Welcome to Transportation & Logistics Briefing, a new M-W-F morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.
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UBER STRIPPED OF OPERATING LICENCE IN LONDON: Uber has lost its licence to operate its ride-hailing services in the city of London, Business Insider reports. Transport for London, the city’s transportation regulator, announced that it will not renew Uber’s licence, which expires at the end of the month. However, Uber can continue to operate past that date as it appeals the decision, which Uber has already signalled it intends to do.
The regulator said Uber’s approach to vetting its drivers and reporting criminal offenses by its drivers was inadequate. It also cited Uber’s use of Greyball, a software program that Uber used to disrupt regulatory and law enforcement investigations into its business practices, as another reason for not renewing its licence. Uber had been granted a four-month temporary licence in May while Transport for London conducted a review to determine whether it would grant Uber a five-year licence to operate in the city.
London is one of Uber’s most important markets — the company has 3.5 million users and 40,000 drivers there, according to Reuters. It is by far Uber’s most important market in the UK, where the company operates in 40 cities. Uber countered the regulators’ statements, saying that it has never used Greyball in the UK to disrupt an investigation, and that it follows the same background checks and criminal-reporting procedures as regular taxi companies. Uber has come under attack from a range of groups in the UK, which criticise the company for its much-maligned corporate culture, its pricing practices that undercut traditional London cabs, and the amount of taxes it pays in the UK.
The loss of its licence in London is just one of many regulatory and legal challenges Uber faces in Europe. Next week, Uber will appeal a tribunal ruling that designated its drivers in the UK as employees, entitling them to minimum wage and holiday pay. Additionally, the European Court of Justice (ECJ) is also considering a case over whether Uber should be subject to the same regulations as other transportation companies. The court’s advocate general issued an advisory opinion earlier this year that Uber should be considered a transportation company, which would likely prohibit Uber from using unlicensed non-professional drivers. It would also mean Uber must comply local regulations throughout the EU regarding certifying, insuring, and paying its drivers like regular taxi companies. These various legal and regulatory challenges, the growth of competing ride-hailing services like Taxify, which launched in London earlier this month, and its ongoing leadership transition mean Uber faces a formidable task in defending its European market share in the near-term.
LOGISTICS STARTUP FLEXPORT RAISES $US110 MILLION IN FUNDING: Freight forwarding startup Flexport has closed $US110 million in Series C funding, mostly from previous investors, at an $US800 million valuation, sources familiar with the deal told Tech Crunch. That is nearly double the $US365 million valuation it received in its last funding round, which closed in late 2016.
Flexport is one of a slew of startups looking to disrupt the freight forwarding industry through software and analytics. Freight forwarders act as middle men, booking transportation for goods across land, sea, and air through their networks of trucking, shipping, and air freight partners. Traditional forwarders have long relied on paperwork, spreadsheets, and manual processes to accomplish this. Flexport and other startups are starting to digitize all of the information — including shipping rates, routes, and customs information — involved in those shipping transactions and analyse it to find ways to ship goods faster and cheaper. Flexport’s platform indexes all available carriers into a database that companies can search for free to see current shipments and rates around the world, but only allows companies to book shipments with those carriers through its own forwarding service.
Flexport will likely use the new funding to continue its rapid expansion, as it faces competition from both other startups — like Freightos and Haven — and traditional forwarders that are digitising their own operations. The company has significantly ramped up hiring as it seeks to expand its footprint and offer shipping anywhere in the world. It has also started building its own warehouse network, allowing companies to store goods with Flexport until they can be batched together with other shipments going to the same destination. This helps Flexport lower rates and maximise efficiency by ensuring it is only shipping full containers. Flexport has two warehouses up and running in Hong Kong and Los Angeles, but reportedly plans to build out a global warehouse network. That will require major capital investments to build and operate such a network, and shift the company’s business model away from a pure software play like the other startups trying to disrupt this space.
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WALMART TESTS IN-HOME, CROWDSOURCED DELIVERIES: Walmart is working with smart lock manufacturer August and crowdsourced delivery startup Deliv to test a service in the Silicon Valley area that delivers groceries straight into the homes of consumers that own an August smart lock. Deliv’s couriers will be given a one-time code they can type into August’s smart locks to access consumers’ homes while they are away. Customers will receive a notification on their smartphone when the delivery person enters and exits their home, and, if they have an August security camera, can stream the delivery taking place on their phones.
This is one of a handful of crowdsourced delivery methods Walmart is exploring to meet the rapidly rising demand for its online grocery delivery service. Booming demand for Walmart’s online grocery delivery service has fuelled much of the company’s overall e-commerce growth in the past few quarters. To meet this rapidly expanding order volume, the retailer has explored a handful of crowdsourced delivery methods, including experimenting with in-store employees delivering e-commerce purchases on their way home from work. These tests are just the latest in this ongoing effort.
The partnership with Deliv and August highlights the challenge of consumer trust inherent in crowd-sourcing deliveries. Crowdsourced delivery companies use non-professional couriers hired as part-time contractors, similar to how Uber uses non-professional drivers. Many consumers would likely feel uncomfortable with a delivery person entering their homes and going through their fridges and pantries. Deliv carefully vets its couriers and removes anyone who averages a rating below a 4.7 on a five-point scale. The tests will be an interesting experiment in terms of consumers’ comfort with using non-professional couriers.
In other news…
- The US Department of Transportation (DoT) conducted a test of three semi-trucks platooning on a Virginia highway. Platooning is when a convoy of trucks uses semi-autonomous software to closely follow a manually-driven truck on a highway. The method creates a slipstream that lessens the trucks’ wind resistance and improves their fuel efficiency. Numerous companies, including Tesla, Waymo, Daimler, have conducted platooning tests. This move by the DOT indicates that it is considering crafting regulations for semi-autonomous trucks that use the technique.
- Daimler will invest $US1 billion in its Alabama plant to start building fully electric sport utility vehicles in the facility, according to The Wall Street Journal. The company plans to offer fully or partially electric versions of all of its vehicles by 2022, and this investment should help it reach that goal. Daimler is one of a handful of foreign automakers that have recently invested in production facilities in the Southeastern United States, including Volvo and BMW.
- Uber is reportedly conducting a wide-ranging review of its Asian business amid a US government probe examining whether the ride-hailing giant broke laws against overseas bribery, according to Bloomberg. The company notified the US government about payments made by its staff in Indonesia, and is reviewing its business units in India, Indonesia, Malaysia, South Korea, as well as its China business, which was sold off to Didi Chuxing. Uber already faces stiff competition in the region from Grab, and an ongoing federal bribery probe could be problematic to the company’s efforts there.