Major U.S. trucking companies not worried about Amazon
- Amazon may have disrupted (and continues to disrupt) the retail industry, but the trucking industry isn’t worried about the e-retail giant’s December move to hire hauling companies to drive its own fleet of shipping trailers.
- Two of the largest U.S. trucking companies, Swift Transportation Co. and Covenant Transportation Group, both said Tuesday in their Q4 earnings reports that they expect to continue to do brisk business for Amazon. Both expressed confidence that e-commerce growth in general and Amazon’s growth in particular would keep their drivers busy.
- The trucking business is getting hit more by higher driver wages, bad bets on fuel prices that have them locked into higher-than-market prices, and prices of trailers themselves, the companies said.
If the attitude of these two trucking companies is any indication, there’s plenty of business to go around, even with Amazon taking on some of the business itself.
“As of right now, Amazons trailer purchases are having little to no impact on our truckload segment and I think it may be premature for us to speculate on what kind of destruction their asset ownership may cause on the industry,” Swift founder, chairman and CEO Jerry Moyes said in answer to an analyst’s question about Amazon’s potential to disrupt the trucking industry. “Remember this is an $800 billion industry and it is incredibly fragmented. Having said that, we currently operate several different facilities for Amazon across a variety of our suite of services and [are] excited about our potential growth with this partnership.”
That may not be true of other, smaller companies, who may suffer not only from the impact of Amazon’s foray into trucking, but also from the increasing pressure to fulfill last-minute, shorter-mile hauling orders described by Covenant CEO David Parker.
“People are calling at 3 a.m., at 5 a.m., saying they need five trucks, 10 trucks or 12 trucks. It’s a moving target,” Parker said, according to the Wall Street Journal. “The model is, ‘I need trucks. I don’t know where they’re going, I don’t know when the load’s going to be ready, [but] I need trucks.’”
That unpredictability led the company during the holidays to shift its fee structure to charge retailers by the day rather than by the mile. It mimics the move by shippers, including the United States Postal Service, United Parcel Service, and FedEx, to respond to the surge of e-commerce orders in recent years by including package dimensions in addition to weight in their fee structures.
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