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Amazon to Digitize the Freight Broker Market

As Amazon opens up its current freight transportation platform, it poses risks to freight brokers and truckload carriers [1].

The traditional interplay between shippers, carriers and freight brokers is carefully balanced by every part to make sure that they all strike a good deal. However, several tech-focused start-ups have been entering the game of digitally connecting shippers with available trucks, and larger companies within the trucking and logistics industry are spending richly to develop their own digital freight marketplaces. Uber’s Freight online load-matching platform for instance, allegedly generated $359 million in freight bookings last year.

Now, add one more giant player to that industry – Amazon. They are offering beta service for truckload shipments in Connecticut, Maryland, New York, Pennsylvania and New Jersey through their Amazon Logistics platform. This platform is not fresh news as it has been utilized during some time to carry loads specifically for Amazon, though now they are making it available for other shippers as well, to offer the company more leverage with carriers on negotiating rates. They even provide instant rate quotes through an online portal, allowing users to handpick from their carrier network and get the best service at good rates. As Amazon in one of the largest freight forwarders in the world with an extensive network of shippers and carriers, they can offer much lower costs than competitors (26% to 33% lower than the market according to an analysis by FreightWaves) [2]. Thus, they are in a strong position to attract more shippers as they open up their platform and eventually take major control of the whole supply chain.

The largest freight broker in North America has already declined more than 10% in share prices during the past weeks.

 

Personal comments

It feels like digitalisation and open platforms for the matchmaking between shippers and carriers is a natural step to make the supply chain more efficient. As the e-commerce market keeps getting bigger, digital freight marketplaces are important to optimize routes and load-matching of each carrier to curb impacts of road occupancy.

 

Written by Hampus Alfredsson, RISE Viktoria.

 

Sources

1. 2019-04-30. Amazon’s Freight Push Rattles Logistics Sector.

2. 2019-05-01. Amazon has introduced its freight broker platform.