The Freight Pod
The Freight Pod is a deep dive into the journeys of the transportation and logistics industry’s brightest minds and innovators. The show is hosted by Andrew Silver, former founder and CEO of MoLo Solutions, one of the fastest-growing freight brokerages in the industry. His guests will be CEOs, founders, executives, and leaders from some of the most successful freight brokerages, trucking companies, manufacturers, and technology companies that support this great industry. Andrew will interview his guests with a focus on their life and how they got to where they are today, unlocking the key ingredients that helped them develop into the leaders they are now. He will also bring to light the fascinating stories that helped mold and shape his experiences.
The Freight Pod
Ep. #40: Solo - Uber Freight announces Broker Access - My Perspective
Uber Freight announced it's newest capacity-as-a-service offering, Broker Access. The tool is designed to provide capacity for other brokers through the Uber platform. Uber has tens of thousands of carriers within it's network through the development of it's own brokerage and the acquisition of Transplace. My concern with this program is, in my opinion, this is a case of double or co-brokering. Whichever terminology you choose to use, it represents a problem as most shippers would be very opposed to any type of arrangement where one broker is procuring capacity from another broker.
During the episode, I break down why I believe what I do about this program, and what I think Uber should focus on moving forward to eventually reach sustainable profitability.
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*** This episode is brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services. Visit gorapido.com to learn more. ***
A special thanks to our additional sponsors:
- Cargado – Cargado is the first platform that connects logistics companies and trucking companies that move freight into and out of Mexico. Visit cargado.com to learn more.
- Greenscreens.ai – Greenscreens.ai is the AI-powered pricing and market intelligence tool transforming how freight brokers price freight. Visit greenscreens.ai/freightpod today!
- Metafora – Metafora is a technology consulting firm that has delivered value for over a decade to brokers, shippers, carriers, private equity firms, and freight tech companies. Check them out at metafora.net. ***
Welcome back to another episode of the Freight Pod. I'm your host, andrew Silver. If you're watching this on YouTube, you can see my dog Bandit sleeping behind me. He's tired, it's late. Well, it's not late it's 7 o'clock pm. We're shotgunning this episode because this morning I woke up and I walked out to my couch in my underwear, I might add and opened my phone, checked a couple apps, one of which was LinkedIn, and I saw a post by one, brooks McMahon, vice President of Emerging Products and Business Development at Uber Freight, and his post was about the latest and greatest tool that they are now offering to brokers, and it's called Broker Access, and essentially what this tool is is a way for brokers to access Uber Freight's capacity that they've developed over the last seven years with their own brokerage and with TransPlace's brokerage and TransPlace's managed trans business.
Speaker 1:So with all of those, they've developed a large, large capacity pool and they're saying, hey, why not offer it to brokers? And I think I understand the idea of wanting to leverage every part of your business, every resource. You have to make as much money as you can. Well, I don't think making money has ever been their MO, but I understand the thought process of saying we have all this capacity, why not open it up to our competitors, even though they don't want to call them their competitors? I think this article, I think you should read the article, I think you should check out the video and learn as much as you can about broker access and make your own opinion on the tool.
Speaker 1:As I sat there in my underwear this morning, I read what Uber announced and I thought this is ridiculous and, if I'm being honest, that was probably the first word I thought of. This is double brokering or co-brokering, whichever one you want to use, it's the same thing in my mind. I think it's ludicrous. This is a separate point that I want to talk about for a minute. So as I sat there, I typed out my own post and I condemned the concept and I didn't mean to light the fire that I did. I guess I should have known that was a possibility with what I was doing, but I did make a commitment to myself to be less inflammatory on LinkedIn a while ago and to stop engaging with people who I thought were just engagement farming and just posting shit to post shit.
Speaker 1:I try to use LinkedIn to add value, to provide insight based on my experience, my opinions on what's going on in the industry. I've tried to use it to help people understand who I am and what it would be like to do business with me, because that's what I think LinkedIn is for is for business, for connecting with people in business. And I did tell myself I would try to avoid inflammatory, post-controversial stuff and I broke that rule this morning. I kind of feel bad about it a little bit. I didn't mean to rain on Brooke's parade. I mean I know I did rain on his parade. I didn't mean to rain on his. I can't say that, I can't. I mean forget it. Let me move on.
Speaker 1:I think that this is a tool designed for brokers to source capacity. And if Uber was simply a software as a service solution, capacity as a service solution, if that was their core business, this would be a wonderful tool. In fact, I think they should make it their core business. I think DAP is no offense to DAT, but I think it's the most disruptible opportunity in the industry. I just think they have not really had their foot on the gas pedal for the last decade. It's kind of just we're coasting because nobody has done anything better. Nobody has been able to get better access or build a better network of brokers and carriers to participate with. Now there's a concept Shippers hate knowing that brokers use the DAT and I actually think that hatred is a little misplaced to an extent. Actually, I think it just needs context and the right way to say it is.
Speaker 1:If you read Brooks' article, he makes comments about how, essentially, brokers should use every tool available to them to procure capacity, and that's what this is. It's a new tool. They have, in his words, tens of thousands of carriers, a lot of really good owner-operators, small carriers. That's kind of how they built their network. Convoy was very similar with the smaller carriers, owner-operators, and he's basically saying hey, if you've got a carrier team, let them focus on mid-size to bigger carriers and we'll handle the little stuff for you. And I get what he's offering. The problem is they are a competitor. They're a direct competitor. They are a freight broker. That is where most of their revenue comes from, not margin, because they've lost hundreds of millions of dollars building this thing. Apparently it's billions. I got a text after my post this morning with one word from someone close to this situation and the only word they said was billions, and he was correcting me for saying that they had burned through hundreds of millions. He said it's actually billions. Regardless, the point is, it's a shit ton of money they've spent to build this massive freight organization, this massive freight organization.
Speaker 1:I should probably have prefaced this by saying much to well, whether or not you want to believe me, I am not an Uber hater to my core. That is not what I am. This is maybe the third time that I've said something negative about Uber. Maybe it's fourth or fifth. It's happened more than it has with any other company. That is a fact, but I believe every negative comment I've made about Uber was fair.
Speaker 1:I also think it's my job as a podcaster. Did I say podcaster, whatever? As a podcast host, podcaster, I guess I can be as jaded as I want. It's my show. I can do whatever the hell I want, but it's not what I want. I want to be honest, I want to be fair. I want to let companies come on here and tell me about what they're doing and share with the audience what they're doing, and I want to poke holes in things that I think are not truthful, but I also would like to do it in a respectful way, and my only concern is I feel like I wasn't super respectful in how I posted about Uber today and I think that's where I seem jaded and maybe I am a little, but I'm not. It's largely because I feel like there's been deception at points and I think this is a deceptive practice. There's nothing.
Speaker 1:This article that has been written is really well written. With respect to all the benefits of this program in terms of the capacity they can offer, how to use it, it's well written. It's weird to me that there's not a single comment made about the fact that they are a competitor. Why, why not address it? Be honest with us, be transparent. That's always what has frustrated me about. It's what I hated about Convoy. Convoy had incredible marketing, which is why I'm not surprised this, coming from Convoy that this is packaged how it is.
Speaker 1:The first few sentences of this article are if you're in logistics, you know transformation is constant, evolution is a must. Resilience is essential. This sounds like we're about to find out about the coolest new thing in history. Instead, we are learning about a tool that is double brokering. There's no ifs, ands or buts about that. Well, the ifs, ands or buts are on the definition of double brokering, so let's talk about that for a second.
Speaker 1:People have argued today in my you know, I made my inflammatory post and it got 100 comments literally. And a lot of the comments some of them are about the notion of what is double brokering versus co-brokering, and the argument is that double brokering is when you give a broker gives a load to a carrier and that carrier brokers the load without authority. Thus it's illegal. And their argument then is that co-brokering is when there's a contract between two different brokers who agree to broker the freight twice. Sure, let that be the delineation. They're both fucking wrong. No-transcript Brokers have always, always had a bad reputation, and that's what pisses me off about the marketing tactics we've seen over time from the freight tech companies, who position themselves as one thing when it's really another or just deceptive tactics.
Speaker 1:One of the times I got upset about Uber is when they announced free quick pay for all their carriers. This is how they started the business free, quick pay for all carriers. That's a great offering to a carrier, but the intent was never to keep it free forever. It was just to suck in the capacity, get them locked in, and then now it costs, I think, 2% to get paid in two days before you get paid for free in like an hour. That never was going to work. It never was going to scale. It's bait and switch tactics. That's what it is. It's hard not to see that and be frustrated and feel like when these carriers are pissed at me as a broker, it's because of stuff like that.
Speaker 1:A few years ago, when I'm still with Molo, I did a company-wide meeting and I asked one of my old owner-operator carriers to come on to the company-wide meeting and just have a conversation with me in front of my company. I wanted to expose not all people are carrier reps, so I wanted them to just get a feel for what it's like to work with an owner-operator. It was a guy named Peter Achukwu and his wife Catherine. They were from Nigeria and they had migrated to the Atlanta area and Peter was a driver and his wife Catherine was the dispatcher and we did a lot of loads together, probably 20 loads a day. Sorry, 20 loads a month, which is about the maximum you could probably do with an owner op, unless it's all like local stuff. You could do multiple in a day and there was never like a question of if he would take the loads I mean, it was usually like I'd give him the load for the weekend, he would take them, but like we negotiate rates and all that stuff, it was fine. But almost never did he take a load from anywhere else.
Speaker 1:And I asked him on this company-wide meeting why did we have such a good relationship? Why did it work between you and I? And he said because you were always honest, and what I mean by that is you would call me and tell me that you had a Coke load picking up in Atlanta at a facility that is not easy to work with, picking up in Atlanta at a facility that is not easy to work with, especially if you're late. You wouldn't tell me it was open hours from eight to midnight. You would tell me you already missed the appointment, as in our company had missed the appointment and we needed you to go be a working and it was probably going to be a while and it was not going to be a fun experience. And it was not going to be a fun experience but we'd get you an extra couple hundred bucks, 150 bucks, whatever it was, and does that work? He was like I just appreciated that you never tried the oh yeah, it's first come, first serve, just to get me to take the load and show up at the facility and then I'm stuck there, so I might as well take the load, even though you lied to me about the intent on the way. That is how you have good relationships with anyone in the industry, on any side. You're just honest. You understand that there's hard stuff in our space, but the reason that we have such negative connotations for freight brokers is because of behavior that is deceptive in nature. It's that simple.
Speaker 1:So the challenge to me is will Uber come out and say to all their shippers like, hey, we're doing this with each of these brokers, here are the brokers we're doing it with. Will the brokers who are going to sign up for this, will they tell their shippers hey, I'm tendering the loads you give me to Uber. They are my capacity tool? If the answer is no, if a broker won't do that, then this is a bad tool and we all know that this was not built. Tell me I'm wrong. So I'm going to rant and then, if you tell me I'm wrong, I'll put my thumb in my mouth and shut the hell up. But the reality is brokers aren't going to admit that. They never will, because they'll lose the business because it's unacceptable. Shippers do not want brokers procuring capacity from other brokers. It's that simple. So I think if Uber wants to figure this out, they should get rid of their brokers.
Speaker 1:It's never made a dollar. It's never even come close. It's lost so much money it has for better or worse no, I don't need to say that but it has never made a dollar. It's never even come close. It's lost so much money it has for better or worse no, I don't need to say that but it has never made money. Uber has incredible people, some of the smartest in the industry, and you can't play both sides.
Speaker 1:So flexport, which is which bought convoys um, old brokerage technology is in a similar dilemma, but it is different. And I know it's different because I have friends at all of these companies, some of which I talked to. I have guys at Uber and Flexport that I talk to every day and they've asked me about this before. And as I talked to the individual who oversees this from Flexport, it was a very intense conversation around like, should they or shouldn't they be selling to shippers while also selling to brokers? And he was adamant we shouldn't be selling to shippers and brokers. That's where it gets wrong. If this is purely a tool for brokers, it's an innovative new solution. It's weird how you got there, because you had to. You know Convoy spent a billion dollars to develop a capacity network that can now be a standalone load board. That's wonderful for Flexport, because they spent less than 1% of that I would guess because they bought it for scraps but they now have a meaningful tool that I think could work.
Speaker 1:I don't know if the cost makes sense. I haven't looked at the cost. My understanding for these companies is at least 25 bucks a load, but as much as 50, 70, 80, 90 bucks a load. There's not enough margin for us to be sharing it three ways. What's going to end up happening is carriers are going to get less money. It's just that simple. How many hands can there be in the cookie jar? The carrier's got his hand here, the broker's got his hand here and I don't have a third hand for Uber to put theirs in. But that's what's happening and I think to pass this off as just another resource is underhanding. It's underhanded it is. It doesn't sit well with me, but clearly I've tried to have Uber on the show and I hope they will come on the show. I can see why they maybe wouldn't after this, but I think I would love to learn more about all the things Uber's doing, and I've given credit to Uber a number of times.
Speaker 1:In my episode with Rob Haddock, we talked about how Uber created facility ratings, which is similar to how if you get an Uber and your driver does a good job, you give him five stars and you can get feedback. Uber applied that concept to freight and they were the first to ever do it and they did it in a way that's super efficient and effective Great, that's awesome. In a way that's super efficient and effective Great, that's awesome. And they should sell that. They should sell that to get opportunities with customers is what I mean by they should sell that Because it makes their business better. It makes their shipper partner's business better. It's good feedback.
Speaker 1:I had Alyssa Correale on the show. Correale on the show, correale on the show. She was incredible. I loved getting to chat with her. I didn't bring her on because she worked at Uber. I brought her on because she's a fascinating person and we had a great conversation. We talked about Uber a lot. We talked about PowerLoop and that could also be a great tool, great resource for their customers, and I've engaged with Uber's marketing team.
Speaker 1:I spent the summer trying to get them to agree to bring someone on the show, and I wanted an in-depth understanding of their business. I wanted to come to the Uber office, sit with their team, see the whole thing and then have a conversation on the record about what they're building. I think they're one of the more fascinating organizations in our space, for better or worse. I don't know the answer. Yet If the thing never makes a dollar and then gets sold off for pennies on the dollar, then it was a massive waste of time, unless some of the tools live on, like in convoys, I think I mean there's a tremendous fallout, in a good way, of convoy talent that has gone off to do new things in the last year. Look at Ryland Hawkins working with my brother at Cargado. They're building something special over there.
Speaker 1:That's a true load board. That's what Uber should do. You've got tens of thousands of carriers. Give up the brokerage. It ain't working. Be a managed transportation company. Be a load board organization. Be Yelp for freight. Create a Yelp tool through your Uber ratings, but stop trying to broker freight. Be agnostic. If you do that, everyone all these small brokers will sign up. But right now, these small brokers that are going to sign up should be scary Because if their shippers find out this is how they're doing business, I don't understand how they have longevity.
Speaker 1:I don't know if these small brokers have longevity to begin with. I mean, we're getting to a place where they're going to outsource 99% of their business. Their appointments will be scheduled by queued, the inbound calls will all be answered by Happy Robot or Fleetworks, and Uber will cover all the loads. So what the heck are the brokers doing? You certainly don't have any carrier reps. You don't have ops reps, or many of them. And then you have a couple of salespeople. And what are you selling? You're selling everyone else's tools. What's different about you?
Speaker 1:I think capacity is something that has to stay in-house. You pull it from other places and then you want to own it. You own it by developing really strong relationships with the carrier, by having good freight to give them as consistently as possible, and that's why you need a stellar sales team out there getting new business. And on the carrier side, you need strong people who can develop relationships all across the board. I understand it is not as effective in terms of time to work with owner-operators. But man, is it fun If you get good ones in your network. I mean, I booked 30 loads a day, all on owner-operators. It's possible, it's doable. I should correct that I booked 30 loads a day and like 25 of them were on owner-operators. I had a few bigger carriers that haul booked 30 loads a day and like 25 of them were on owner operators. I had a few bigger carriers that hauled some loads a day. It's doable and I understand people want to do more with less. But this one piece, this one slice of passing the load to another broker to procure the capacity, I think is where we cross the line.
Speaker 1:I am happy to have Leo or Ron on the show to talk about this, to talk about the entire business. I hope he'll come on. I understand why he wouldn't, but I hope he will. I think that if the election taught us anything, it's that podcasts have power and discourse when we disagree is a great way to understand one another better. I am not someone who can't be convinced of something. I will ditch my opinion in a minute if you can convince me that this makes sense, like I think. I would start and end on the shipper question Is a shipper okay with this? Are most shippers going to be okay with this? Because I'm sure you'll find a few here and there who just say, I don't care, give me the lowest price and okay, fine, there's always going to be these outliers. You've got this massive industry and there's a hundred million. There's so many different ways to do this, but if I'm a shipper, here's how I think about this.
Speaker 1:Moving forward, I've always believed that shippers should be way more interested in how brokers procure capacity, and I think there's a ripe opportunity for someone like Good Shipper ISO to go deeper on their tooling that they're offering and get into the mechanics, the makeup of a carrier network, so you could look at the size of the carriers you use, how often you use each carrier, your average loads per carrier, per carrier's load, whichever it is. There are a number of things you can look at that would indicate network strength and I think, if I'm a shipper, that's the next thing that I'm going to start to evaluate, because there's not a need for you to have 50 brokers. You should have anywhere from three to at most like 20. If you have a really big business, you don't need more brokers than that, but you've got to pick out of 15,000 or 20,000, wherever the hell the number is. Now. I know I used to say a bigger one, but I just corrected it down. And in making those choices we all sound the same. But it's going to sound a little different when people stop saying I have a really strong carrier network and say I have Uber's carrier network, but I don't think that gets you in the door, I don't. So I think there's more to come.
Speaker 1:On carrier procurement, I think it's one of the most essential parts of brokering literally like 50% of it and the idea that a broker is just passing that off to another broker is so crazy to me. So I'm sorry for maybe reiterating myself so much, but this is my perspective and I could easily be wrong. Prove me wrong. Prove me wrong. You know, prove me wrong. Show me that you grow this thing and make Uber a super profitable organization that does good, takes care of carriers, is honest and open about how they're managing the business. That's, you know. That's what I would like to see out of the organization as it continues to. You know, invest billions, and that's all I would like to see out of the organization as it continues to. You know, invest billions and that's all I got, so I hope this was insightful. I hope this gave you an opportunity to see a different side of the show, as we just tackle a very specific concept. Have a good one.
