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    -9.450
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  • OTRI.USA
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    -0.3%
  • OTVI.USA
    15,699.510
    -8.400
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  • TLT.USA
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    0.000
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  • TSTOPVRPM.CHIATL
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  • TSTOPVRPM.DALLAX
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  • TSTOPVRPM.LAXDAL
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  • TSTOPVRPM.PHLCHI
    1.980
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  • TSTOPVRPM.LAXSEA
    3.900
    0.100
    2.6%
  • WAIT.USA
    124.000
    -3.000
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  • ITVI.USA
    15,698.280
    -9.450
    -0.1%
  • OTRI.USA
    23.410
    -0.080
    -0.3%
  • OTVI.USA
    15,699.510
    -8.400
    -0.1%
  • TLT.USA
    2.800
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    3.390
    -0.060
    -1.7%
  • TSTOPVRPM.CHIATL
    2.840
    -0.080
    -2.7%
  • TSTOPVRPM.DALLAX
    1.510
    -0.070
    -4.4%
  • TSTOPVRPM.LAXDAL
    3.290
    0.080
    2.5%
  • TSTOPVRPM.PHLCHI
    1.980
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NewsTechnologyTruckingTruckload

Amazon’s brokerage operation goes national

As demand for goods from its own warehouses as well as third-party suppliers skyrocket, Amazon is expanding its brokerage division, first launched just a year ago.

The ecommerce giant is now offering brokerage services in 48 states. Amazon’s shipper-focused website, freight.amazon.com, now says service areas include “all U.S. states except Alaska and Hawaii.”

The service matches shippers with freight capacity. Previously, access to the site was limited to only to pre-approved shippers. The site is now open to more shippers.

FreightWaves first reported the launch of the brokerage service in April 2019. The expansion of the service now expands truckload capacity for shippers.

The initial launch of the service featured rates as much as 30% below market value, according to FreightWaves research. In a larger survey of the logistics industry, FreightWaves found that eight of 10 carriers and freight brokers think Amazon’s entry into digital freight brokerage [was] ‘negative’ for their market segments. Carriers, by a two-to-one margin, are more apt to view this development as ‘very negative’ than freight brokers. On the other hand, seven of 10 shippers think it is a ‘positive,’ though this view is tempered as only one in five that believe it is a ‘very positive’ development.  

In the survey, “Amazon and the Logistics Industry,” carriers and brokers were concerned that Amazon’s size could push down freight rates, but as one respondent noted, Amazon may have to eventually pay market rates.

”As long as carriers get access to all of their freight as well, it has to be a volume play,” the respondent said. “Amazon will need to pay ‘market rates’ just like other 3PLs. At the end of the day, I believe Amazon will compress the average margin for brokers, but they will not eliminate them from the market.”

An analysis at the time of the survey found that rates available from Amazon’s online platform supported the respondent’s thesis. Shipper quotes collected for 30 lanes indicated Amazon’s quotes to shippers were within 50 basis points of DAT spot rates.  

The expansion of the service comes at a time when Amazon recently halted a delivery service for non-Amazon packages and after reports emerged earlier this year that the company was dropping logistics service providers.

The delivery service, Amazon Shipper (3P), is to be suspended in June. In a research note in early April following the news, Morgan Stanley analyst Ravi Shanker reported that the move would apply to Amazon’s third-party program. It picked up non-Amazon packages at sellers’ warehouses for delivery to end customers.

“This was still a pilot/nascent service and not a full operation,” Shanker wrote. “The 3P service within Amazon was an expanded version of a limited pilot that began in the L.A. area in December 2017 and did national delivery from three major U.S. metro areas (New York, Chicago and Los Angeles as well as in London) early last year. However, it was still a limited pilot program and had not yet seen broad rollout as a full 3P service. As such, we believe the volumes of this operation are likely to be relatively limited within Amazon Logistics.”

Shanker said the thought is the suspension is COVID-19 related and likely not permanent.

“It is no secret that e-commerce volumes have surged in recent weeks post-COVID-19 restrictions and that Amazon has had to adapt its operations to cope,” Shanker wrote. “This has included hiring 100,000 workers, prioritizing essential products over others and pushing out delivery windows for Prime and Fresh customers. It is no surprise that Amazon would be directing all of its resources to managing its internal volumes no matter how small.”

Brian Straight, managing editor, Modern Shipper

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and fleetowner.com. Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at bstraight@freightwaves.com.

6 Comments

  1. Not even close; you have large brokers that still predominately play in transactional freight (Arrive as an example), you have small brokers that are entirely transactional – these types of shippers don’t have the ability to fit their freight into the cadence of an Amazon, just doesn’t work. Margins here will stay high, but not 15%.

    For large brokers that are Enterprise account dependent, CH, Coyote, yes, you are going to see significant margin compression here; there is reason for a Home Depot, P&G, General Mills, etc not to partner with Amazon, their freight is so large a significant portion can fit into the Amazon network.

    Convoy & Uber? Are you kidding me? If it wasn’t for Freightwaves continually pumping up these guys because of their “tech”, no one would care. Uber still sells 95% of their freight as a loss leader and Convoy isn’t even moving that much freight, forget about the touchless piece – touchless is driven by easy freight, dense freight, where you get scale – the same freight that would fit the Amazon network. DFM is a joke, DFB’s are a joke, all hype to increase a brokers multiple for sale and the impression they have a moat to their business.

    1. Arrive continuing to get 15%+ margin?

      Anybody can open a brokerage these days with a smart phone and load board access.
      There is almost no value add of a broker for van freight.
      Basically a broker is an appointment setter and BS filter.

      Arrive is no better shape than CH Robinson.
      Someone will chip away at their margins.

  2. Look, I understand the value of drivers, but this argument of yours is just old and tired, same $hit since the 80’s. A broker provides all types of services that a driver or even a fleet of drivers just can’t; from a distributed sales force, to 24/7 tracking support, to on site QBR’s, to managing seasonal peaks and valley’s in contractual pricing [eating losses during bad parts of the year for more profitable parts of the year], etc, etc.

    If I was to give drivers a piece of advice; spend less time talking about stupid stuff like how much brokers make, how pricing should be transparent, how brokers should be locked to max 10% margins, blah, blah, blah – focus on your business and if you think you can do it better all it costs is about 70K for your bond and you can “do it right” – otherwise, just zip it.

    1. Dear Joe the Bastard Broker
      Do I smell fear? Everybody nowadays knows that with technology in place, all these so called “Brokens” add completely no value to the industry. If you have no assets there no room for you in this business. So you are right, zip it up and leave it for carriers to handle. Your 3PL era is over!

  3. If I was a freight broker, I would be very worried about Amazon’s push into the digital brokerage market. Amazon seems to have a history of aggressively asserting itself into new areas of the supply chain while allowing its’ future competition to carry the load (pun intended) until it can ramp up enough man/womanpower to overtake or consume its own service providers.

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