The Amazon effect – pricing and technology
Profit margins in the general freight trucking industry are thin. The trend of ecommerce growth coupled with the practice of offering free next-day delivery to consumers has already compressed, and will continue to compress, the profit margins that general freight trucking companies earn.
Trucking companies that operate in the spot-market are in a position of weakness relative to shippers, and the volume of ecommerce shipments does not matter if every extra shipment is a loss-creating shipment for the trucking company that transports it.
Further, Amazon is investing a great deal of talent and capital into building its logistics capabilities. Charley Dehoney, my #MarketVoices counterpart, wrote an article which ran on FreightWaves on October 29, Logistics as a lambda function. His article describes what is happening in detail. As Amazon Logistics’ capabilities have increased, it has started competing more directly and robustly with UPS and FedEx.