FinTech: Uber May Hive Off Uber Freight, Its Truck Broking Business
In January, Uber Freight cut 3% of its workforce.
Uber (NYSE: UBER) is considering spinning off its Uber Freight logistics unit in a sale or as a separate publicly traded company in order to focus on its core ride-hailing and food delivery businesses. The company is discussing options with advisers, but no decision has been taken and plans could change, according to a Bloomberg report, which cited confidential sources.
An IPO is the more likely outcome if Uber decides to hive off the unit. In that case, the timeline could be as long as a year, and a successful result would also depend on market conditions.
The report is significant given that Uber’s freight unit has struggled during a broader downturn in trucking. The company is therefore looking to streamline its focus on more profitable areas such as the ride-hailing and food-delivery units, which are clocking growth in their businesses.
Meanwhile, Uber Freight is a registered freight broker and is not a motor carrier. Its platform matches trucking companies with prospective shippers.
Uber Freight has been successful in building its presence with national brands by utilizing the Uber brand and Share technology, according to Chief Financial Officer Nelson Chai on Uber’s conference call. However, the company is rejigging its organization to focus more on small and mid-sized shippers.
Chai warned that while the company expected to gain traction in this area, the current downturn in the broader freight industry would weigh on the prospects of its business.
As a result, the freight business may continue to underperform compared to previous years, when market conditions were more favorable. In January, the unit cut 3% of its workforce.
Related Story: Leading Logistics Investor Greenbriar Commits $500M To Uber Freight
Photo by Brian Stalter on Unsplash
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