ReutersAmazon CEO Jeff Bezos
The simple reason: Amazon's growing so fast, it can't handle everything by itself.
“They’re growing so dramatically that it’s hard for anybody to keep up with what they are doing in the marketplace. They need every truck they can get their hands on," Joey Hogan, CEO of Covenant, a trucking company that works with Amazon for expedited shipping, said on its earnings call Tuesday, according to the Wall Street Journal.
“Amazon’s trailer purchases are having little to no impact on our truckload segment,” another large trucking company called Swift Transportation was quoted as saying by the WSJ. “We currently operate several different facilities for Amazon across a variety of our suite of services and are excited about our potential growth with this partnership.”
The comments were made in response to questions about a recent report that said Amazon had bought thousands of trailers to ship products between its fulfillment and sortation centers. Although Amazon said it will continue to work with existing trucking partners, the move showed Amazon could take a bit out of the trucking business.
The trucking industry is massive. It generated roughly $650 billion in 2013, or roughly 84% of the entire US commercial transportation industry’s sales. Still, losing a customer like Amazon could put a huge dent on any company.
Amazon is clearly making moves to become a larger logistics company. In addition to the trailers, Amazon is reported to have registered for an ocean freight service, bought several airplanes, and tested drones for unmanned delivery. Baird Equity Research recently wrote, "Among other opportunities, Amazon has 'powerhouse potential' in the large transportation and logistics market, dominated by global enterprises such as DHL and UPS."
Interesting article. The transportation industry is being affected by our changing marketplace just as is just about every other industry. A key to being a valuable player in this economy is to stay informed and adjust when necessary. As Amazon keeps growing they will need freight brokers to help keep their trucks full. I teach my students the importance of understanding the market. Come join us in our next class to learn how to be a successful freight broker or learn freight brokering online.
Moving forward,
Jeff Roach
www.transportationtraining.com
Disclosure: Jeff Bezos is an investor in Business Insider through his
personal investment company Bezos Expeditions.
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