Starting today, shippers using MercuryGate’s transportation management system (TMS) will have access to Uber Freight’s network of carriers, guaranteed capacity and real-time market rates, MercuryGate announced this morning.
“Shippers need reliable information to drive speed and efficiency in their 24/7 operations,” said MercuryGate president and chief executive officer Joe Juliano in a statement. “By tapping into Uber Freight’s trusted carrier network, customers of all sizes can realize the benefits of a digital freight marketplace with access to real-time pricing and a vast network of available carriers and guaranteed capacity.”
MercuryGate is perhaps best known as a freight brokerage TMS, but the software company’s website lists Baker and Taylor, Chobani, Dillard’s, Moen, Columbia, Hibbett Sports, Jabil, Mohawk and Sephora as shipper customers.
The MercuryGate-Uber Freight partnership is similar to the Oracle-Loadsmart deal announced last month and confirms a new trend in the digital freight brokerage (DFB) space. DFBs are valued on revenue multiples as if they’re technology companies, but so far they have tended to grow like traditional brokerages, with enterprise salespeople working through the corporate hierarchies of Fortune 500 companies and bidding on freight lane by lane.
In other words, the problem was not so much mobile app downloads and stickiness – downloads can grow virally and stickiness can be tweaked with incentives as needed. The problem was a lack of freight. It’s still an expensive and painstaking process to acquire new shipper customers, and the kinds of companies initially targeted by most DFBs were large enterprise customers, who already have relationships with asset-based carriers and non-asset third-party logistics providers (3PLs).
This play allows Uber Freight to piggyback on MercuryGate’s network of shippers, and, more importantly, decouple freight volume growth from manual human effort (i.e., salespeople). By giving MercuryGate users access to on-demand capacity and real-time rates, Uber Freight is dramatically reducing the friction involved in joining its network.
TMS integrations like the Uber Freight-MercuryGate and Loadsmart-Oracle deals will likely be necessary for digital freight brokers to grow their freight volumes as quickly as their carrier capacity and maintain a balanced, liquid network. Shippers will benefit from better price discovery and arbitrage opportunities, especially if they can efficiently compare rates from multiple transportation providers.
“As part of this collaboration, shippers can depend on load coverage any hour of the day, seven days a week,” said head of operations at Uber Freight, Bill Driegert, in a statement. “Users can price and tender immediately, spending less time looking for prices and capacity and more time and energy delivering value to their customers and improving their bottom line.”
MercuryGate was founded in 2000. A year ago, the technology company was acquired by private equity group Summit Partners for an undisclosed sum, though the Wall Street whisper number was $390 million.
Uber Freight was founded in 2016 as part of Jason Droege’s Uber Everything strategy with team members from Otto, the self-driving truck company Uber acquired in 2016. Based on Uber Technologies’ (NYSE: UBER) latest financial reporting, FreightWaves estimates that Uber Freight is on a $500 million revenue run rate.