Hot Takes
Last week we took a little trip down memory lane to learn just how Amazon Freight got its start. Some may be more intimately familiar with the origin story than others. Amazon Freight is primed to become the next UPS and won’t stop until it achieves that status, regardless of the cost.
Amazon Freight has around 40,000 trucks through independent contractors that do one-way trips, with the goal moving forward of getting backhauls or partnerships with shippers to utilize the capacity. We know Amazon offers LTL space at discounted rates via Amazon Freight. And we know that Fulfillment By Amazon (FBA) services orders not placed on Amazon.com
When Amazon trucks complete a move from inbound center to another part in the network, there typically isn’t a load waiting to bring that truck back to the fulfillment center, meaning it comes back empty. Unless of course it doesn’t. This is where we can expect to see Amazon Freight coming in with lower-than-typical rates to the market.
It has to secure some sort of freight to get its drivers back without eating the full cost of a deadhead truck.
Currently, Amazon Freight has opened its network to haul air cargo for the U.S. Postal Service. Amazon Air has expanded into hubs at Cincinnati-Northern Kentucky International and Ohio’s Wilmington Air Park, making both Amazon Air and Amazon Freight an assertive force in third-party delivery. Additionally, Amazon’s air cargo network is a possible workaround for port delays.
During its development phase, Amazon “partnered” with UPS to learn more about its network, getting UPS to share proprietary information, give tours of operations and to sell Amazon on UPS as a partner. When UPS realized Amazon was building its own freight network, it backed away from its current competition, leading Amazon to hire a bunch of logistics executives to build their own delivery strategy.
Amazon is known for severing ties with transportation providers at the drop of a hat, most commonly under the guise of “performance safety issues.” Those issues can’t be too severe as Amazon welcomes those drivers back into the network, under another Amazon provider, or they participate in an Amazon-approved trucking business incubator. This company has come under fire recently for its poor warehouse conditions and removing the human element from warehousing.
Amazon might not be coming to relieve your capacity and freight woes all the time, but it’s likely that it will be coming hard for external freight in Q4, retail peak season. That typically being the highest volume for the company, that’s when it can best scale up its extra capacity and save its bottom line at the end of the year.
Quick Hits
We get it; you vape — Last Thursday, the U.S. Postal Service implemented the mandate from Congress to ban the shipping of all vaping products. The Postal Service’s ban combined with those of DHL, FedEx and UPS, makes it a struggle for the vaping industry to get its goods to market. The industry was also brought under the 2009 Prevent All Cigarette Trafficking Act, which is designed to fight online sales of untaxed cigarettes.
There are a few companies that have stepped forward to help bridge the gap left by the major small-parcel carriers. They include Vape Freight and LSO. LSO is a regional Texas carrier that has been transporting vaping products for quite some time. CEO Richard Metzler said it’s a “head-scratcher for me” why vaping products get different treatment by carriers than do other legal products for which adults have to sign.
It’s a big new world — Descartes MacroPoint and FreightWaves SONAR Lane Score data are available in one place. The combination gives a clear picture of available capacity and market pring on a lane-by-lane basis.
SONAR Lane Score allows the individual carrier rep to view market conditions on each lane via a simple score system (1-100) that represents how attractive (or not) it will be to cover open loads on that lane.
The pairing also enhances day-to-day ease as brokers can use lane scores as automation triggers to send offers to the most appropriate carriers servicing the network. Through this partnership, everyone gets the critical information necessary to prioritize and execute shipments faster and in a more cost-effective way.
Market Check
Houston outbound volumes are slowing a little bit compared to the beginning of the month but still about average compared to last year. The Port of Houston is expected to handle more of the overflow from the ports of Long Beach and LA, while also overcoming their elevated levels. Rejection rates are also creeping down from where they were a few weeks ago, meaning carriers are getting in there to pick up freight.
This might be the calm before the storm. As we gear up for retail’s peak season, I would take this opportunity to move shipments for a slightly lower rate and get some of the cheaper freight from shippers out of the way now before we ramp up and hit levels matching mid-October and that of last year.
Who’s with Whom
Canada’s XTL acquired Georgia freight brokerage CBT, creating the Canadian firm’s first U.S.-based operation. Both companies focus on the food service industry, and poultry and egg processors. It’s an opportunity that enables both companies to sell in a market they never have before, while boosting service to their customers. Read more here.
