Dive Brief:
- Amazon is aiming to expand its delivery reach with less-than-truckload services, which could launch in 2026, according to J.P. Morgan research notes.
- Job postings from the e-commerce giant provide further evidence of the LTL expansion for Amazon Freight’s core truckload offering. The unit also already provides intermodal services.
- Amazon’s planned disruption in the LTL market carries potential risks for the industry, Bank of America analysts said in a research note. But they also pointed out caveats such as potential aversion by the e-commerce giant to hire company drivers.
Dive Insight:
Amazon is developing a Dispatch & Disruption team for Amazon Freight Less-Than-Truckload and seeks to create a “disruptive transportation product,” according to the company.
Last year, the company launched a Less-than-Truckload program in Germany, part of a “mission to become the most trusted freight provider for shippers around the globe,” a September announcement said. That’s an expansion of LTL services from the United Kingdom.
But J.P. Morgan analysts, based on conversations with carriers and 3PLs, questioned Amazon’s ability to become a stand-alone carrier.
“Our industry conversations indicated that the vast majority did not see Amazon as a threat to national LTL carriers at any point in the future,” a research note said, detailing roadblocks with issues such as terminals and pointing out that the company has skipped over Yellow Corp.’s bankruptcy auctioned properties so far.
The appeal with Amazon is its ability to innovate by working backward from customer needs, LTL veteran Scooter Sayers noted in a LinkedIn post. That’s allowed it to move more parcels than anyone else, he wrote.
But the Teamsters could also intervene on behalf of heavy duty truck drivers, given the labor group’s history with seeking to unionize Amazon workers, said analyst Satish Jindel, founder of SJ Consulting Group. He doesn’t see the e-commerce giant moving in that direction.
People think that because of Amazon’s success elsewhere that anything the business touches turns to gold, but that’s not always the case, Jindel said.
Amazon has previously had success creating new freight mode divisions, however.
Around a decade ago, the e-commerce giant moved to break into the air cargo industry and has generally seen steady growth over the years. As of February 2024, Amazon Air operated 202 average daily flights, according to a report from DePaul University Chaddick Institute for Metropolitan Development.
“The unit stands out for bucking the trend toward large-scale reductions in the air-cargo sector and has increased its cargo capacity by prioritizing larger planes,” the report said.
