Amazon’s reported interest in entering the LTL market quickly captured carriers’ attention — and not just because a potential acquisition by the retail giant could be the latest consolidation to upend the industry.
Retail volumes have helped LTL carriers weather a freight recession marked by stagnant industrial demand better than their truckload counterparts over the past two years.
If Amazon pursues an acquisition to handle LTL shipping in house, it would provide a windfall for the acquired carrier while removing a sizeable chunk of retail demand from the rest of the market, said Scooter Sayers, an industry consultant.
Amazon moves a staggering number of shipments through carriers’ LTL networks, said Sayers, Cubiscan’s director of business development for LTL solutions and founder of Sayers Logistics, in a LinkedIn message.
“Even if they never open up their LTL capacity to the open market, they are a threat to the LTL carriers as they can pull business away from them over time,” Sayers wrote.
The ground shift, which could also have implications for the truckload market, would happen as the trucking industry awaits a freight rate rebound after a drought followed a COVID-19-induced boom.
But Amazon joining the LTL sector would represent “good disruption” for an industry in which the incumbent carriers generate great profits and strong pricing power, Sayers said.
“Seems ripe for a large player with new ways of doing things,” he said.
An Amazon entrance into LTL would be far from the first supply-chain expansion for the online retail goliath, and just the latest in a slew of recent shake-ups for the trucking industry sector.
Since 2021 alone, such shifts have included XPO’s transformation into a pure-play U.S. LTL carrier, Yellow Corp.’s bankruptcy, Knight-Swift Transportation Holdings’ move into LTL, and FedEx Freight’s planned spinoff.
The upcoming FedEx spinoff has caused some in the industry to wonder if Amazon might go after LTL’s largest carrier.
FedEx Freight hauls twice the daily volumes of its biggest competitors, meaning such a move would likely require it to shed freight to make room for more of Amazon’s, said Bobby Russell, EVP of MyCarriers, on an episode of the “Ship Talkers” podcast earlier this month.
If that happened, though, it would bring a benefit to the rest of the market, he pointed out.
“Other carriers would pick up that business,” Russell said. “So if it went that way, I could see it being very beneficial for the LTL game.”
Reporter David Taube contributed to this article.
