Could it be that Amazon has finally decided on the main strategy to get ahold of its middle-mile logistics?
As we all know the company has been flexing its last-mile muscles in the “sharing economy” segment, through Amazon Flex, a service that uses crowdsourced drivers for deliveries in some selected US and UK areas. Of course, there are drones too, making the first Prime Air delivery just a few weeks ago near Cambridge, in rural England (to still be considered a test).
Regarding the long-haul market, Amazon has been aggressively expanding its logistics capabilities by buying thousands of eight-wheelers, some cargo planes and a sea-freight license in China.
RBC Capital Markets predicts Amazon’s package volume will surpass FedEx in three years and UPS in seven years.
That’s a lot of stuff to move.
Now, as reported by the “UK Business Insider”, the American giant is: “building an app that matches truck drivers with shippers. (…) The app, scheduled to launch next summer, is designed to make it easier for truck drivers to find shippers that need goods moved, much like the way Uber connects drivers with riders. It would also eliminate the need for a third-party broker. (…) The app will offer real-time pricing and driving directions, as well as personalized features such as truck-stop recommendations and a suggested “tour” of loads to pick up and drop off”.
This move has come as a little bit of a surprise. Jeff Bezos has already invested in a startup that does exactly the same thing: Convoy (with the participation of Uber’s co-founder Garret Camp and Uber is working on a Uber-for-trucks too). Does this mean that if you get money from Jeff you’re screwed? Difficult to know but I’m guessing the people at Convoy didn’t sleep well last night. Were they only a test? The proverbial toe in the water?
If Amazon and Uber both enter the sector it’s going to be hard to survive, especially if you consider how hard it already is (Cargomatic, last September, seemed destined to crash and burn).
And yet crowdsourcing space on half-empty trucks could really be the missing link in the treble chain that Amazon is building: an in-house fleet moving the first mile, the trucking app for the middle mile, and a mix of owned vehicles, drones and crowdsourced drivers for the last-mile. Of course, it would take years to complete the picture.
As noted by “Forbes”: “Delivery costs form a significant portion of Amazon’s expenses and account for nearly 10-15% of its net sales. (…) In order to ensure that it can fulfil its delivery promises at lower costs, the company is constantly looking at innovative ways to improve its delivery network. Amazon needs very heavy volumes to gain operating leverage from its investments in logistics. A related logistics business which can connect truckers with shippers can help Amazon to generate additional revenues from its logistics expertise, providing returns on these investments. Amazon could use its logistics expertise in this venture and generate another revenue stream over the long term”.
