By Joseph Chalfant

Uber has announced that it will acquire the transportation logistics company Transplace in a deal valued at $2.25 billion.

The deal will be conducted by the rideshare giant’s hauling division, Uber Freight, in an agreement with TPG Capital. The private equity group will receive $750 million in Uber stock and the remainder in cash, according to CNBC.

Uber Freight is growing rapidly amid the national truck driver shortage, securing $301 million in revenue in Q1 of 2021. While the hauling division only makes up a small stream of the company’s total revenue, its last quarter amounts to a 51% jump in year-over-year numbers, according to CNBC.

Company leaders believe that the merger could lead to innovation within the industry.

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, in a press release. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.”

Transplace believes that the acquisition will reduce transportation costs and maintain critical supply chain infrastructure. It will also enable Uber Freight to serve a greater number of customers “at all levels of the freight industry” and expand its services into Mexico.

Transplace CEO Frank McGuigan celebrated the move.

“The acquisition will combine the world’s premier shipper network platform with one of the industry’s most innovative supply platforms, to the benefit of all stakeholders,” said McGuigan. “Our expectation is that shippers will see greater efficiency and transparency and carriers will benefit from the scale to drive improved operating ratios. All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment. Finally, we want to thank TPG for their partnership as we have worked together to position Transplace as a leader in supply chain innovation.”

Both companies claim that this will accelerate Uber Freight’s journey to profitability. Transplace expects that the acquisition will allow Uber Freight to break even on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of next year.

Industry leaders believe that the two companies’ proprietary technology will provide a benefit to consumers. President of transportation consulting firm Armstrong & Associates Inc., Evan Armstrong, considered the decision a strategic success, according to Transport Topics.

“In terms of the combination, Transplace has very good technology around managing large transportation networks for customers,” Armstrong said. “Uber Freight has good technology geared toward transactional freight brokerage business, which has been somewhat of a gap in the Transplace model.”