Amazon announced on Wednesday it is opening its less-than-truckload freight services to all businesses beyond its own network, causing shares of major freight carriers to decline. The expansion allows any company to use Amazon's trucking services to ship to any U.S. destination through its Amazon Supply Chain Services program. The move intensifies competition in the freight industry as Amazon leverages its logistics infrastructure of 80,000 trailers and 24,000 containers built primarily for its own operations.
Freight Carrier Stocks Decline Following Announcement
Shares of several large freight carriers slumped on Wednesday after Amazon's announcement. Old Dominion Freight Line's stock tumbled more than 6%, while shares of ArcBest sank 4%. Saia and XPO Logistics slid 5% each. Shares of FedEx Freight, which started trading earlier this month after it was spun off by FedEx, fell about 3%.
Amazon Expands LTL Service to All Businesses
The e-retailer said it will offer less-than-truckload shipping to all businesses, not just those who ship goods into its warehouses and fulfillment centers, and deliver to any destination in the U.S. Less-than-truckload refers to a service where companies carry shipments from multiple customers on a single trailer, instead of full truckloads.
"The feedback from Amazon selling partners using our LTL service was clear: the technology, visibility, and reliability were exactly what they needed --- and they wanted to use it more broadly," Jim Ruiz, director of Amazon Freight, said in a statement. "Now Amazon LTL can move your freight wherever it needs to go, servicing destinations nationwide for businesses of all sizes."
Amazon Built Logistics Network Over Recent Years
Amazon has built up a logistics empire over the past several years and reduced its reliance on external carriers, largely to service its own needs and meet its increasingly faster shipping speeds. That includes a fleet of Amazon-branded cargo planes, tens of thousands of delivery vans and a growing freight service that includes 80,000 trailers and 24,000 containers.
Last month, Amazon unveiled an "end-to-end" supply chain service that combines several of its logistics and freight offerings into a single package. The announcement sent shares of rival carriers UPS and FedEx lower.
FAQ
What did Amazon announce on Wednesday regarding its freight services?
Amazon announced it is opening its less-than-truckload freight services to all businesses, not just those who ship goods into its warehouses and fulfillment centers, and will deliver to any destination in the U.S. as part of its Amazon Supply Chain Services program.
How did freight carrier stocks react to Amazon's announcement?
Shares of major freight carriers declined on Wednesday, with Old Dominion Freight Line falling more than 6%, ArcBest down 4%, Saia and XPO Logistics each sliding 5%, and FedEx Freight dropping about 3%.
What logistics infrastructure does Amazon operate for its freight services?
Amazon has built a logistics network that includes a fleet of Amazon-branded cargo planes, tens of thousands of delivery vans, 80,000 trailers, and 24,000 containers, which it developed primarily to service its own needs and meet faster shipping speeds.
