Amazon Freight expands to 48 states, furthering control of its logistics network

Dive Brief:

  • Amazon has expanded its freight service to the lower 48 states, from five Eastern states, the company confirmed in an email to Transport Dive.
  • This spot freight service is designed for small and medium line-haul providers to carry loads for Amazon in the middle mile. Access to the freight site had been limited to line-haul providers Amazon had pre-approved to sign up for loads. Amazon has now opened the website for broader access to more carriers.
  • Amazon jumped into the freight brokerage business in 2016. The service expanded in August 2018 to full truckload for dry van hauls in Connecticut, Maryland, New Jersey, New York and Pennsylvania.

Dive Insight:

Amazon — with one of the world’s largest market caps, $1.18 trillion — is an increasingly growing presence in many industries, not just e-commerce and retail. The entrance into freight hauling roiled the markets in 2019. A FreightWaves survey done in June 2019 found eight of 10 brokers and carriers viewed the market entry negatively, and several reported concerns that Amazon’s size and scale would push down dry van spot rates.

Many analysts see an attempt by Amazon to better control its logistics. The company felt burned by peak season delivery problems in 2013. Amazon and UPS offered refunds after packages promised to be delivered by Christmas Day did not arrive. The causes weren’t necessarily avoidable. Bad weather and last-minute shopping caused some of the problems, according to the Washington Post. But the problems caught Amazon’s famous detail-oriented attention.

The company began to expand into logistics after that. At the same time, it punished carriers who were late. During peak season of 2019, Amazon temporarily banned third-party merchants from using FedEx’s ground service, after noting some deliveries were running behind schedule.

“What we like about our ability to participate in transportation is that a lot of times we can do it at the same costs or better and we like the cost profile of it too, Amazon CFO Brian Olsavsky said in a Q4 2018 earnings call. “We can also invest selectively because we have more perfect information. We know where our demand is, we know where we’re moving things between warehouses and sort centers. And by not involving third parties all the time, we found that we can extend our order cutoffs and we’ve done that over the last few years.”

Some logistics experts believe the e-commerce giant could need regulation as it begins to swim in the freight market.

“With a huge network, e-commerce customer dominance, and copious shipment volume, it seems that Amazon’s supply chain creep should raise a flag … The tendency to dominate and then creep that dominance outwards creates a force that should be addressed.” wrote Zvi Schreiber, CEO and founder of Freightos, on his blog.

Schreiber said Amazon’s modus operandi has become evident, noting the company builds internal capacity and tools for its network, then offers them externally as a service. He gave the example of Amazon’s warehouses, initially for Amazon inventory and later offered as a fulfillment service for sellers. “Trucking will go the same way,” he wrote.

Source: https://www.transportdive.com/news/Amazon-Freight-brokerage-48-states/577506/

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