Amazon has expanded its trucking service to businesses beyond its own logistics network.
Summary
- Amazon expanded its less-than-truckload shipping service to businesses beyond its own logistics network.
- Freight carrier stocks fell after the announcement, including Old Dominion, ArcBest, Saia, XPO and FedEx Freight.
- Amazon is turning more of its logistics network into outside services through Amazon Supply Chain Services.
The move sent shares of several major freight carriers lower on Wednesday. The company will now offer less-than-truckload shipping to businesses across the United States.
Amazon opens LTL service to more businesses
Amazon said it will offer less-than-truckload shipping to all businesses through Amazon Supply Chain Services. The service previously supported companies shipping goods into Amazon warehouses and fulfillment centers.
Less-than-truckload shipping lets carriers move freight from several customers on one trailer. The model differs from full truckload shipping, where one customer fills the trailer. Amazon said the service can deliver freight to any destination in the United States. The company is using its logistics network to reach more business customers.
Jim Ruiz, director of Amazon Freight, said sellers wanted wider access to the service. “The feedback from Amazon selling partners using our LTL service was clear,” Ruiz said. He said customers valued the service’s technology, visibility, and reliability. “Now Amazon LTL can move your freight wherever it needs to go,” Ruiz added.
Freight carrier shares fall after announcement
Freight stocks declined after Amazon announced the expanded trucking service. Old Dominion Freight Line fell 5% after the news. ArcBest shares dropped 4%, while Saia slid 3%. XPO Logistics also fell 5% during the market reaction.
FedEx Freight shares fell about 7% on Wednesday. The company started trading earlier this month after its spinout from FedEx. The share declines came as Amazon moved deeper into a market served by long-standing carriers. The company’s freight offer now targets businesses of different sizes.
Amazon has spent years building a large logistics network for its own retail operations. It now uses more of that network to serve outside companies. The company reduced its reliance on external carriers as it pushed faster delivery speeds. That strategy gave Amazon more control over shipping times and costs.
The logistics network becomes an outside service
Amazon’s logistics system now includes cargo planes, delivery vans, trailers, and containers. The company has 80,000 trailers and 24,000 containers in its freight operation. Its network also includes tens of thousands of delivery vans. Amazon-branded cargo planes support longer-distance movement across its supply chain.
The company has started opening more in-house logistics tools to outside businesses. That approach adds competition for carriers that already serve business shippers. Last month, Amazon introduced an end-to-end supply chain service. The package combines several of its freight and logistics services into one offering.
That announcement pushed shares of UPS and FedEx lower at the time. Wednesday’s LTL expansion added another freight service to Amazon’s outside-business program. Amazon said the LTL service will support destinations nationwide. The company’s latest move extends Amazon Supply Chain Services beyond warehouse-bound shipments.
