Hatch Chile Company shows cost savings benefits of Uber Freight’s relief loads program

Over the course of the ongoing COVID-19 pandemic, shippers have been up against myriad challenges and changes, which have subsequently resulted in making changes on the fly, in various ways, in order to be able to adapt to a suddenly changing world, and, more specifically, logistics operations.

This was especially true for Hatch Chile Company, a Coppell, Texas-based (outside of Dallas) packaged food company selling southwestern U.S.-based products, and is especially well known for its Hatch Brand Diced Green Chilies packaged in a four-ounce can. 

At the onset of the COVID-19 pandemic, in March and April, Hatch’s volumes hit record levels, with demand for certain products up more than 100%, driven by consumers cooking more meals at home and not eating out at restaurants, due to shelter-in-place orders. This sudden shift put the company in a position in which it needed to uphold its strong customer deliveries processes.

But that was not something that was a given, as the demand surge Hatch faced put the company into a situation in which it needed to secure additional truck capacity to bring in products from its manufacturing plants, or suppliers, into its warehouses, and then ship them out to its customers in the retail and grocery channels, according to Hatch Chile Co. President David Gregory.

This led the company to develop a relationship with San Francisco-based Uber Freight, a subsidiary of the ubiquitous, ride-sharing service Uber, whose proprietary app matches trucking companies with loads to haul.

In the past, Gregory explained that when it worked with traditional freight brokers, the communications process between shipper and broker was primarily e-mail- and phone-based.

“It would be along the lines of us asking for a quote, for a load, and the broker would send us a spreadsheet back with a listing of their rates for various lanes,” said Gregory. “But it was always kind of a manual back and forth process, particularly for requesting quotes, in the form of a phone call or an e-mail.”

With that process being tedious and time-consuming, Hatch looked into Uber Freight’s Shipper Platform, which Uber describes as simple intuitive dashboard geared towards helping small businesses manage logistics tasks via a singular interface. These tasks include: finding reliable capacity, budgeting for shipping costs, tracking and ensuring their goods are delivered on-time and with care.

And this is where things started to change, for the better, for Hatch.

“So, when Uber Freight came around, one of the real major plusses and benefits that they offered was this online portal [Shipper Platform],” said Gregory. “And with the portal, instead of having to contact someone through e-mail or a phone call, we could simply say ‘we need a truck to go from point A to point B’ on our laptop and get a quote right away. If the quote was reasonable and looked good, we could go ahead and book the truck and not have to deal with all of this back and forth.”

This represented a stark contrast to the intermittent rounds e-mails and phone tag, which required more time than could be afforded. And Gregory said that the key differentiator of the Uber platform was that it provided relatively fast and almost instantaneous quotes, coupled with the ability to book a load with minimal manual interference.

As for what led Hatch to give Uber Freight a shot, Gregory explained that it came about as a byproduct of him being a customer of Uber’s ridesharing service, adding that its technological capabilities outpaced the competition, in terms of the Uber Shipper Platform’s robustness and ease of use. Hatch actually got started with Uber Freight prior to COVID hitting and then when that happened, there was a need for a lot more trucks and more truck capacity, and it started booking more and more loads with Uber.

And a major attraction, for the company, within the Uber Shipper Platform, was the Uber Freight relief load initiative, which it introduced in March, specifically for small shippers to better navigate the COVID-19 pandemic.

All relief loads booked via the Uber Freight shipper platform are hauled with zero profit pricing for Uber Freight, according to Uber. By lowering the cost of transportation, Uber Freight aims to support small shippers as they navigate this challenging economic time, as well as help ensure that critical goods can get where they need to be reliably and on time.

Hatch’s Gregory described the relief load initiative in one word: fantastic. What’s more, it put the pricing perspective into much better perspective, too, especially when it came to the actual realized financial savings for Hatch.

“It was like ‘maybe this quote is a little bit high,’ however, if [Uber Freight] can get it booked cheaper they are going to refund the difference to us, which took the risk out of it, even if we thought the quote seemed a little bit off,” he said. “And sure enough, at the end of the day, it paid off. We had all these trucks booked and we were able to get at least $6,000 in relief loads savings.”

Over March and April, Gregory noted that in talks with Uber, Uber would indicate that if it was able to book a truck as it typically does, it would book a truck from, for example, from Dallas to Atlanta for $1,800. But if Uber could procure a lower rate, say for $1,600, it then qualifies as a relief load, with Uber doing that as a special low profit or no profit kind of deal.

In this case, Uber Freight refunds the difference between what was actually booked, at $1,800, and then refunds the $200 difference to the shipper, being Hatch, in this case.

“When you take all of those kind of deltas across the 50 or 60 different loads we had, it resulted into at least $6,000 in cost savings,” said Gregory. “This process marked a wholesale change compared to a more typical process, in which the agreed-upon rate would have been the actual rate, with no relief. The $6,000 savings represents around a 5%-to-10% costs savings over what we originally booked. Had we been with larger brokers, we never would have realized that kind of savings, as the rate would be the rate.”