Air freight truckers have much to fear from Amazon, says Oz journal
FREIGHT companies have reason to fear that Amazon is a threat now that the online retail giant has moved into the transport market to cut costs, reports Melbourne's Australian Financial Review
FREIGHT companies have reason to fear that Amazon is a threat now that the online retail giant has moved into the transport market to cut costs, reports Melbourne's Australian Financial Review.
It has been hiring people for its expanding Amazon Air business, which includes a fleet of planes and a hub at the Cincinnati/Northern Kentucky International Airport and increasing its stakes in air cargo firms groups Atlas Air Worldwide Holdings and Air Transport Services.
Amazon has also been researching drones with the aim of using them to deliver packages to customers in 30 minutes or less.
Unconfirmed news reports from China that Amazon is in talks to take a stake in Chinese autonomous truck maker TuSimple, which says its goal is to bring the first self-driving truck to market, have led analysts to warn that the online retailer is now looking to the transport industry to secure future growth and cut shipping costs, said the report.
'We believe that the entire transportation space should prepare for a future where Amazon and other giant shippers are potentially competitors,' said New York-based Morgan Stanley analyst Ravi Shanker.
'The large amount of capital being funnelled into the new digital disruptors in the areas of autonomous driving, electrification, last-mile and digital brokerage services have the potential to accelerate the commercialisation of those technologies.'
Amazon has already taken an unspecified stake in Aurora, a US developer of technology for autonomous vehicles.
It has also moved into freight brokerage, launching a new website freight.amazon.com that offers prices for other companies that want to use its network of third-party trucking operators in Connecticut, Maryland, New Jersey, New York and Pennsylvania.
The site, which describes Amazon Logistics as a licensed freight broker, tells potential customers that they can 'tap into the scale of Amazon as we extend our carrier network to give you best-in-class service at great rates'.
The move has concerned freight operators, with industry news site FreightWaves.com describing it as freight carriers' and brokers' 'worst nightmare'.
Amazon last year started a 'delivery service partner' programme targeting entrepreneurs who can lease Amazon-branded vans to help deliver its packages in the US, putting it in competition with other delivery groups like FedEx and UPS.
The programme is not available yet in Australia where Amazon still uses third-party logistics groups like Toll and Australia Post to transport items acquired on its website.
But Amazon's logistics website says that while the delivery programme is not offered in other countries, potential operators should 'watch for future opportunities in your area'.
Amazon said in its most recent annual report that its shipping costs, which include sortation and delivery centres as well as transportation, rose to US$27.7 billion in 2018 from $16.2 billion in 2016 and warned that costs would keep increasing.
'We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.' the company said.