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How Amazon Brokerage would impact the traditional 3PL and brokers?

I bet you have noticed Amazon's newly service- 1 Day Free Shipping for its Prime Member. It sounds indeed excited. What you do not know about behind is Amazon's ambitious growth plan to take over logistic leading position. Just one month ago, Fedex has announced to the public that they will not renew its ground shipping contract with Amazon according to Bloomberg. Now, Amazon only has one partner carrier , which is UPS , however, Amazon is currently aggressively grow its own carrier network and distribution system, allowing them to control its own delivery lead time and cost spending.

There is no doubt today Amazon , by definition, is a 3PL service provider as companies continues to buy/lease air planes, trucks and brokerage service to its logistic portfolio. And will it impact the traditional truck brokerage and 3PL service ? I think the answer is YES. Whatever Amazon wants to do, they have the great technology resource , best talents and strong financial background to do it at the best.

Amazon Brokerage

Whether you are amazon buyer or seller , simply log in using your login information and it gets you to the page of " Full Truck Load Service" In this website, you can now go get real-time quotes on shipments originating and finalizing in the Northeast. Aside from that, what Amazon is doing is locking up truckload capacity, mainly from mid-size carriers, for the Amazon logistics network. Right now ,yet amazon freight service is only available in few states, like New York, Connecticut, Maryland, New Jersey ( New England zone!) but it was just a matter of time that Amazon leverage the implicit network effect — the total number of shippers and carriers who do business with Amazon — and connected both sides of its business.

I have tried to test the spot quote between Amazon and Old Dominion Freight

So i typed in pickup zipcode 11559 ( Lawrence, NY) and delivery zipcode 07099 ( Kearny , NJ) for full truckload rate

In Old Dominion Freight Line web page, I also use the same pickup and delivery zipcode, the only difference is ODFL will ask cargo size , weight and commodity etc. Assuming both are general cargo, size and weight should not matter because we are comparing full truckload rate. And here is what I got

As this two results makes clear, Amazon quotes rates to shippers that are below even ODFL ’s broker-to-carrier spot rates. In other words, in its current form, Amazon Freight has very low margin profit perhaps. We can tell Amazon will beat up some of the carriers in market using its low pricing strategy .

Customer Service is Differentiator

Every company has its own core competitive advantage to survive. In the past ,we have UPS , Fedex, DHL. In the future, we have Amazon, and w even have Uber Freight now. We have to ask ourselves why customers will want to stay with you because you can’t rely on cost any more. You’re going to lose that battle. But you don’t have to go wild on analytics. There are so many local to mid-size companies want personalized customer service. They want a simple phone call and connect to the same person they are talking to all the time. They want a very experienced account manager to give them some consulting advise for their upcoming freight. They want a true customized service . Period .

My current company is running its mode for many years. It works like a family owned restaurant . Our customer gets full attention from each import specialist. I even know one of my customer would like to have billing invoice together with back-up document and 7501 entry summary to be scanned as one PDF and sent to them by email. Therefore, I really think customer service is definitely an attractive factor to differentiate your business with big companies.

Do you have any thoughts about how Amazon brokerage service will impact the traditional brokerage and 3PL service?

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