Will Amazon Take Over The Trucking Industry
The launch of Amazon’s freight broker service has stirred up the trucking industry and rightfully so too. Though the service is operational only in Connecticut, Maryland, New York, Pennsylvania, and New Jersey, it poses a significant threat to truckers. In this article, we discuss ‘does Amazon poses a threat to the trucking industry?’
Amazon Freight Service
Though Amazon’s growth has reduced substantially, it is still quite a formidable opponent and can afford to go without revenue earnings for some time. It is currently focusing on gaining market share through a series of calculated strategies.
Previously Amazon offered its prime customers free two-day shipping. With the launch of its freight service, it now offers its Prime customers free one-day shipping. What this does is attract consumers to place their orders with Amazon instead of going to their competitors.
With its focus on third-party logistics network growth, the company effectively removes all costs uncured and sells the service at incredibly low prices. Amazon has a well-established ecosystem that boasts an expansive network of shippers and movers. The company already has an advantage over competitors.
Amazon is also undercutting prices by 26 – 36%, which is far lower than that offered by competitors. Many truck drivers working with the company have complained about the unfair terms of the contract. They claim it is beneficial only to the company and not to the drivers.
Though beneficial for obtaining market share, Amazon’s current freight brokerage platform is not profitable. To ensure profitability in the long run without increasing the cost of service, Amazon is using self-driving trucks by Embark.
By keeping the cost of drivers low, eliminating their own profit margin, offering customers incentives to choose Amazon over others, the company is set to take market shares. In fact, a report by Business Insider Intelligence and Transportation briefing predicts that Amazon will hold 49% of the US e-commerce market by 2023.
So does amazon pose a threat to the trucking industry? Well Yes! All the statistics and strategies adopted by the company leave no room for speculation. It has entered the market to eliminate competition and also the need for drivers.