Uber Freight

Uber Freight: the market impact of COVID-19, March-April 2020

May 13 / US

The logistics industry is dynamic by nature, but this is an unprecedented time. March and April were among the most volatile months in recent history: volume surged in essential goods while demand for nonessential freight drove down, disrupting supply chains and creating a rare imbalance in the marketplace. In May, we’re starting to see evidence of a leveling-off as rates tick up and the surging spot market softens. 

At Uber Freight, we’re leveraging our technology to address challenges spurred by COVID-19 and move what matters. Over the past several weeks, we’ve worked with our shipper partners and carriers to move more than 30,000 relief loads across the US and more in Canada and Europe. We also want to provide as much helpful information as we can during this time to help our shipper partners make informed decisions. This is the first in a series dedicated to understanding supply chain pressures caused by COVID-19, drawn from trends we’re observing across our own marketplace. 

Volume

Demand for consumer essential goods surged in March, causing an increase in spot loads that leveled back out in April. In March, demand surged within verticals that produce essential goods, causing supply to tighten. Uber Freight spot opportunities surged 250% in March, a trend emblematic of a wider industry phenomenon as shippers moved quickly to meet the initial spike in consumer demands. As April progressed, the spot market began to normalize and dropped 40% month-on-month, returning to close to pre-COVID levels.

Rates

Rates declined, while costs for carriers climbed significantly, creating operational challenges that may limit supply. In March and April, costs for carriers increased as utilization dropped, while detention increased and insurance costs continued to rise. At the same time, rates declined as businesses began to adapt, and supply moderation factors such as increased regulation and declining truck orders placed strain on carrier businesses. All service lines were affected except for reefer rates, which held closer to steady throughout March and April due to the continued demand for food and beverage. 

Rates hit carrier cost floors in April, creating challenges for small carriers in particular, but rates are ticking up as we look to May. This uptick and other factors may support carriers in the long term, including hours of service revisions, lower fuel costs, and government small business protection plans. 

Carrier utilization

Market imbalances between inbound and outbound loads in certain regions in March stabilized in April. In March, we saw the surge in consumer essentials and decrease in nonessential freight together create a shift in typical freight demand mix, resulting in increased imbalances between inbound and outbound loads in certain regions. Uber Freight saw a 50-mile decrease on the average haul in March driven by a sudden increase in retail restocking loads (warehouses to stores) requiring more local, short-haul runs, before rebounding back to normal levels in April. 

This asymmetry placed strain on drivers who found themselves moving goods to certain regions but struggling to find loads moving out of them. Uber Freight’s bundling technology, which aims to reduce empty miles by enabling carriers to book loads and reloads together, helped offset the imbalance. The overall share and quality of our load bundles remained consistent amid a dynamic market in March, indicating that our technology has helped absorb the disproportionate increase in demand and maintain utilization. In April, as more carriers sought out technology to support their operations, Uber Freight saw the share of load bundles more than double by the end of the month. 

As April came to a close, these market imbalances showed signs of decline, and we expect them to reach normal pre-pandemic levels in May, with regional markets that previously saw large surpluses in inbound loads, like New York, now stabilized. 

Facilities

Facility dwell times increased while ratings fell in March; as dwell times returned to normal in April, ratings began to climb. Uber Freight saw a 9% increase in dwell time for carriers on our platform from February to the end of March before returning to normal levels in April. Facility ratings fell from an average of 4.27 stars in February to 4.15 at the end of March before steadily climbing back up in April to reach 4.20. 

Digital transformation

Digital operations proved critical to enabling fast, reliable service amid a changing market. Digital transformation is more critical than ever. Companies that invested in supply chain digitization before the pandemic have emerged better prepared than others—they can see the instant information they need to be able to make fast, informed decisions and adapt to rapidly changing market conditions. 

Despite supply chain volatility, Uber Freight’s service remained consistent. Tender acceptance on primary awards remained flat/up before rising significantly in April as we honored our contractual commitments while servicing surge volume to meet the needs of our customers and keep their supply chains moving. On-time performance also remained consistent: reliability on pickups and deliveries remained high in the face of tightened market conditions. 

More shippers are looking to partners who can also help them automate their operations. As the market stabilizes, shippers will be more receptive to new opportunities that cut costs and increase flexibility. Ultimately, automation and access to real-time information enables better, faster, more resilient supply chain operations through periods of disruption such as this. Uber Freight’s direct API integrations eliminate significant labor and friction in shipper operations and, on the heels of recent partnerships with BluJay and SAP as well as our recent touchless loads milestone, we’re accelerating our efforts to help shippers build sustainable supply chains that are resilient to global disruptions and stripped of excess waste. 

As the market continues to evolve, Uber Freight is committed to helping shippers and carriers keep essential goods, and our economy, moving. Check back next month for more insight into this evolution.