How high demand and lack of drivers is forming the ‘perfect storm’ for Uber Freight

Uber Freight CEO Lior Ron joins Yahoo Finance to discuss the challenges of the labor shortage on Uber Freight as continued demand drives the economic rebound in the U.S.

Video transcript

- Welcome back to the "Yahoo Finance Live" on this Jobs Friday morning, talking a lot about the state of the US labor market. Certainly saw a rebound today-- 850 jobs added back to the economy. [AUDIO OUT] abound amid a demand crunch across all [AUDIO OUT] services, goods, so on, and so forth. Certainly, one area that has seen a major crunch is within the supply chain, specifically the trucking and the rail car business.

You don't have enough drivers. You don't have enough trucks. You don't have enough containers-- really, not enough of anything. Joining us now to talk through some of the challenges they're seeing in their business is Lior Ron, the CEO of Uber Freight. Lior, thanks so much for joining us this morning to talk a little bit about how you guys are seeing the recovery. So let's just start with the state of your business today relative to 2019-- the kind of growth you had hoped to see over the following two years, and what level of capacity you're able to run at right now.

LIOR RON: Yeah, thanks for having me. On our side, business is really booming. We are going super fast-- more than 50% year-over-year. Lots of new shippers on the platform. We now have the largest digital network with over a million truck drivers for the Uber Freight platform. But that growth is coming because, to your point, we are in a very abnormal trucking market where demand is at an all-time high and supply is at an all-time low.

- Lior, that right there, that dynamic, strikes me as pretty darn good for pricing for your business. Is that right?

LIOR RON: It is. The reality is, there are just not enough trucks. As you just mentioned, everybody's buying more automotive. Everybody's building more houses. Everybody's consuming more inventory and more goods. We consume more packages. There's just more, and more, and more stuff we all consume.

And also, there's just so much volatility. There is an imbalance of containers. There's an imbalance in warehousing. There's an imbalance on last mile.

So it's really the perfect storm well there's just so much more demand-- as a matter of fact, almost 2x more demand year-over-year for trucking activity-- and on the other hand, there's just not enough truck drivers. A lot of carriers are choosing to stay home, employment and benefits, it's they want to-- concern from COVID. Some of the aging drivers have exited the industry.

So there's not enough drivers. We're still at maybe 70% of capacity compared to pre-pandemic. And that gap, to your point, between demand and supply does create a very tight market and a very high price environment. And we're trying to do our best to handle the demand and really help those truck drivers come back to the market.

- What I'm hearing from you now, really, is a booming economy. From where you sit, is the US economy-- is it overheating?

LIOR RON: That's a great question, and I would leave my economist colleagues to answer that. But I can say that I am seeing a lot of heat, and I'm seeing a lot of heat across all dimensions of the economy. And I think that will remain the case on our part, based on our projection, at least for the next few months. We have now [? beverage ?] season, with a lot of truck capacity going into July 4th and then into the summer months. We see industrials recovering and picking up. So we don't see a short end in sight for that peak, and therefore very strong demand for truck activity.

- And Lior, I'm curious how you guys are seeing the business right now between that short-- that last mile, where everyone is spending so much time and attention right now, versus long-haul deliveries. I mean, is the demand, I guess I should ask, for last-mile delivery, both vehicles and staff, is that also hampering some of that longer-haul trucking which is the base of the industry, but I think a little bit more of a grueling part? There's a few more licenses involved there, so on and so forth. Is that internal industry dynamic creating an imbalance as well?

LIOR RON: It does. Behind any last-mile shipment, there's a truck making the first and middle mile. So the trucking demand is definitely impacted by the boom of e-commerce and last-mile. Uber has benefited from the last-mile activity, and Uber Freight is definitely seeing momentum from all of that last-mile action and activity going into the middle mile.

And we are just supporting drivers. And the interesting shift we are seeing in the market is, although a lot of truck capacity and carrier capacity is still diminished compared to pre-COVID, the secular trend and the shift we are seeing on our side is a lot of the small carriers, [AUDIO OUT] the mom and pop shops, are entering the market with very high velocity because the prices, to your point, are elevated. It's much easier for them nowadays to get a truck, fill demand with platforms like Uber Freight, and as a result, actually, there's a secular shift where, compared to last year, there's almost 2x, 3x more new registrations coming from the small guys.

And as someone who's trying to empower the small guys with technology, that's definitely a very strong trend, and it's definitely something we're very excited of seeing. And it's definitely an opportunity to bring back some of the capacity by really supporting the small guys and allowing them to make an earning and come back to the market.

- And Lior, before we let you go here, how much longer before we see an autonomous, semi-truck on the road in a critical mass?

LIOR RON: Ah, the billion-dollar question. Thanks for asking. I would say--

- [INAUDIBLE] asking it.

LIOR RON: The $100 billion question. It's happening, but it's going to take some time. I think the beauty of trucking is you can automate a very fixed lane, a very restricted geo, and you can make a thriving business even if only you have automated a portion of a highway in Arizona, or in Nevada, or in the middle of the desert with perfect visibility and very little pedestrian cars around you.

So I think that will happen. Over the next two, three, four years, we will see the first deployment of an autonomous truck without a driver on a very limited segment. But from there to full scale, in all times of day, in all weather, in all geos, under all operating conditions, I think that's going to take more than a decade.

But definitely exciting to see. I think we're going to play a very important part in that, because you need a driver in the first mile and last mile to transfer the trailer from the autonomous truck to the distribution center or to the hub. But early days, and definitely something worth paying attention in the next couple of years.

- All right, right really interesting conversation, and I really appreciate you taking the time to speak with us this morning. Lior Ron is the CEO of Uber Freight. Lior, thanks so much for jumping on. I hope we'll be in touch.

LIOR RON: Thanks for having me again. Always a pleasure.