We keep up with the shipping industry being experts in overnight air freight ourselves. The future looks interesting for the shipping industry as Amazon appears to be positioning itself as its own freight broker. They have not officially announced plans to do so, but the writing seems to be on the wall.
Large Investments in 2017
None of this is a secret, it’s pretty hard to keep jet planes under wraps. In 2017 Amazon spent a whopping $13.2 billion on warehouses and other logistical buildups in North America. That’s five times what they spent in 2015. FedEx and UPS in comparison each had around $5 billion in capital spending in 2017. This spending pattern seems to fit with Amazon’s unstated philosophy: when it sees business opportunity it goes all in, and wins.
Amazon.com registered with the Federal Motor Carrier Safety Administration as a freight broker on March 4, 2016, doing business as Amazon Logistics Inc. Transcredit reported that Amazon Logistics first acted as its own freight broker in August of 2017. It brokered a second load in October and a third in November. In addition, Amazon Logistics also registered with load board DAT Solutions on March 30, 2017. In January 2016, the Federal Maritime Commission granted Amazon’s request to become its own nonvessel operating common carrier and freight forwarder. This allows them to directly negotiate rates and secure capacity with ocean and airfreight carriers. The maritime industry is now wondering to what extent Amazon will try to take control of transportation shipments headed for Amazon warehouses. Taking greater control of shipments would give Amazon more flexibility and help it avoid warehouse congestion.
Currently, companies like Maersk are handling these shipments. The pressure from Amazon could be a good thing though, because Maersk has upped it efficiency in response to the threat. In 2014, it took more than 2 hours to complete a container booking with Maersk. In 2016, the average went down to 22 minutes. Management aims to bring that down to as little as 2 minutes in 2018. Competition makes us better.
Ultimately Amazon is on a quest to cut out the middleman and ensure the best customer experience possible. Who can blame them? It’s just good business. We’ll see how it plays out in the coming years.