Source: Amazon.com
Amazon developing Uber-like trucking app
Amazon is reportedly developing an app that connects truck drivers with shippers.
A source close to the developments told Business Insider that the app, scheduled to launch next summer, “is designed to make it easier for truck drivers to find shippers that need goods moved, much in the way Uber connects drivers with riders.”
The app would include real-time pricing, tracking and payment options as well as trucker-friendly features such as directions, truck stop recommendations and a suggested “tour” of loads to pick up and drop off. The project builds on the Amazon Flex program, its on-demand car delivery platform.
Amazon’s app would join a number of digital startups, including Convoy, Trucker Path and Transfix, looking to replace the traditional third-party middlemen, such as C.H. Robinson and J.B. Hunt, that have long arranged deliveries between shipping docks or warehouses. In August, Uber acquired Otto, a self-driving trucking company, and in late November launched UberFreight, a platform matching truck drivers and fleet managers with freight waiting to be shipped.
Communicating through phone calls, e-mails and faxes, the traditional third-party services are said to work slowly and inefficiently. Empty trucks log some 20 billion miles per year in the U.S., Transfix told Recode last year.
The traditional middleman also charge a fee of around 15 percent. In its third quarter, Amazon’s fulfillment and shipping costs rose faster than its sales as it focused on improving shipping times for its Prime members. Convoy told Business Insider that 84 percent of all freight costs involved trucking.
With other moves including building its own network of cargo planes and tractor trailers, Amazon is increasingly looking to take logistics and shipping into its own hands. While Amazon claims its objective is only to supplement UPS, FedEx and others during peak periods, creating a full-fledged logistics company would to drive significant cost savings.
- Amazon is secretly building an ‘Uber for trucking’ app, setting its sights on a massive $800 billion market – Business Insider
- Amazon is considering a trucking app, report says – Seattle Times
- Amazon reportedly developing Uber-like app for truckers – Supply Chain Dive
- Transfix Brings the Uber Model to the $800 Billion Trucking Industry – Recode
- Amazon To Add Trucking App to Shipping Network Push – Fortune
Discussion Questions
Discussion questions: How might Amazon’s trucking app support its logistical ambitions? How can Amazon’s retail rivals build similar efficiencies into their supply chains?
Poll
BrainTrust
Chris Petersen, PhD.
President, Integrated Marketing Solutions
Adrian Weidmann
Managing Director, StoreStream Metrics, LLC
Well, it had to happen! It is a great idea as long as (as is the case with Uber), the truckers that bid (answer the calls) are reliable and efficient. The concept is open to replication and others will jump into the trucking space. It will help both the smaller-than-Amazon shippers and the independent truckers looking to enhance their business and maximize the usage of existing equipment.
Shipping costs and logistics are the unseen underbelly in the growth of omnichannel. Not only are customers purchasing more online, customers are expecting both speed and accuracy of delivery.
Given the recent reports of Amazon (and other e-commerce) volumes outstripping the supply of delivery trucks, it is not surprising that Amazon would invest in ways to both build and maximize capacity.
The trucking and delivery system in the U.S. is built upon a historical model of point-to-point long-haul shipping. It is an industry ripe for disruption. An Uberlike model could optimize loads and reduce empty returns.
However, it is a whole lot easier for an individual to use their car for Uber than it is for someone to find a truck. Also there are a host of quality issues. Delivery is ripe for a disruptive makeover, but there will not be an overnight fix. But in the words of Bezos, tomorrow is day one.
Amazon is continually looking at new ways to make the supply chain more efficient and this is a logical next step. They certainly have enough volume to justify this kind of move and it takes them one step closer to controlling their entire supply chain.
Amazon has a history of building services that enable it to operate efficiently at ever-increasing scale. In some cases, it successfully commercializes those capabilities beyond its own needs.
Anything that brings new efficiencies to managing fleet capacity utilization has the potential to benefit not only Amazon, but others in the supply chain.
Of course by owning the platform, Amazon would benefit disproportionately.
If it’s worth doing, it’s worth doing well. And if you are doing it well, the by-product could and should be a potential revenue opportunity. If you’ve got Amazon’s resources, why not?
It continues to amaze me that Amazon keeps forging ahead with new concepts and strategies. This is another great concept that will provide logistics and shipping firepower to Amazon’s retail strategy. This could have been developed by Target, Walmart or Home Depot but once again it’s Amazon. The culture of innovation and risk is apparently alive and well at Amazon. This once again shows how mired traditional retailers are in their status quo.
The Home Depot could develop their own version of this for delivering supplies to DIY customers who don’t have a vehicle made to haul heavy and bulky items.
The Amazon shipping approach is simply the intelligent buying of shipping services. Uber deserves the cover in the Time Magazine “of the year” edition (along with the cover of most other publications). Wherever capacity or leverage exists, technology is able to link partners in the way that electronic data interchange (EDI) changed supply transacting forever. Where Uber is the public face of offering/using available capacity, its threat to taxis and hotels has defined it as an approach to commerce that can be embraced by business.
In 2017 we’ll see the Uber concept advance further as more applications develop and Uber purchase moves into Uber-barter and Uber-borrow. eBay, Craig’s list, Kijiji, Angie’s List, Ariba and others are not to be overlooked as foundation platforms for this new level of peer-to-peer commerce.
Since a good part of Amazon’s reputation is based on fast, efficient, accurate delivery, their desire to control the process is understandable. Of course, they are going to experiment with a variety of methods. The trucking app will be very effective if the drivers are reliable — again, the control issue. Technology threatens the middleman position everywhere. Unless the middlemen offer something beyond just connecting parties, technology will work just as well.
The simplest answer — assuming this plan is real and not another of Amazon’s end-of-the-year “reveals” — is that by tying up excess independent trucking capacity Amazon could box out its competition on yet another front, this time delivery. If there are no trucks available, it makes it pretty hard to meet certain customer delivery windows. As to what the competition could do, I’d say develop deeper pockets and the same disregard for margins that has driven Amazon this far. The so-called Uberization model is likely to change the face of logistics but, as others have pointed out, a supply chain is only as strong as its weakest link.
What’s interesting to me, being in retail consulting in Minneapolis, is that Amazon is basing much of this software development there. They are aggressively recruiting talent from Best Buy, Target and their software vendors, up to more than 100 engineers. It will be interesting to see how this works in terms of delivering the final product on time.
Brands — retailers and manufacturers — need to create similar logistics and content supply chain strategies that leverage enabling technologies to curate, manage and deliver their digital brand assets across all available shopper channels; online, mobile, in-store and social, with the same innovative thought process. All of us shoppers expect it!
We will see. The transportation management space is not as simple as Uber and there a few more legal areas that must be addressed. J.B. Hunt and the gang are not rookies at this and far from old-fashioned. Do not expect this attempt to be as easy as Prime.
I will stick with the pros on transportation management.
Logistics professionals have always tried to optimize across inbound and outbound freight to reduce deadhead miles and improve driver and asset productivity. Networks are much better positioned than individual shippers to achieve such optimization. Now add layers of inefficiencies in the manner of communication forms and means, and spreadsheets, and you have an area ripe for disruption and innovation.
Amazon combines technology with scale and function to offer something for everyone in this freight shipping process. Shippers move their freight faster, fleet managers lower their per-unit cost, drivers make more money with fewer empty miles and overall the network is more efficient.
It’s difficult to achieve all this without scale, visibility and investment in technology. Amazon is picking up logistics expertise at lightning speed and putting its technology and financial power behind it.
Of all the things Amazon has tried, this one makes the most sense. To me, Amazon is much more a Marketplace and delivery/distribution business. If they can figure this out and, as Tim Gunn says, “Make it Work!” This could be the answer to a big issue.
For my 2 cents.
Amazon is a brand based on quality, delivery and cost. They meet all three criteria plus. Now adding a potential faster delivery channel says they never stop working at improving. They will never rest on their past successes.
Keep in mind this model hinges on the logistics providers being reliable to maintain the commitment they have to the shipment and not abandon it when a better last minute pickup shows up. The personalized customer model can easily fall apart when all the customer’s expectations are missed because what the brand cannot deliver on time.