course of 2021. Industry analysts have attributed various drivers for these deals, including: getting into a specific vertical, expanding geographic reach and scale, and increasing technology offerings, among others.