(Note: This is an updated version of a story that was published on Friday. After the original story appeared, FreightWaves received clarifying information from sources close to XPO that differed materially from the original version. FreightWaves regrets any confusion).
As of Monday, XPO Logistics Inc. will no longer accept inbound LTL shipments on one of its lanes in Albany, N.Y. and destined for Amazon.com Inc. warehouses in New York’s capital city, a source close to XPO said Saturday.
A memo obtained Friday by FreightWaves did not specify a particular market where the ban would be imposed, only instructing employees to stop directing “Amazon-routed freight” through the carrier’s LTL network. The memo came from Mario A. Garza, XPO’s (NYSE:XPO) LTL national 3PL account executive, a sign that XPO’s action was directed at third-party logistics providers that consolidate shipper traffic and tender it to XPO for delivery to Amazon’s (NASDAQ:AMZN) warehouses.
The source said the company will send a note to 3PLs clarifying the extent of the ban. XPO had not responded to an e-mail query on Friday to comment on the memo.
LTL carriers like XPO move a large amount of freight to Amazon’s distribution centers. However, the process sucks up a lot of LTL trailer capacity, and equipment can sit for days at Amazon’s locations before its unloaded, according to an industry executive who requested anonymity. The general issue is not foreign to shippers and carriers hauling inbound freight to Amazon locations, the executive said.
Shippers may pre-pay the freight charges directly to the carrier, or retailers will compensate the carrier. Typically, a direct pre-pay from the shipper is more profitable for the carrier, the executive said. However, 3PLs may be using their volume clout to dilute XPO’s margins, which may have led to Friday’s decision, the executive said.
LTL networks have been buffeted by soaring domestic demand as well as knock-on effects of the escalating congestion problems at U.S. ports, particularly on the West Coast.