The impact that Amazon.com, Inc. (AMZN) has had on the transportation industry cannot be understated. However, it’s a difficult impact to qualify because it’s so unlike anything that’s come before. Amazon isn’t attempting to monopolize the transportation industry as it exists; they’re trying to completely reinvent the wheel by way of influencing existing industry infrastructure.
“Alexa, pay for gas.”
Amazon’s newest disruption could end up being a net-positive for the whole industry. By the end of 2020, more than 11,000 Exxon and Mobil stations across the country will be integrated with Amazon Pay; buying fuel at those pumps will be as simple as asking Alexa to pay. This also adds an additional layer of security to paying at the pump since it bypasses credit card readers and, by extension, skimmers.
Equally important (or maybe more so) for the trucking industry is that Amazon’s voice assistant can be linked to a fleet account, meaning drivers needn’t carry a physical card that they may be tempted to use for personal expenses on or off the clock. Payments processed through Amazon Pay are also less vulnerable to corporate security breaches; data thieves tend to target the least securely packaged information they can find, and for many merchants that means payment information from magnetic strip-only cards.
Intermodal Marketing Blues
Last September Amazon purchased 250 shipping containers, signaling their intent to reduce or eliminate reliance on intermodal marketing companies (IMCs) like Schneider National and JB Hunt. These companies act as a middleman between rail and road, utilizing shipping containers that can be offloaded directly from railcars onto trailer beds and vice-versa. Traditionally they’ve been necessary because Class I rail carriers don’t sell capacity directly, except to the IMCs.
Walmart and Amazon, though, have both held talks with Class I rail carriers about buying capacity directly. Their purchase of the containers isn’t really a surprise. What is surprising is the relatively small number of containers Amazon purchased for its pilot program; 250 intermodal shipping containers is hardly a drop in the bucket of Amazon’s total freight volume. Walmart, while declining to offer a specific number, has indicated that they purchased several thousand containers for their pilot program.
It should be noted, though, that Amazon has historically taken small steps in expanding its logistics division. Amazon Air started in 2015 with 20 Boeing 747s. By 2021 it will have at least 70 cargo planes in its fleet. Additionally, just last January Amazon acquired Pinnacle Logistics’ air cargo operations in Baltimore and Rockford, Illinois.
Similarly, Amazon started running a handful of its own branded truck trailers in 2015—today they run almost 10,000. And late last year, the company began to add branded tractors to its fleet. The overarching point is that Amazon seems to launch new logistics operations on a small scale and grow them aggressively over a short period of time. Intermodal marketing is likely to follow suit.
What’s Next?
Right now, Amazon.com, Inc.’s expansion into the business of transportation is a mixed bag for the industry. Innovations like Alexa at the fuel pump are undoubtedly good for everyone because all freight companies can make use of them. More to the point, stopping internal and external data theft is a real need in the freight world, especially for trucking companies.
On the other hand, Amazon’s consistent pushes into new branches of the freight world has the potential to harm smaller businesses. Some may be squeezed out of competition, and those that aren’t may face a new landscape shaped by Amazon Global Logistics. In short, there’s likely to be some uncertainty in intermodal freight in the short term.
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