Report: Amazon mulling supply chain tech purchase

The e-commerce giant is reportedly looking to either license or buy outright technology to help manage its expanding freight transportation network, according to a recent Wall Street Journal article.    Amazon.com Inc. is looking to either license or purchase outright technology to help manage its expanding freight transportation network, according to a recent report from the Wall Street Journal.
   The WSJ article quoted “people at companies that have been contacted by the retailer,” who said the e-commerce giant is specifically eyeing programs aimed at supply chain optimization. The idea behind Amazon purchasing existing technology is to save time on development, one of the people said.
   “With the right technology, Amazon’s plans could pose a threat to established forwarders as well, by winning over their small- and medium-size clients—many of whose goods are destined for Amazon distribution centers anyway,” the WSJ said.
   While they may ultimately prove true, however, these reports are speculative at best, and WSJ did not provide specifics as to which companies or product offerings Amazon might be targeting.
   Investment analysts with William Blair Equity Research echoed those comments in a recent client note.
   “Our opinion regarding the various options Amazon could take based on the limited information in the (Wall Street Journal) article is certainly speculation,” the firm said. “However, we believe it is logical for Amazon to require some additional help for itself and/or its selling partners. We believe it supports our long-term thesis for several of the freight brokers/forwarders and likely further industry consolidation over time as the transportation industry seeks to gain broader multimodal expertise, services, and technology.
   William Blair also noted that it thinks UPS and FedEx, Amazon’s largest freight forwarding partners, will not be cut out of the company’s supply chain network entirely as the requirements of such a network are simply too vast.
   “In addition, we continue to believe that UPS and FedEx will remain valuable parcel delivery partners for Amazon,” it said. “While Amazon will likely continue to do more on its own, we believe the services UPS and FedEx provide will still be needed. Furthermore, with other customers and shippers in the world, we see it as unlikely that Amazon alone would destroy the growth opportunity for either company, nor do we see UPS or FedEx creating a customized solution on that scale for just one customer.”
   Various freight oriented tech startups have made it their goal to arrange cargo transport at the push of a button, rather than using a transportation management system to plan moves and book space with providers over the phone. These companies also offer suites of online tracking tools that eliminate older, more time consuming methods like manually entering shipments into a spreadsheet.
   According to WSJ, Amazon recently approached Ryan Petersen, chief executive of one such startup, Flexport Inc., asking for a presentation on his company’s technology, a request he said he “declined politely.”